Through TheFLY's Eyes: Wal-Mart

from Theflyonthewall.com











Wal-Mart Sets Its Sights On The Generic Drug Market


Analysts Thursday at mid-day were still trying to assess the long-term implications of Wal-Mart’s (WMT) announced plan to offer nearly 300 generic drugs for $4 per prescription.

Wal-Mart has promoted the plan as a way to make health care more affordable. WMT will test the plan at its Tampa Bay-area pharmacies, then expand the program throughout the rest of Florida in January 2007, followed by country-wide expansion during 2007. Analysts believe WMT should see an up-tick in traffic - attracting consumers who never shopped at WMT before - although it’s difficult at this early juncture to predict the program’s long-term traffic implications.

Short term, the plan’s trading impact on prescription benefit managers was negative: WMT’s announcement sent several key prescription benefit managers tumbling in early afternoon trading Thursday, on margin pressure fears, among other concerns. Trading volume was above-average, across the segment.

Medical Health Solutions (MHS) plunged $2.25 to $60.64, as did Caremark (CMX), which slid $2.98 to $56.13 and Express Scripts (ESRX), which dove $3.39 to $80.56. Drug wholesalers AmerisourceBergen (ABC), down $2.17 to $44.04, and McKesson (MCK), down $1.09 to $52.87, and Cardinal Health (CAH), down $2.41 to $66.28, were also hit hard.

Meanwhile, WMT slid 41c to $48.48.