CVS Caremark v Walgreens – Whos going to blink?
This morning’s announcement by CVS Caremark that they are terminating their contracts with Walgreens in 30 days ups the ante in the ongoing battle between the two huge pharmacy firms. The decision came after Walgreen’s earlier announcement that it was not going to renew its contracts with the big PBM/retailer due to ‘irreconcilable differences’. After Walgreen’s shot across CVS Caremark’s bow earlier this week, Caremark’s stock took a hit, dropping to its 52-week low after an 8% decline. Walgreens’ valuation has also suffered, altho less than CVS/Caremark’s. There are a lot of moving parts here, which we’ll try to briefly summarize. First, retail pharmacy chains have been suspicious of CVS Caremark ever since the two companies merged several years ago, concerned that the PBM (Caremark) would favor the retail chain (CVS) over other retail chains, such as Walgreens, Rite-Aid, and independents and food/drug combos including WalMart. Walgreens isn’t the only retailer complaining. Second, w
