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Walgreens and Alliance Boots have entered into a long-term agreement with AmerisourceBergen to source brand-name drugs, which Walgreens previously sourced from distributors and suppliers. Starting in September, all brand-name drugs will be sourced through AmerisourceBergen, and next year, Walgreens will begin sourcing generic products from AmerisourceBergen too. Previously, the drugstore chain had self-distributed generics.
This 10-year comprehensive primary distribution agreement will help Walgreens, Alliance Boots, and AmerisourceBergen benefit from greater scale and global opportunities and work together on programs to improve service and efficiencies, according to a Walgreens press statement. AmerisourceBergen had an existing relationship with Walgreens, as a distributor of specialty items.
“We are excited to be expanding our existing relationship with AmerisourceBergen to a 10-year strategic long-term contract, representing another transformational step in the pharmaceutical supply chain,” said Gregory Wasson, president and CEO of Walgreens. “We believe this relationship will create a wide range of opportunities and innovations in the rapidly changing U.S. and global healthcare environment that we expect will benefit all of our stakeholders.”
AmerisourceBergen President and CEO Steven Collis said, “As we all recognize the imperatives of health reform not only here in the U.S. but also globally, we have entered into a unique opportunity to unlock value in the pharmaceutical supply chain by collaborating to leverage all of our proven strengths. These agreements not only expand our U.S. business, but also provide opportunities to meaningfully grow our specialty and manufacturer services businesses internationally.”
In addition, Walgreens and Alliance Boots can purchase a minority equity position in AmerisourceBergen, up to 7% of the fully diluted equity of AmerisourceBergen in the open market. A Walgreens executive will be added to AmerisourceBergen’s board when Walgreens and Alliance Boots together acquire 5% equity of AmerisourceBergen, and an Alliance Boots executive will join the board when equity warrants are exercised, according to the press statement.
The minority equity position is subject to customary regulatory approvals, Walgreens noted.