BJ’s Getting Out of Pharmacy Biz
BJ’s Wholesale Club has decided to close all of its pharmacies.
The decision to get out of the pharmacy business was made, according to interim CEO Herb Zarkin, for a number of reasons. These included the company getting into pharmacy at a later stage (2002) than its primary competitors and not having conveniently located stores (46 of BJ’s 171 stores have a pharmacy) to make it easier for consumers to pick up their prescription medicines.
“We haven’t seen the [prescriptions] grow on a regular basis,” Zarkin said. “It just didn’t make a lot of sense for us to keep on putting the investment in.”
BJ’s has also felt the effect of increased price competition, which started when Wal-Mart began pricing some older generics at $4, as well as dealing with reduced reimbursement rates from Medicare.
The announcement BJ’s is shuttering its pharmacies is likely to increase speculation of a company sale.
“There’s a very legitimate case for it being sold — they’re not big enough to compete with the Sam’s and Costcos,” David Strasser, an analyst with Banc of America Securities, told the Boston Globe.
Discussion Question: What is your reaction to BJ’s closing its pharmacies?