Public Health and Private Equity: The Implications of Walgreens' Buyout for Future Pharmacy Care

Pharmacies serve as essential healthcare access points, acting as vital links between individuals and their health services. This importance extends beyond their role as retail stores, affecting public health outcomes and the delivery of medical needs.

The evolving landscape of pharmacy ownership and management is critically tied to public health policy and economic strategies. Patrick Aguilar, a professor specializing in medicine and business, recalls his firsthand experience working as a pharmacy technician at Walgreens in West Texas in 2003. His daily tasks involved handling extensive prescriptions, deciphering handwritten doctors' notes, and navigating insurance complexities—highlighting how pharmacy operations directly influence community health.

Today, Walgreens, one of the largest pharmacy chains globally, filled nearly 800 million prescriptions in 2024. Recently, the company announced a significant shift: it would be acquired by private equity firm Sycamore Partners for $10 billion—representing only 10% of its peak market valuation—and was taken off the public stock market for the first time in nearly a century.

This acquisition underscores broader questions about the future of pharmacy care in the context of private equity involvement. The move signals a potential shift in ownership strategies that could fundamentally impact how pharmacies operate and serve the public.

The history of Walgreens reflects its growth since its founding in 1901, with expansions through the 20th century and a merger with Alliance Boots in 2014. However, recent challenges have tested the industry: rising labor costs, declining sales of non-prescription retail goods, and increased financial pressures from pharmacy benefit managers, which govern drug pricing and reimbursement.

These pressures have led to the closure of nearly one-third of U.S. retail pharmacies since 2010, raising concerns about access and quality of care.

The involvement of private equity firms like Sycamore introduces new dynamics. Such firms typically aim to improve efficiency and profitability within a 5-7 year window, often through cost-cutting measures and restructuring. While this approach can generate significant returns—as seen in examples like Dell Technologies and Hilton—criticisms persist regarding its impact on employment, innovation, and long-term strategic growth.

For Walgreens, the deal involves plans to split into three units—U.S. pharmacies, U.K. pharmacies, and U.S. primary healthcare via VillageMD. This strategy echoes previous private equity moves, such as with Staples, focusing on targeted restructuring to boost financial performance. Given VillageMD’s recent financial struggles, this move may serve as an opportunity for targeted investment and revitalization.

Financially, Sycamore’s purchase reflects a calculated risk, with 83.4% of the acquisition financed by debt—raising concerns about the potential prioritization of debt repayment over innovation and service quality. The company's plan to split Walgreens into separate units is aimed at streamlining operations and enhancing value but also symbolizes a shift in traditional pharmacy management.

The long-term success of this transition hinges on balancing profitability with maintaining accessible, high-quality healthcare services. While private equity’s involvement might modernize retail pharmacy operations and improve efficiency, critics worry about its emphasis on short-term returns potentially undermining ongoing innovation and community health provision.

Ultimately, Walgreens’ evolution under private ownership will influence the landscape of American pharmacy care—and its impact will resonate with the millions who depend on neighborhood pharmacies for their health needs.