WBA - Walgreens Boots Alliance

[Cigarbutt]

Some scuttle butt for whatever its worth:

My wife belongs to several pharmacists groups on facebook.  One consists of mostly Walgreens pharmacists who complain about their jobs.  The general consensus is that Walgreens is cutting back hours and offering new graduates less than they used to ($80k instead of $100k) starting out.  I think happy employees are important, but I don't think Walgreens has been in the business of keeping its pharmacists happy for a long time.  Here's what this tells me.

1.  There is an oversupply of pharmacists graduating (especially larger cities)
2.  It looks like Walgreens can cut one of its largest expenses significantly due to #1

This supply-demand dynamic will likely last 3-5 more years (my guess), as its already been going no for several years.  I'm interested to see how this trend plays out and if it helps EPS for both Walgreens and CVS.

Good observation.
About twenty years ago, consensus view was that there would be a shortage due to growing demand.
These supply and demand cycles are typically long and recognized too late.
It seems that there is a significant potential for oversupply:
https://www.ajpe.org/doi/pdf/10.5688/ajpe7051
Pharmacists and pharmacy technicians are a large cost component to margins in a maturing and consolidating segment.
There is an argument that pharmacists may contribute more value in the coming transition but what has happened in retail pharmacies (including WBA) is that the employment growth of relatively low-cost pharmacy technicians has outpaced the employment growth of pharmacists.

[Jurgis]

Can someone explain to me what the ($100K) pharmacists do?

I understand their role in Europe where pharmacists can suggest/prescribe the medicine (although I somewhat doubt their qualifications and on the spot diagnosis). But in US what is exactly their job? If doctor prescribes the meds, their dispensing should be simple or even automated, no?

[JRM]

Most people think they just count pills, but they have technicians and robots to do that.  The position requires similar training to a doctor, 6-8 years of school with a residency typically.  They have knowledge of drug effects on the body as well as interactions with other drugs.  They provide a second check on the doctor (which is surprisingly necessary) and help to ensure abuses aren't taking place.  Their license rides on the fact that they are ensuring the correct drug in the correct dosage is dispensed every time.  The stakes are high with controlled substances.  Is the position worth $100k per year starting out?  I know pharmacists who make over $150 per year, and that's in the midwest.  I also know the curriculum is very difficult.  AI could probably do 70-80% of the job, though.

[Cigarbutt]

@JRM, Is that a detached view?
Opinion: pharmacists are worth their pay but a lot of what they provide may be at risk with more technicians, automation and AI and their potential value-add will evolve with the changing landscape (opportunity).

Community pharmacists spend on average about 2/3 of their time "dispensing" medications which involves more than just counting pills. They are also involved (more and more) as a "provider" (with the medication therapy management, as part of the newer legislations) of care and as potential prescribers.

Here's, for reference, WBA and CVS perspectives and another relevant document (see: Scope of Practice for Pharmacists):
https://www.walgreens.com/images/WH/Walgreens_Emerging_Role_Pharmacist_White_Paper.pdf
https://cvshealth.com/thought-leadership/the-role-of--pharmacists-in-a-changing-health-care-environment
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5008427/

Personal note: my father-in-law has had significant health issues lately and I have been impressed by the community pharmacist's role: side effects follow-up, personalized adjustments of medications with blood tests and even some coordination of care.

[JRM]

My wife is a pharmacist and I am in no way trying to down play how difficult her training/job is.  They add significantly more value than what most people realize.  Most of us probably just go to pick up a z-pack and wonder what the pharmacist is doing.

I know at large retail chains like Walgreens the pharmacist may be asked to dispense the drugs, run the cash register, and even administer flu shots. There is a lot of risk involved is the in dispensing controlled substances and the pharmacist is the gate keeper.

[DooDiligence]

Seems like these businesses would be moatworthy as long as the human touch is still effective & regulated.