Kroger Pharmacy Up Despite Wal-Mart

WENDY TOTH

CINCINNATI — Kroger Co. here named pharmacy as a department that experienced particularly strong growth in the third quarter of 2006, during the company's earnings call this month.

This is despite Wal-Mart Stores' $4 generic prescription program and reports that supermarkets did not capture as many dollars from Medicare Part D recipients as other channels, according to David Dillon, chairman and chief executive officer of Kroger.

“The results are because customers find what we provide to be relevant to what they want in the way of pharmacy services,” Dillon said. Because customers come in for that service, it “is in essence the answer to everything from Part D to the impact of Wal-Mart's generic prescription program.”

While Kroger has launched similar generics programs in three small markets, reportedly in New Mexico, Illinois and Nebraska, the company is not announcing any additional steps.

While Wal-Mart's discount program made a publicity splash, a truth of the pharmacy business is the majority of prescriptions are paid for by third-party providers, said Neil Stern, a partner at McMillan-Doolittle, Chicago. “So I would suspect that the pharmacy business, even if you don't match Wal-Mart, which Kroger may not be choosing to do, can still be very healthy.”