WBA: $1bn cost saving strategy and new partnerships

Date : 08 January 2019

Walgreens Boots Alliance embarks on a new cost saving strategy, and latest partnership news.

WBA announces new billion dollar cost saving strategy

Walgreens Boots Alliance has launched a new cost transformation programme aiming to cut annual costs by $1 billion by its third year. This is designed to counteract pressure on margins, create a leaner operating model and fuel the investments that will make WBA agile and fit for the future.

The strategy is three-fold:

  1. Optimising divisional performance. Chile and Mexico have already undergone significant restructuring to address low margins. Profitability of the Pharmaceutical Wholesale division is currently being assessed, with plans to improve commercial operations and warehouse networks in select markets.
  2. Global review of cost base. A 16-week assessment on total spend is underway, with initial focus concentrated on the US, UK and global functions. WBA is working with Accenture and taking a zero-based budgeting approach: ultimately the outcome of each cost must align with the company's overall strategic priorities and drive growth. More detailed plans will be shared at the end of this assessment period.
  3. Digital transformation will continue to drive enhanced capabilities and lower operating costs. Partnerships are key to unlocking these opportunities. 

The plan follows a $1.5bn cost-saving initiative that was completed in in 2017.

Partnership update

Boots has acquired health tech company, Wiggly-Amps, in line with the retailer's ambitions to boost its digital offering and improve its pharmacy offer.

Wiggly-Amps creates tech-led healthcare products and services, including e-consultation platforms, self-check-in screens for patients and remote blood testing machines.

In December, WBA also announced a new partnership with Verily, a company that develops tools and devices to collect, organise and activate health data. The partnership will focus on finding innovative ways to deliver better patient care at lower costs.


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