Global Walgreen-ing

Whatever is the world coming to but the Walgreen-ing of the global mass market retail drug store distribution channel.

Global OTC manufacturers need to start thinking hard and smart about playing with global retail chain drug stores. The death knell of decline is starting to sound for independent pharmacies, and, when you couple this change in the retail distribution channel with General Sales Ledger (GSL) and Pharmacy (P) brands that provide consumers with easier access, you can start to count on

· Improved public health benefits

· Lower prices

· Great business opportunities

Nicholas Hall is a very smart and astute observer of consumer healthcare and the retail pharmacy.

Here are four data points from his latest OTC newsflash:

1. According to local press reports, the Spanish government risks being taken to the European Court in the next couple of months, in a move to change its pharmacy model to reflect EU legislation guaranteeing the freedom to set up European-wide businesses.

2. Meanwhile, a report by Dutch audit company Ecorys and the University of Maastricht, defending liberalization and deregulation, concludes that the elimination of all rules that regulate pharmacies would provide significant economic savings. The report suggests deregulation of pharmacies could improve their productivity by one-third and reduce prices by 30-40%.

3. In Japan, Drugstore chains Welcia, which has 95 stores in Shizuoka and Kanagawa, and Tokyo-based Takada are in talks to merge later this year. The merger will create Japan's ninth-largest drugstore chain, with sales of about Y130bn (US$1.2bn) and around 395 stores.

4. Speaking at a retail sector conference this week, Alliance Boots executive chairman Stefano Pessina announced that the roll-out of the Boots name in Europe. Although the Boots brand is very powerful in the UK and known elsewhere, it has not been exploited advantageously in international markets. Pessina said the brand will be developed in Europe over time, starting with Norway, where 7 of its Alliance Apotek pharmacies have been rebranded under the Boots the Chemist format, with all 125 Norwegian stores set to follow suit.

This man knows what he sees.

Now it is up to OTC manufacturers to also see these beacons of change and convert them into cogent sales, branding and distribution strategies. The pain of Wal-Mart has already been well felt in the US. Similar distribution and pricing are emerging in Europe, while, similar opportunities loom large in emerging markets like China (viz. Nep-Star) and India. The challenge will be capitalizing on this emerging wave of drug store capitalism.