Chain Drug Stores Shrug at $4 Generic Impact

Dec 26, 2006 2:00 AM

Chain drug stores Rite Aid and Walgreen in separate earnings calls late last week shrugged off the effects of $4 generic drug programs instituted by Wal-Mart Stores and copied by a number of other mass and grocery merchants in recent months. “It had limited impact on our business as customers chose location, convenience and service over the small price differential,” Mary Sammons, chief executive officer of Camp Hill, Pa.-based Rite Aid, said in a conference call. “I continue to wonder how long these programs can last since the $4 price tag does not cover the full cost of dispensing and you can only sell a product at below cost for so long.” Rite Aid said same-store sales increased by 4.3% in its fiscal third quarter that ended Dec. 2. Walgreen, based in Deerfield, Ill., on Friday reported same-store sales gains of 9.7% for its fiscal first quarter ended Nov. 30. “While the last several months have brought plenty of speculation about the effects of $4 generic drugs, we‘ve shown with these results just what our core business is capable of doing,” Rick J. Hans, director of finance for Walgreen, said in a prerecorded conference call.