USA Drug Sale Sparks New Competition From Independent Pharmacists

by George Waldon  on Monday, Oct. 1, 2012 12:00 am  

Terry and Jennifer Perkins are opening Oak Grove Pharmacy JFK in the aftermath of the USA Drug sale. (Photo by Jason Burt)

On first impression, the $438 million sale of the USA Drug chain to Walgreens looks like a case of corporate consolidation complete with the loss of jobs and consumer choices.

However, behind the scenes, smaller operators are rushing to fill the void that one described as "exciting." The largest drugstore chain based in Arkansas, with locations in a seven-state region, is gone, but entrepreneurial-minded pharmacists hope to profit from the market shift.

"What you're going to see in the next six months are some independent pharmacies opening up," said Terry Perkins, owner of Oak Grove Pharmacy in North Little Rock. "The public will really benefit from it."

The details are still taking shape concerning exactly where and when those new pharmacies will crop up in the wake of the LaFrance family's sale to Walgreen Co.

Some of the former USA Drug pharmacists who lost their jobs in the merger are expected to begin returning to the market by year's end. For now, they are sitting on the sidelines, collecting severance pay, some as lucrative as a year's salary, and waiting out non-compete terms woven into their severance packages.

Twenty-eight drugstores in Arkansas are among the 76 locations that will close as part of the cash transaction.

The in-state locations range from Prescott in the southwest to Bentonville in the northwest to Paragould in the northeast. Little Rock is home to five of the 28 USA Drug and Super D locations merging with other Walgreens.

Perkins counts himself among those who intend to make inroads behind the big corporate deal that removed one of the largest regional drugstore chains as a player and merged it with the largest drugstore chain in America.

He is in the process of opening Oak Grove Pharmacy JFK across the street from a USA Drug Express at 5209 JFK Blvd., a leased North Little Rock location that won't be retained by Walgreens.

Perkins is literally positioning his new 2,400-SF store in leased quarters to replace the nearby USA Drug Express in hopes of attracting its former customers. His new drugstore at 5308 JFK Blvd., which will employ two pharmacists, should be open for business by mid-November or early December at the latest.

"As soon as I heard that Walgreens and USA Drug were brokering some kind of deal, I thought more pharmacies would be needed," said Perkins, a pharmacist since 2003. "I knew they would be absorbing those smaller stores down the street from their big boxes."

The USA Drug Express at 5209 JFK is less than a quarter-mile north of a Walgreens at the intersection of McCain and JFK boulevards. Walgreens also operates at the corner of JFK and Kiehl Avenue in Sherwood to the north and at McCain and North Hills Boulevard to the east.

A leased USA Drug location in the Lakewood Village shopping center on McCain near North Hills and the USA Drug Express located in a building owned by the LaFrance family at 1300 E. Kiehl Ave. in Sherwood also will close as part of the Walgreens assimilation.

Perkins said that free local delivery and compounding specialty prescriptions for customers are services that will set his new North Little Rock drugstore apart from Walgreens.

His shelves will feature a different mix of goods, with a heavier dose of medicine products and less general merchandise. Though dwarfed in size by Walgreens, he isn't intimidated to compete with the biggest of the big boys and believes he can beat them with personal service.

"It's not bad at all because they make people angry, and I make them happy," said Perkins, a second-generation pharmacist with an aunt and uncle who also are pharmacists.

His father, Hugh, owns Medicine Man Pharmacy in North Little Rock. The elder Perkins said the USA Drug acquisition is opening the doors of opportunity for independent pharmacists to gain some extra business.

"New independents will likely come in at a rate we haven't seen before," Hugh Perkins said. "The number of independents has been in the decline.

"It's going to be one of the bigger changes I've seen in my 35 years. It's going to be exciting for some entrepreneurs."

Cornerstone Pharmacy, which operates six pharmacies in the Little Rock area and northwest Arkansas, also is working on a deal to open a JFK location.

"From what I hear, there a lot of people looking to jump out there," said Aubrey Harton, a pharmacist and partner in the Cornerstone pharmacy at 1811 Rahling Road in west Little Rock.

W.P. Malone Inc. of Arkadelphia, which operates a chain of 17 drugstores in Arkansas, is in the process of opening a new pharmacy in Heber Springs. But that deal was in the works for some time and just happens to coincide with the USA Drug-Walgreens transaction.

"When this announcement came, I began to look at other possibilities," said Percy Malone, a pharmacist and owner of W.P. Malone. "There are a lot of good pharmacists looking for opportunities, and I have talked with some of them.

"The key is who's in the pharmacy taking care of the people in the neighborhood. It's the people in the building who make a difference, not Percy Malone."

Like others, Malone expects a rash of new pharmacies to crop up to replace some of the USA Drug locations. Several potential partnerships with a local pharmacist are in the offing, he said.



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