SOURCE: Paragon Financial Limited

Paragon Financial Limited

November 10, 2011 08:16 ET

Rise of Generic Drugs Helps Boost Top Lines at Rite Aid and Walgreen

The Paragon Report Provides Equity Research on Rite Aid & Walgreen

NEW YORK, NY--(Marketwire - Nov 10, 2011) - The drug store industry has been showing signs of recovery in recent months as efforts to cut costs and streamline operations have started to boost bottom lines. While the unfortunate unemployment situation is hurting consumer confidence, the drug store sector has been using promotional activity to help lure cash-conscious consumers. The Paragon Report examines the outlook for companies in the Drug Stores Industry and provides investment research on Rite Aid Corporation (NYSE: RAD) and Walgreen Co. (NYSE: WAG). Access to the full company reports can be found at:

Recent generics coming to market seem to be one reason the sector is selling more drugs. The problem with generics is that they actually lower revenue due to their lower costs. They are ultimately more profitable though. Revenue increases are instead coming from bigger basket-size and front of the store sales as there is a movement towards a more comprehensive offering of health-care services that seeks to make drug stores into more of a one-stop location where consumers can get vaccinations, prescription medicines and groceries.

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Recently Rite Aid reported an increase of 2.9% in same-store sales for the four-week period ended October 22, 2011. Increase in comparable store sales were primarily driven by increased prescription counts and growth at pharmacy and front-end same store sales. Total drugstore sales increased 2.8% year over year for October 2011. In the four-week period, prescription revenue contributed roughly 70 percent of drugstore sales while third party prescription revenue accounted for 96.4% of pharmacy sales.

Walgreens, meanwhile, had October sales of $6.13 billion, an increase of 4.7 percent from $5.86 billion for the same month in fiscal 2011. October pharmacy sales increased 4.6 percent, while comparable pharmacy sales increased 3.1 percent.

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