Walgreens Inks New Supply Deal

DEERFIELD, Ill. — Walgreen Co. here on Tuesday said it has agreed to a new, 10-year supply agreement with AmerisourceBergen for branded and generic pharmaceutical products, and will also take an equity stake in the drug wholesaler.

AmerisourceBergen will replace Cardinal Health as Walgreens’ primary supplier for branded products when their contract expires at the end of August, Cardinal said. Walgreens currently self-distributes generic product, and said it plans to turn that over to AmerisourceBergen as well, beginning in 2014.

In addition, Walgreens and its partner, Alliance Boots, said AmerisourceBergen will access generics and related pharmaceutical products through the new joint venture, Walgreens Boots Alliance Development, a global platform that seeks to help bring products to market.

Read more: Walgreens Buys Stake in Alliance Boots

Furthermore, Walgreens and Alliance Boots said they have an agreement to acquire up a 23% equity stake in Amerisource Bergen, including the rights to acquire up to a 7% stake initially on the open market and warrants for the purchase of another 16% in two separate tranches in 2016 and 2017.

Gregory Wasson

Walgreen said the new supply agreement would allow the companies to operate with greater scale and efficiencies. Walgreens also said it would benefit from “an enhanced supply chain with daily deliveries.”

“Today’s announcement marks another step forward in establishing an unprecedented and efficient global pharmacy-led, health and well-being network, and achieving our vision of becoming the first choice in health and daily living for everyone in America and beyond,” said Gregory Wasson, president and chief executive officer of Walgreens.