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Merger reshapes drug store market Acquisition of Eckerd gives Rite Aid commanding presence among local drug chains

Pharmacists and shoppers say they see opportunity as Rite Aid takes over the Eckerd drug stores it acquired when it completed its $4 billion takeover earlier this month.

That deal gave Rite Aid a larger presence in Western New York than the other bigger, Walgreens and CVS chains.

And while the acquisition reduces the number of major drug store chains in the Buffalo Niagara from four to three, the competition for prescription dollars still is intense, ranging from chain drug stores and independents to big box discount stores and grocery stores.

"Even though they have a larger market share, it's still less than 50 percent," said Douglas Hoey, speaking about the local market from the office of the National Community Pharmacists Association. The group represents 23,300 independent member stores from Alexandria, Va.

"I don't know that there's going to be a huge impact," said Hoey, the group's senior vice president. "You talk to patients, they really value that relationship with the pharmacist."

A local survey found that even before the Eckerd purchase, Rite Aid came close to being the region's most popular choice for shoppers filling prescriptions for health and beauty items.

Local shoppers visited Tops 42 percent of the time, edging out Rite Aid at 41 percent, according Scarborough Research. Eckerd ranked as the fifth most-visited chain, at 29 percent, trailing Wal-Mart's 36 percent and Wegmans at 30 percent. Survey takers could choose more than one chain.

Rite Aid fans should have an easier time finding stores from among the 81 now in Erie and Niagara counties. As the transition of 32 former Eckerd's unfolds in the next 16 months, the 81 independently owned pharmacies in the two counties also hope to lure any customers who may decide they're disenchanted with change.

While pharmacists at independently owned stores say they hope the enlarged corporate chain will have a harder time giving the kind of customer service they specialize in, stores of all kinds are eager to find a way in to a bigger share of the growing prescription drug business. Prescription drug sales nationally rose 7 percent in 2005 to $252 billion, according to the National Association of Chain Drug Stores. (NACDS)

Rite Aid grew to 5,100 stores nationwide by adding 1,854 Eckerds and Brooks pharmacies. This fixes it in third place behind Walgreens, at 5,807, and CVS at 6,200.

"It puts them in the big leagues with the big competition," said Laura Miller, senior economist at the NACDS in Alexandria, Va.

Miller said she doubted the increase in Rite Aid's size would be a disadvantage to customers. "It shouldn't make a difference because all of the large chains accept all of the insurers," she said. "You always have a choice of another store to go to."

Rite Aid says it will try to keep customers from going elsewhere by keeping Eckerd workers on staff.

"The associates are critical to the success of the integration and acquisition," said Ashley Flower, a spokeswoman at the company's headquarters in Camp Hill, Pa.

The changes that are ahead for former Eckerd stores include adding some 8,000 new "private brand" items to store shelves and hiring more people to assist pharmacists. "It's our priority to limit disruption," Flower said.

To foster competition that the Rite Aid-Eckerd purchase might diminish, government regulators announced months ago that they had asked Rite Aid to sell 26 stores that were too close an Eckerd's or Brooks.

Four in Western New York made the list. As a result, a Grand Island Rite Aid, once less than a third of a mile away from an Eckerd on Grand Island Boulevard, is now a Medecine Shoppe. That company was also the buyer of a former Eckerd in Le Roy. In Yorkshire, in Cattaraugus County, a Rite Aid was sold to Walgreens. (Information about the sale of a Wellsville Eckerd was not yet available, according to the company.)

In another government effort to help people take advantage of drug store options, the state attorney general's office posts prices of various drugs at different stores at Login and check the range of prices for, say Ambien or Zoloft, within 10 miles, or more, of a zip code.

"It arms consumers with the best knowledge to go and find the best prices," said Lee Park, a spokesman for attorney general's office. "It's an effective way to restore competition."

For Marguerite Galante, of Buffalo, it is convenience and array of sundries that draw her to Rite Aid, not drug prices.

She has insurance that directs her to Walgreens or Rite Aid and she prefers the latter for its wide selection. But Rite Aids were never as close as the Eckerds near her winter house in Arizona and her daughter's place in New Jersey.

Now stopping in will be easier when she leaves Buffalo. "I was really, very happy," said Galante, as she loaded Rite Aid bags with cosmetics and candy into her trunk at the Rite Aid on Sheridan Drive, near Colvin Boulevard. "This makes it really nice and convenient."

For Brad Arthur, a pharmacist who owns the Black Rock Pharmacy his father founded on 431 Tonawanda Street in 1959, the Eckerd less than a mile down the street has long been a source of serious competition. Now there's hope for change.

Another pharmacist owned that store before he sold to Eckerd. He's stayed on staff ever since and has an enduring reputation for good customer service.

"I'm trying to induce him to retire," Arthur said with a smile. If Rite Aid changes things, and service becomes impersonal, perhaps unhappy costumers will come Arthur's way.

"It all depends how committed they are," he said of Rite Aid.

Arthur said he is proud that he can take the time out to counsel patients about how to treat illness with drugs, as he did for one woman who came in to talk after her doctor diagnosed her with breast cancer.

At the Eckerd-turned-Rite-Aid down the street at 801 Tonawanda, customers say they keep coming back to the store with narrow aisles for that same kind of personal attention.

"They're always helping me with questions," said Teresa Coto, after she got out of her car. "That's what I like . . . I just hope it stays like that."



Rite Aid takes over Eckerd

Merger of drug store chains expands Rite Aid's presence in the Buffalo Niagara region

*Merger gives Rite Aid 111 stores in the eight counties of Western New York.

*Rite Aid agreed to sell four Western New York stores in Grand Island, Yorkshire, LeRoy and Wellsville to spur competition in those markets.

*Nearly $4 billion deal gives Rite Aid 5,100 stores, making it the No. 3 U.S. drug store chain, behind CVS Corp. and Walgreen Co.

MAP (see microfilm)

Rite Aid (49)

Eckerd (32)

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