Walgreens Boots Alliance Inc (NASDAQ: WBA) and FedEx Corporation (NYSE: FDX) last week announced the launch of a nationwide next-day delivery
service under which FedEx will deliver prescription drugs from Walgreens' pharmacies to patient locations.
Walgreens has begun a same-day delivery pilot program in select cities using a range of delivery contractors. The program is
being piloted in Dallas, Chicago, New York City, Gainesville, Miami, Tampa, and Fort Lauderdale, Fla. The company said it will
expand the same-day delivery program next year. It did not offer specifics. The announcements were made yesterday.
The next-day delivery service, which carries a $4.99 fee, utilizes Memphis-based FedEx's air and ground delivery network,
Walgreens said. The service will leverage an infrastructure put in place last year when FedEx began regular pick-ups and deliveries
at 7,000 Walgreens locations, the pharmacy chain said.
The venture builds upon "our existing platform where FedEx team members are in our stores multiple times per day, so the
handling and delivery of prescriptions will be a very efficient and fast process, consistent across the nation," said Morry
Smulevitz, vice president, business and operations communications for Walgreens, in an e-mail.
Smulevitz would not comment on the market potential of the service.
The move follows a similar initiative announced in mid-June between Walgreens rival CVS
Health Corp (NYSE: CVS) and the U.S. Postal
Service. Pharmaceutical delivery gained visibility earlier this year when Amazon.com, Inc. (NASDAQ: AMZN) said it was weighing plans to serve the segment, potentially
breaking the dominance in drug distribution held by providers like Cardinal Health Inc (NYSE: CAH) and Mckesson Corporation (NYSE: MCK).
Amit Mehrotra, transport analyst for Deutsche Bank, said in a note today that Amazon could be the catalyst to significantly
change how prescription drugs are delivered. The Walgreens venture is an "encouraging development for [FedEx] to gain exposure
to what we expect to be a fast growing market in the near- to medium-term," Mehrotra wrote.
Separately, FedEx announced that Raj Subramaniam has been named president and CEO of FedEx Express, the company air and
international unit, effective January 1. He succeeds David L. Cunningham, who will retire at the end of the year.
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