Wal-Mart expands pharmacy strategy
On its face, the expansion yesterday of Wal-Mart's generic drug program seemed only incremental. The company added seven new compounds to the list of drugs it sells for $4.
But the company seems to be reaching out to a younger and broader drug clientele as it tries to expand its piece of the nation's $250 billion retail pharmaceutical market beyond its current share of 5 to 6 percent.
Many of the drugs previously on the Wal-Mart plan were heart, high blood pressure, and diabetes drugs commonly used by older people. But yesterday, the company added to its $4 list methylphenidate, a drug for attention deficit and hyperactivity disorder that is commonly used for school-age children.
Perhaps more significant, Wal-Mart said it would start selling generic versions of two popular birth control pills for $9 a month, appealing to an estimated 11 million women in America, most of them under age 40, who use oral contraceptives.
Establishing a new $9 price point for certain generic drugs may prove a key step, according to analysts, some of whom have considered Wal-Mart's pharmacies an underused asset.
"This is a very important development. Rather than just sell for $4 and be stuck with only the cheapest generics, they've now created a tier and they have a business model for more expensive generics, as well," said Ronny Gal, who follows the generic drug industry for Sanford C. Bernstein & Co.
The discounts have prompted similar steps by many other retailers, including Target, which said yesterday that it would match Wal-Mart's latest moves. 