United Drugs and Associated Pharmacies merger to combine strengths

Behind the decision by United Drugs and Associated Pharmacies to merge is one overriding theme: a national, integrated cooperative of more than 2,000 pharmacies all rowing in roughly the same direction is a force to be reckoned with.

In today’s economic maelstrom, it may also mean the difference between success and failure for many of the independent pharmacy operators operating under the combined United-Associated umbrella.

This economy -- which is chewing up many smaller businesses, drying up demand for all manner of goods and services, and throwing hundreds of thousands of workers a week off corporate payrolls -- leaves little room for error. And the financial meltdown makes operating an independent drug store -- not an easy proposition in the best of times -- a daunting prospect. Any combination of buying and marketing co-ops that can boost efficiencies and/or beef up the menu of services or purchasing clout of their members has to be a topic of serious consideration.

What’s more, merging the memberships of United and API creates one of the nation’s largest independent pharmacy networks, on a par with McKesson Corp.’s Health Mart franchise operation, Cardinal Health’s Leader umbrella program for independents and its Medicine Shoppe franchise pharmacy brand, or AmerisourceBergen’s Good Neighbor Pharmacy store-service and branding program. Only a handful of drug, supermarket or mass merchandise chains field as big a store network.

But many questions remain, even assuming the merger is approved. Among them: how will the combined programs squeeze new operating efficiencies and a stronger service program for their members out of their marriage? What additional steps need to be taken in this kind of unforgiving market to unite the 2,000 pharmacies under a stronger marketing, advertising and branding umbrella? Will there be a unified national advertising and pricing strategy? And, finally, will the members of both groups embrace the combination as a long-term benefit to their business?