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Partnerships in focus at Walgreens as WBA positions chain as health destination

Walgreens Boots Alliance and Walgreens executives recently highlighted the company's partnership with iA and VillageMD as big areas of focus as Walgreens looks to grow its role as a health destination.
David Salazar
Managing Editor
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In recent years, Walgreens Boots Alliance and Walgreens have positioned themselves as savvy forgers of partnerships. On a call with analysts discussing the company’s strong third-quarter showing, WBA and Walgreens executives made clear that two of its ongoing partnerships will play a crucial role for the chain moving forward. 

“As I analyze the company and see where they are, this team has done some tremendous work in building partnerships,” WBA CEO Rosalind Brewer said, noting that she also will be focused on building a strong base business for WBA. “Those partnerships will be key to us going forward. There's an opportunity to innovate with our partners and really grow some of these collaborations.”

a large commercial kitchen
iA automation in use at another chain’s facility

One of the bright spots for Walgreens in Q3 was the progress made in its partnership with pharmacy automation provider iA. WBA in January took a majority stake in the Johnson City, N.Y.-based company with a focus on reducing its operational costs and freeing up pharmacists by centralizing a portion of prescription fulfillment services. Since then, the companies have gotten two fulfillment centers up and running — one in Phoenix and one in Dallas, which collectively service some 550 stores. 

James Kehoe, WBA global executive vice president and Global CFO, noted that the efforts are part of the company’s strategic plan to modernize its pharmacies — and that the two centers are just the beginning. 

[Read more: Walgreens Boots Alliance takes majority stake in iA]

“We have also decided the next nine markets for micro fulfillment centers, and we expect the deployment to be completed by the end of calendar year 2022,” Kehoe said, noting that the existing two fulfillment centers will support roughly 1,000 stores over time. He also said that the company is looking closely at growing its testing and diagnostic offerings but would offer more information in the fall. 

Walgreens president John Standley said the iA partnership is part of the larger strategy to grow the scope of pharmacy services Walgreens provides and ensuring that pharmacists have the time to perform more reimbursable services. 

“The investments that we're making in iA to free up our pharmacists really create I think future avenues for growth of revenues we kind of look down the line,” Standley said. “That's how we're thinking about it, and we think there's a lot of opportunity there, as we move forward.”

a living room filled with furniture and a large window
Inside of a Village Medical at Walgreens location

As it lays the groundwork with the iA partnership, Walgreens continues to grow the number of co-located clinics operated by VillageMD at its pharmacies, accelerating its rollout plans. So far, 46 Village Medical at Walgreens clinics have opened — exceeding the company’s December 2020 goal of opening 40 by the summer's end — and Kehoe said there will be 35 more opening by the end of the calendar year. 

Kehoe said that the physical locations are the main part of the partnership, but that the companies also are rolling out telehealth options on a smaller scale. “In addition to these physical co-locations, we formed an integrated virtual healthcare collaboration with VillageMD in an additional nine Walgreens locations,” he said. “This will give patients access to the same expanded … services that are available at the co-locations.”

[Read more: WBA speeds up investment in VillageMD to accelerate clinic openings]

Standley said that beyond making care more accessible, they offer the potential to help patients better manage chronic conditions — and can provide some incremental script growth at locations with clinics. 

“VillageMD is a great partnership for us in the pharmacy, because we can do a collaborative care model for chronic patients with VillageMD and it kind of breaks down a bunch of the barriers that you might have in that kind of relationship,” he said. “And there is definitely a script uplift in the store from the relationship that's going develop over time as we have opportunities to continue to advance the model, as we roll out additional [co-locations] across the chain here.”

As the chain moves forward, Brewer said the company’s partnerships would go hand-in-hand with ensuring that the company’s core businesses are strong in order to help build the pharmacy of the future. 

“There are tremendous opportunities in healthcare right now, and we are uniquely positioned to capitalize on them,” she said. “The overall healthcare space is sprawling and incredibly complicated. So, we must be laser-focused on the products and services that have the most potential end value that can be enabled with the most innovative technology, and that will be delivered at a level and quality that our customers expect.”