How Brexit Hurts Walgreens Boots Alliance


Walgreens Boots Alliance is bracing for even more payment reductions to its United Kingdom pharmacies as the country’s National Health Service grapples with budget issues.

The European economy isn’t doing well and the situation in the United Kingdom, where Walgreens owns 2,500 Boots pharmacies, has been clouded by the UK’s decision to leave the European Union.


While some have urged politicians to redirect fees currently going to the EU toward funding of the NHS, other reports have said exiting the EU will cost the NHS “billions.” Given the political fallout that includes the resignation of Prime Minister David Cameron and the falling pound, no one really knows how the NHS will fare in coming budgets.

But the cash-strapped NHS is already hitting Walgreens.

Each quarter, Boots pharmacies, like other healthcare providers, face a quarterly review from the NHS on reimbursement rates. Walgreens Boots Alliance disclosed earlier this week that a new cut in reimbursement from NHS contributed to a 2.3% dip in the company’s retail pharmacy international third-quarter sales to $3.2 billion.

Walgreens executives haven’t publicly addressed Brexit’s potential impact but management expressed concerns about the ongoing effort of the NHS to cut reimbursement for pharmacy services. Boots has about one-fifth of the UK’s pharmacy market so NHS actions have a significant impact.

Alex Gourlay, the co-chief operating officer of Walgreens Boots Alliance who oversees both Walgreens and Boots pharmacy operations, said the company’s UK pharmacy services are facing a broader review that happens every few years on top of the quarterly event.

“The government is keen to get more value from pharmacy, and that’s a negotiation that has commonly been carried out,” Gourlay told analysts. “We have lived with this sort of pressure and these requests for very many, many years both in the U.K. and Europe, and we are used to dealing with it. But there is a particular phase we are going through but that request is slightly deeper, and obviously, the industry is working together to try and give the government the best answer we can.”

The NHS is expected to announce changes in funding later this year.

Fuente: Forbes.

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