Of the people interviewed for this issue, Stefano Pessina may well have the biggest impact on Central Pennsylvania in 2016.
The billionaire is CEO of Walgreens Boots Alliance, which is aiming to complete a $17.2 billion acquisition of Cumberland County-based Rite Aid Corp. by next year.
Despite a busy international travel schedule, the Italian-born pharmaceutical magnate took time to answer questions about his early life, his rise to prominence and what the proposed merger could mean for Rite Aid, one of Pennsylvania’s 18 Fortune 500 companies.
Pessina, 74, also reflected on what other international opportunities could beckon for his Illinois-based corporation.
Q: Your academic training was in nuclear engineering. Do you ever regret not pursuing a scientific career? And how did that training ultimately prepare you for your life’s work in the pharmaceutical industry?
Lives: Monte Carlo, Monaco
College: Polytechnic University of Milan
Career recap: Pessina took over his family’s Italian pharmaceutical business four decades ago. He expanded it through a series of mergers and acquisitions, including a 2005 union with venerable British chain Boots. Merged with U.S.-based Walgreens in a two-step process that was completed in 2014. He became CEO of Walgreens Boots Alliance in July 2015 after a period as interim CEO.
A: I don’t regret it at all.
I actually started out in academia for a period of time after obtaining my degree, but moved to a private research firm and got my first taste of working in a large company. When I decided to get involved with my family’s business, and had the opportunity to run our pharmaceutical wholesaling company, I took it and never looked back. I think my studies were very useful, and I often say that my engineer mindset is still very much with me: I like building things, understanding how things work and trying to make them work most efficiently.
Which of your professional accomplishments to date are you most proud of? Which has been the most challenging?
We’ve been fortunate to have a number of important events in the evolution of our company … and frankly each of them, especially those that I call ‘transformational deals,’ have been instrumental steps to get where we are today. And then each of them came with its own challenges that we had to overcome. You could say that, for example, the choice to go international and expand from Italy was a key passage, but equally the merger with Boots when we were Alliance Unichem was crucial for our growth. And so was our deal with Walgreens; without it, we would not be the global company we are now.
So, sorry I can’t pick one.
However, I can tell you that I am proud of how we have built a strong leadership team for this company. They work very well together, some have done so for many years, but also we’ve managed to add fresh talent every time new companies joined the group. I consider this a great success, and I intend to continue cultivating the team and including new valuable people as we encounter them.
Speaking of the Rite Aid deal, you have said the goal is not to seek increased negotiating power vis-à-vis insurers and benefits managers. But is such increased bargaining power a likely outcome? And if so, how would that benefit the corporation — and consumers?
The Rite Aid acquisition will not change the rules of the game with insurers and PBMs. There continues to be a wide choice of pharmacies and mail order in the market, and that won’t change. The industry will remain very fragmented. This acquisition won’t give us any additional advantage with insurers and PBMs, and we didn’t include any such potential advantages in our analysis of the transaction.
Decisions about integrating the two companies “will be made over time,” a Walgreens corporate statement indicated. Do you have a vision for how long the Rite Aid brand might ultimately survive separate from Walgreens?
For now, Rite Aid is expected to initially operate under its existing brand. Overall, our goal will be to create a fully harmonized network of stores, which can be achieved in a variety of ways and not only by having the same store brand across the network. For example, many years after the Duane Reade acquisition and integration with Walgreens, the New York stores still trade under their popular Duane Reade brand. In some locations, the Rite Aid brand is especially popular with customers and frankly more recognizable than the Walgreens brand.