Walgreens Boots Alliance CEO Stefano Pessina says the drugstore giant’s partnership with Microsoft will help create an “ecosystem” connecting its drugstores to patients, their insurers and local medical care providers in communities.
In an interview Tuesday morning following the blockbuster announcement that Walgreens has formed a strategic partnership with Microsoft, the Italian billionaire said Microsoft’s products, which include the Azure cloud and artificial intelligence platform, will help Walgreens improve the customer and patient experience as the two giants develop new healthcare delivery models, technology and solutions to help manage chronic conditions. Financial terms of the partnership weren’t disclosed.
“Together, we will reach out to other players in the space to create a true ecosystem that will be really able to facilitate the lives of our customers,” Walgreens CEO Pessina said in a telephone interview. “Without a big technology company behind you, it will not be possible.”
Walgreens is banking on the future healthcare consumer having more control of their choices than they do now. There’s a need, Walgreens and Microsoft say, to more fully integrate the healthcare system through the use of data and the two companies hope to do that through “next-generation health networks, integrated digital-physical experiences and care management solutions.”
“If we put together our network with a cloud and the AI solutions that Microsoft has, we can become a powerful instrument to serve our customers,” Pessina said.
Walgreens and Microsoft say they have each made a multiyear research and development investment to “build health care solutions, improve health outcomes and lower the cost of care.” As part of the partnership, Walgreens will roll out 12 pilot “digital health corners” this year that are “aimed at the merchandising and sale of select health care-related hardware and devices,” the companies said.
These health corners, Pessina said, will provide “digital tools” that can be used by customers to help provide “solutions for chronic conditions and lifestyle” and help them manage their diseases like diabetes.
For both Microsoft and Walgreens, the partnership will help them compete with and potentially fend off online retail giant Amazon as it becomes more interested in providing healthcare services. Amazon last year bought the online pharmacy Pillpack and is also working on ways to improve healthcare and reduce costs in a partnership with JPMorgan and Warren Buffett’s Berkshire Hathaway for more than 1 million employees.
Walgreens also faces a new threat following rival drugstore chain CVS Health’s acquisition of Aetna, the nation’s third largest health insurance company. Retailers are looking to rapidly grow their healthcare businesses as a way to offer lower cost services and treatments as U.S. consumers battle rising health insurance premiums.
But Pessina isn’t enamored with big acquisitions like CVS Health’s purchase of Aetna. Instead, Walgreens under Pessina has formed myriad partnerships to achieve its goals and strategy. In the last year, Walgreens has partnered with the grocer Kroger, the diagnostic test company LabCorp and is developing senior health clinics with the health insurer Humana.
“We need to be flexible,” Pessina said.
Walgreens said it will work with Microsoft to connect the drugstore giants stores and clinics to consumers “wherever they are,” allowing customers to access digital services like virtual care when they need it, the companies said.
“Improving health outcomes while lowering the cost of care is a complex challenge that requires broad collaboration and strong partnership between the health care and tech industries,” Microsoft CEO Satya Nadella said “Together with Walgreens Boots Alliance, we aim to deliver on this promise by putting people at the center of their health and wellness, combining the power of the Azure cloud and AI technology and Microsoft 365 with Walgreens Boots Alliance’s deep expertise and commitment to helping communities around the world lead healthier and happier lives.”