Alliance Boots and Walgreens expansion into China an "obvious next step," says EIU analyst

Following the news that Alliance Boots and the USA’s Walgreen, which initially took a 45% stake in the UK-based retailer and pharmaceutical wholesaler for $6.7 billion, with an option to buy the remainder (The Pharma Letter June 20, 2012), plan to expand into China, Ana Nicholls, healthcare analyst at The Economist Intelligence Unit, commented: “China is the obvious next step for Boots and Walgreen, now that they dominate the US and European markets.

The view was expressed after Alliance Boots’ chairman, Stefano Pessina, speaking on the sidelines of the Fortune Global Forum in Chengdu, said that he was scouting for deals in China that could lead to Boots chemists becoming a fixture in the country, reported the UK Times newspaper. It has already made substantial inroads in China since he began looking at the market a decade ago, announcing a wholesaling joint venture, Guangzhou Pharmaceuticals, in 2007 and taking a stake in Nanjing Pharmaceutical, a distributor, last September. Last month, the Financial Times also reported on the groups’ interest in China (The Pharma Letter May 7).

Ms Nicholls noted that Chinese demand for pharma is set to rise rapidly - by an average of 17.9% a year in 2013-17 in nominal local-currency terms, according to EIU forecasts. Demand for Boots toiletries and consumer healthcare products should be almost as strong, at around 12% a year, according to a recent report from the EIU in combination with Mintel.