Walgreens begins new phase in transformation

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When the history of Walgreen Co. is written, Greg Wasson, who last month announced that he would step down as chief executive officer of the drug chain upon completion of its merger with Alliance Boots, will be seen as one of the company’s most consequential leaders.

cdr-filler-opinion-750A product of the Walgreens system who joined the retailer as a pharmacy intern in 1980, Wasson broke the mold, opening the way for a reevaluation of tenets that had sustained the business for years, but, in at least some instances, may have outlived their effectiveness.

Shortly before his being named CEO in 2009, the perception of Walgreens among many industry observers and board members was that the company had stagnated. For decades, management embraced a “crawl, walk, run” approach to innovation, and, up until the middle of the decade, that conservative orientation had served the drug chain well. Consistently opening several hundred stores a year, the company expanded its geographic footprint and market share even as it continued to turn in strong financial results.

During that period CVS Health emerged as a serious challenger by acquiring a series of important drug chains. Perhaps more troubling from Walgreens’ perspective, CVS in 2006 agreed to purchase Caremark Rx, which at the time was the nation’s third-largest pharmacy benefits manager, and MinuteClinic, a pioneer in the in-store health clinic field. By contrast, Walgreens, which had until that year eschewed acquisitions, appeared to be stuck in its tracks.

An agent of change was needed, and Wasson stepped up to the challenge. He quickly set out to galvanize the corporate culture, providing an infusion of new ideas while preserving the essence of Walgreens’ heritage. He also brought in executives from outside the organization to complement home-grown talent and significantly extended the company’s field of vision.

Wasson’s plan to reinvent the company for the 21st century ended the practice of rapid store openings and replaced it with a strategy to improve the customer experience and get more out of Walgreens’ existing assets. Emphasis was placed on three objectives: transforming the front-end business, enhancing retail pharmacy’s role in health care delivery and creating a platform to better compete in an increasingly global marketplace.

Although there were some bumps in the road, Wasson had a considerable degree of success in strengthening the company’s position on all those fronts.

Now, as Wasson noted in announcing his retirement, “it is time for new leadership to move that vision forward.” Walgreens is fortunate to have the ideal person in place to do just that. Once the merger is finalized, Stefano Pessina, Alliance Boots’ executive chairman and a member of the Walgreens board, will serve as interim CEO of the combined company until a permanent successor is chosen.

Pessina has amply demonstrated his business acumen over four decades, taking a small, family-owned pharmaceutical distributor in Italy and, through a series of skillfully managed mergers and acquisitions, transforming it into an international power in pharmacy retailing and drug wholesaling. Noted for his intelligence, energy and relentless focus, he can be counted on to make Walgreens more efficient without compromising its commitment to innovation, and, at the same time, continue to explore opportunities to extend the company’s reach through additional business combinations in this country and overseas.

The Wasson era was an exciting time at Walgreens, one characterized by a continuous quest for new ways to make the drug chain more relevant to its customers. There is every reason to believe that effort will go forward and accelerate under ­Pessina.



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