Brewer’s Jump to Walgreens Means Female CEOs Rule U.S. Pharmacies
(Bloomberg) -- When Rosalind Brewer takes over as chief executive officer of Walgreens Boots Alliance Inc. in March, the three largest U.S. pharmacy chains will be led by women for the first time.
With women dominating health-care spending in the country, it seems long overdue.
"That's something that always surprised me: That drug retail has been run by men when primarily their customer base is female," said Lisa Gill, a health-care analyst who covers Walgreens, CVS Health Corp. and Rite Aid Corp. at JPMorgan Chase & Co.
The ascendance of Brewer and Karen Lynch, who takes the top job at CVS next month, coincides with the imminent and daunting challenge of administering Covid-19 tests and vaccines amid the pandemic. The new CEOs — along with Heyward R. Donigan, who has led Rite Aid since 2019 — also need to ensure their companies find growth in the digital age.
Women tend to make health-care decisions for their households, Gill said, often managing their children and elderly parents' health. The U.S. Department of Labor estimates mothers make 80% of the decisions for their children’s health care.
Rite Aid specifically says it's targeting women between the ages of 25 and 49 because they take care of themselves and their families, meaning their dollar goes well beyond one customer. Seventy percent of the members of Rite Aid's loyalty program are women, according to CEO Donigan.
“We all are looking at the business with a very fresh set of eyes from the lens of a female consumer," she said in an interview. “The sky's limit as to how we can reshape the traditional retail drug-store business.”
Women are also better represented across the health-care industry than they are in corporate America — with 60% of entry-level jobs, almost half of senior manager jobs and close to a third of C-suite roles — according to an August 2020 McKinsey & Co. study on the industry. Women outperform men in promotions to the C-suite, often via hires from outside the industry, but still lag behind men in promotions in many other segments of leadership, McKinsey found. Women also run GlaxoSmithKline Plc, the world’s biggest vaccine maker by revenue, and health insurer Anthem Inc.
The moves by Lynch and Brewer into their companies’ top spots come as women still make up less than 6% of CEOs of S&P 500 companies. Brewer is the first Black female CEO of an S&P 500 company since Ursula Burns left Xerox in 2016.
The three chains are jostling to become health destinations. Rite Aid is refreshing its brand and overhauling its inventory to attract wellness-conscious customers. Walgreens has doubled-down on its pharmacy focus with the recent sale of its European drug distribution business, particularly its omnichannel offerings. And CVS, following its 2018 acquisition of health insurer Aetna, is renovating a portion of its locations into HealthHubs that offer convenient health services.
The pharmacy chains are playing a big role in the pandemic response. Walgreens, CVS and Rite Aid are offering coronavirus testing at some of their stores and are slated to immunize millions of people at thousands of locations across the U.S.
Brewer, with her career at Walmart Inc. and then Starbucks Corp., comes from the retail world, without health-care experience, while Donigan and Lynch took more-traditional routes to leadership for the industry through previous health-care and insurance roles, according to Bloomberg Intelligence analyst Jonathan Palmer. The companies have been making clear decisions to promote women into more powerful roles. Outgoing Walgreens CEO Stefano Pessina has a strong track record promoting women and CVS also has a woman as chief financial officer, Palmer said.
Billionaire Pessina, who orchestrated the merger of Walgreens and Alliance Boots and has been CEO of the combined company since 2015, said in July he planned to hire a new leader and move to the role of executive chairman. Part of Brewer’s new role will involve figuring out how to share power with Pessina, who still owns more than 16% of the Deerfield, Illinois-based company.
Brewer’s digital expertise made her an ideal candidate to oversee the company’s transformation, Pessina said in an interview Tuesday. That and her leadership skills will make up for her lack of experience in health care, he said.
Lynch, who moves to CEO job from her roles as executive vice president of CVS Health and president of Aetna, has also run CVS’s health response to Covid-19 since March 2020. She came to CVS as part of the 2018 purchase of Aetna. Like Donigan, she also worked previously at Cigna Healthcare.
Donigan was also seen as an outsider at Rite Aid when she took the helm, as a digital health executive with little retail background. Since then, she has made transforming Rite Aid's retail presence one of her main priorities. Upon her arrival, the cash-strapped company's stores looked dilapidated and carried outdated products.
The unprecedented role of women in leadership in health-care retailing will undoubtedly mean change, said Gill from JPMorgan.
"With women at the helm, they're going to have a much stronger view of what they want and how they want it delivered," she said.
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