Has Wal-Mart's $4 Drug Program Begun To Lose Gas?

by Douglas A. McIntyre



Walgreeen (WAG) and Rite Aid (RAD) both turned in excellent results for the last quarter. Part fo the message sent by both companies is that Wal-Mart's (WMT) $4 generic drug program is not hurting them. But, Wal-Mart said its November pharmacy sales were up sharply.

Some part of this does not make sense. Some analysts say that the Wal-Mart drug buyers as consumers without insurance who were not going to any store while the mainstream pharmacies cater to patient who are insured. Rite Aid and its large competitiors keep more generic drugs stocked in its stores, and their prices are not very different from Wal-Mart's.

If there is a surge in the purchase of generic drugs that is fueling growth at both Wal-Mart and Walgreen, there has to be a problem a Big Pharma company's who patent drug sales are being eroded by generics already.

Again, that answer would be too simple. Some data still appears to be missing.

While the mystery of both Wal-Mart and Walgreen both doing well is still open, one piece of data does appear to be clear. CostCo (COST) took a shot at $4 generics and lost money. They moved the price point to $10.

Lost money? Can Wal-Mart be making any at $4? If not, one of Wal-Mart's biggest initiatives could be a bust.

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Related BHI articles:
- Searching for Values in the Drug Stock Universe
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