Another regional pharmacy chain is being swallowed up by one of the big three – and this time it is North Carolina-based Kerr Drug. Walgreens, the acquiring company, is making its second such purchase within the past. Last fall, the national retail powerhouse purchased USA Drug, a former top-10 drug chain. Kerr Drug operates 76 stores only in the state of NC and also runs a specialty pharmacy business.
North Carolina is a fast growing market and home to another regional retail chain that was purchased this year: supermarket operator Harris Teeter. Kerr operates in 26 core-based statistical areas within the state, according to Chain Store Guide’s 2013 Drug Industry Market Share Report. Its top five markets based on area population are Charlotte, Raleigh-Cary, Greensboro, Durham-Chapel Hill, and Asheville. In three of those markets, Kerr has a top-five prescription drug market share position.
Kerr Drug, Inc.
Top Five Markets Ranked on Population*
| CBSA Market |
Current Area Stores |
Current RX Share |
CBSA Population |
| CHARLOTTE-GASTONIA-ROCK HILL, NC-SC |
4 |
1.7% |
1,827,009 |
| RALEIGH-CARY, NC |
15 |
9.9% |
1,189,407 |
| GREENSBORO-HIGH POINT, NC |
7 |
8.5% |
736,985 |
| DURHAM-CHAPEL HILL, NC |
8 |
14.6% |
520,258 |
| ASHEVILLE, NC |
3 |
4.4% |
432,870 |
*Source: Chain Store Guide’s 2013 Drug Industry Market Share Report
According to the CSG report, Walgreens strengthens its already strong presence within the Charlotte metro, but will still lag behind area leader CVS. In fact, CVS pharmacies are the top operator in each of the above five markets. This likely was a key reason for the Kerr purchase.
Walgreens vs. CVS Caremark*
| CBSA Market |
CVS RX Market Share |
Walgreens RX Market Share |
| CHARLOTTE-GASTONIA-ROCK HILL, NC-SC |
37.6% |
21.0% |
| RALEIGH-CARY, NC |
26.7% |
20.9% |
| GREENSBORO-HIGH POINT, NC |
36.3% |
19.3% |
| DURHAM-CHAPEL HILL, NC |
28.3% |
14.5% |
| ASHEVILLE, NC |
34.7% |
11.6% |
*Source: Chain Store Guide’s 2013 Drug Industry Market Share Report
According to a Walgreens press release, ‘the transaction is subject to satisfaction of regulatory requirements and other conditions, and is expected to close sometime this year. Walgreens anticipates the transaction will not have a material impact on earnings per share in fiscal year 2014.
Until the acquisition closes, Kerr Drug and Walgreens will continue to operate separately. After closing, the acquired Kerr Drug retail drugstores will continue to operate under their current brand in the near term. Decisions will be made over time regarding the best, most effective way to integrate Kerr Drug’s retail drugstores and specialty pharmacy business with Walgreens operations.’
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