One on One with Bill Simons, Exec VP Pressional Services Wal-Mart
Thursday, October 19, 2006
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SUSIE GHARIB: Wal-Mart said today it is expanding its $4 generic drug program to 14 more states. The discount drug plan will now be extended to 1,264 Wal-Mart stores, including locations in New York and Texas. The move comes less than a month after the retailing giant launched the plan in Florida. Wal-Mart charges a flat $4 rate for a month's supply of more than 300 commonly used medicines. Earlier today I talked with Wal-Mart's executive vice president in charge of the program and asked him when the drug plan will go nationwide.
BILL SIMONS, EXEC. VP, PROFESSIONAL SERVICES, WAL-MART: Well, let's say days and weeks, rather than weeks and months. All 50 states, there are some issues as we work through them in timing, in order to be compliant with, as you can imagine, the pharmacy and regulatory issues in each of those states.
GHARIB: Mr. Simons, there are thousands of generic drugs that are out there and yet Wal-Mart is offering around 300 or so. Will you be offering a wider selection and particularly some of the newer generics like Zipamax or Zocor?
SIMONS: Sure. Yeah. The generics that are on this list for us today represent 25 percent of all prescriptions we fill in our pharmacies there, safe and effective drugs that have been used and are used regularly to treat common therapeutic issues. It is important for us to make sure that this is a profitable venture for us because if it is profitable, it is sustainable. So as the prices of those generics, the newly released ones, become more competitive and we can get them to a point where we can sell them at a $4 price and make money, they'll be added to the list.
GHARIB: From the analysts I've talked to, my understanding is that this $4 drug program, Wal-Mart is really not making any money, when you do all the math of the pharmacy costs and everything else.
SIMONS: I can assure you these are among some of the most profitable items we have.
GHARIB: Can you give us some kind of characterize how profitable they are for you?
SIMONS: I can give you some top-line results from the Florida pilot. As you can well imagine, our prescription counts are up 20 plus percent. Our total pharmacy dollar sales are up double digits in sales. Our gross profit is ahead of the market trend, and store traffic is up. So on all of the financial and economic indicators, this is a very, very good business proposition for us as well.
GHARIB: Are you finding that people who come in to buy their drugs are going about and buying, making other purchases inside the Wal-Mart and how significant are those purchases?
SIMONS: Well, you know, 84 or 85 percent of the U.S. population shops at Wal-Mart at some point during the year. So these are our costumers who were not receiving the same value on prescription drugs in the marketplace that they were on everything else that was sold in Wal- Mart. This is a move for us that takes our strength and our core competency and applies it to the prescription drug segment. So there are costumers and they are buying other things, but they're in the store anyway. They're just coming in maybe one more time to pick up a prescription.
GHARIB: All right, Mr. Simons, thank you very much and good luck to you.
SIMONS: Thanks so much, appreciate it.
