Walgreens Becomes a Salvage Project

Takeaway: A hundred billion here, a hundred billion there, and sooner or later you’re talking about real money.

This week, Stefano Pessina, the largest shareholder of Walgreens Boots Alliance, agreed to take the company private in a roughly $10 billion deal that will likely see it dismantled and sold for parts. "At its peak, Walgreens Boots Alliance had more than 13,000 stores stretching from Norway to Chile, Alaska to Thailand, with a market cap of over $100 billion" -- The Walgreens Billionaire Watching His Empire Come Apart, the Wall Street Journal, March 7, 2025

Wind extinguishes a candle and energizes fire.

Likewise with randomness, uncertainty, and chaos, explains Nassim Nicholas Taleb in?Antifragile, Things That Gain from Disorder.?You want to use them, not hide from them. “We just don’t want to survive uncertainty, to just about make it. We want to thrive uncertainty and have the last word. The mission is how to domesticate, even dominate, even conquer, the unseen, the opaque, and the inexplicable.”

In other words, you want to get in front of complexity, not get swallowed by it. The story for a modern strategy to tell (and sell) is The How.

Novo Nordisk on Wednesday followed Pfizer (PfizerForAll), who followed Eli Lilly (LillyDirect), to essentially “become” a direct-to-consumer pharmacy. Novo’s pharmacy brand, called NovoCare, will allow patients to pay $499 in cash per month for the weekly drug. It’s part of a bigger strategic theme: It's fairly simple to remove the constraints of channel evolution in healthcare.

The technologies and capabilities to stand up unique care and service infrastructures -- to innovate the markets in pharmacy, claims and benefit management -- are widely, easily and cheaply available to anyone with better system vision.

Which is related to the Walgreens garage sale.

From the?Wall Street Journal’s?reporting last week (Walgreens [Went] From $100 Billion Health Giant to Private-Equity Salvage Project):

“Not much has gone right for Walgreens Boots Alliance in the past decade.?

Customers bought more and more household items online at sites such as Amazon.com, instead of Walgreens’s more than 8,000 stores across the U.S. The pharmacy chain inked deals with other drug suppliers and doctors offices, but stood pat while rivals, including CVS and Express Scripts, merged with big health insurers, gaining control of the medical-reimbursement purse strings that were squeezing pharmacies.

Walgreens cash flow sagged, its debt piled up and?shares sank. And on Thursday, Walgreens?was sold to private-equity firm?Sycamore for $10 billion, down a staggering 91% from its $106 billion peak in 2015.

The storied pharmacy chain — which became a ubiquitous seller of everything from diabetes injections to nail files as retailers consolidated across the U.S. — fell after it neglected to keep up with customer preference to buy online and failed to navigate the fierce competition and intense cost pressures of healthcare.

It could shrink more after its sale. Sycamore, a New York-based firm that specializes in retail and consumer investments and, more recently, is better known for smaller deals, is expected to sell off pieces of the business or work with partners to turn it around, The Wall Street Journal reported.

Globally, the transaction ranks as one of the largest leveraged buyouts in the past decade.”

You can't iterate on a burning platform. You can't "fix" an embedded economic system. And you can't ChatGPT your way into a different peer group. 'Strategic atrophy' is a thing. We're putting the new operating (or financing) model ahead of the new thinking model.

And while you should expect any business to defend what has made it, and its shareholders, big money in the past -- UnitedHealth Group will fight to keep a $400 billion business intact; ExpressScripts will do what it takes to sustain $200 billion in annual revenue; ditto for WTW and its $10 billion book of benefits consulting business -- there is a deeper thing going on for leaders to grasp, which is this:?

The era of linear solutioning is over.

Jumping to the next ‘hundred-billion dollar growth curve’?— really big market innovation — doesn’t start by trying to “fix” the past, or make tweaks at the edges. It starts by leaping into a new orbit for imagination, with a more creative form of value alignment and positioning to spark, and then sustain, entirely new industry ecosystems (‘ ecosystem-centered market strategy’) —?here’s what that looks like using “malaria” as a use case).

Back here in the United States, in the $5 trillion system of markets we call healthcare, the whole thing will perform better with?a different “pharmacy” reimbursement/pharmacist-as-provider model?as the base layer.?This is the keystone advantage the drug market has, untapped power to reconfigure markets?in way that they rotate, and then are rewarded, around the ‘production of affordable health' as a new economic concept.?

This isn’t about buying better “utilization management" and “cost optimization” from third-party payers, who themselves are kinetically trapped, but changing the practice of medicine, and the nature of competition, at scale. It’s about inventing the automobile, not trying to feed the “horseless carriage”.

And while avoiding ambiguity and shying away from complexity is understandable, pretending it doesn’t exist is foolish at best and fantasy at worst.?It’s time to break the Standard Model of thought and inaction.?Which starts by using new words to think new thoughts.

Here’s a selection of modern strategy stories published on?Fresh Paint?this past year.

It’s all part of a meta-narrative, a master storyline from Blue Spoon, to help leaders in business and government?find strategic fit to a world that has stopped making sense (at least in conventional terms). In retrospect, these stories feel only more apposite.

How to Profit from Disorder

The capacity to ‘see, say, sell and sustain’ with better system vision is?a rich vein to mine for originality.?No magic wands, hyperspace missions, moonshots to save humanity from itself, generative AI capabilities from technology vendors promoting access to galaxies far, far away.?Just a different brand of imagination, the kind with the power to punch through and persuade.?

It's fairly simple to remove the constraints of channel evolution in healthcare.

All it takes is weird vision and professional ambition.?

/ jgs

John G. Singer is Executive Director of?Blue Spoon, the global leader in positioning strategy at a system level.?To position a modern strategy story:?[email protected]

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