Walgreens Boots Alliance is not a market innovator. As a consumer retail outlet primarily for the pharmaceutical industry, the firm’s intellectual property holdings are negligible. Where industry leaders have been focused on drug-interaction detection, drug counterfeiting, customizable dosing and the like, Walgreens is dependent on the technology of others.
The majority of Walgreens’ pending patents are subtle variations on data, inventory and prescription management business methods, which offer little to no market differentiation. Virtually all of the Boots Company PLC legacy patents on store-brand cosmetics or pill packaging are expired or soon to expire. In its 2017 annual report, the company states that approximately 98 percent of its prescription sales came from managed care and governmental reimbursement programs. In other words, the majority of Walgreens Boots’ business is more a proxy for managed health care than it is a reflection of consumer products.
The selection of Walgreens for inclusion into the DJIA continues to challenge the relevance of an index branded as an “industrial average.” As index-linked investment activity continues to expand through the proliferation of exchange-traded funds and other indexing products, the increasing homogeneity of the Dow, the S&P 500 and the Russell methodologies converge on consensus insights rather than on meaningful market insights.