DRUGSTORE.COM: Rite Aid, GNC Buy 33% Stake
Rite Aid Corp. yesterday announced the purchase of a $7.6 million, 25% stake in the online pharmacy Drugstore.com, as the flow of brick-and-mortar drugstores onto the Internet picks up speed. Rite Aid ally General Nutrition Centers Inc. also picked up a $2.4 million, 8% stake in Drugstore.com, which has become one of the most heavily traveled online pharmacies with the help of Amazon.com, which owns 40% of the company. The move, which follows CVS Corp.'s purchase of Soma.com last month, "underscores the difficulties Internet drugstores are having in contracting with managed care companies," and "runs counter to investors' views ... that Internet companies could put a big dent in traditional drugstore sales." The Wall Street Journal reports that under the deal, Drugstore.com will "be able to do business with all of Rite Aid's customers," including those under managed care contracts; the 56 million customers in Rite Aid's PCS pharmacy benefit manager will have to go through Drugstore.com if they want to fill prescriptions over the Internet; and Drugstore.com customers will be able to have drugs mailed to them or pick them up at Rite Aid stores (Berner, 6/23). Jupiter Communications analyst David Restrepo said the PBM link could pay off big for Drugstore.com. He said, "This gives Drugstore.com something that none of their competition has and that is huge for them. This puts them well in the lead of everyone else trying to sell prescription drugs online." The deal is subject to regulatory approval, and is expected to close this summer (Beck, AP/Philadelphia Inquirer, 6/23).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.