In this issue Mass Market Retailers takes an in-depth look at Walgreen Co.’s upcoming merger with Alliance Boots.

In this issue Mass Market Retailers takes an in-depth look at Walgreen Co.’s upcoming merger with Alliance Boots.

Although the two-part transaction, the second phase of which is expected to be finalized early next year, has garnered its fair share of attention, it is instructive to consider just how big a change it represents, both for the company and for the retail pharmacy business as a whole.

A reminder of the scale of the deal came just as this issue was going to press, when Walgreens offered $8 billion in unsecured notes, the fifth-largest sale of corporate debt in history. The proceeds will be used to fund the $21.6 billion acquisition of Alliance Boots, creating a health care and retail entity with 11,000 stores (excluding the 1,400 units in Mexico and Central America that Alliance Boots is in the process of buying) and 370 distribution centers in more than 20 countries.

That’s quite a transformation for Walgreens, whose leaders for many years were known for their conservative approach to the business and expressed little interest in the idea of expanding beyond the United States. That started to change when Greg Wasson was named chief executive officer in February 2009. His efforts to reinvigorate the company, particularly at the front end, caused Walgreens to look at retail developments overseas.

The process brought Wasson and his colleagues into contact with Alliance Boots, whose executive chairman, Stefano Pessina, had for many years pursued an international strategy in Europe and Asia. Recognizing the opportunity presented by their complementary geographic footprints and capabilities, the two organizations started on a path toward a full merger in 2012.

The combination has already fundamentally altered the way the major players in community pharmacy and drug distribution think. It no doubt influenced McKesson’s decision to buy Celesio, a leading pharmaceutical wholesaler in Europe, and CVS Health’s acquisition of Drogaria Onofre, the eighth-largest drug chain in Brazil, and its generic sourcing partnership with Cardinal Health.

Like Walgreens and Alliance Boots, those organizations understand the importance of scale in the efficient delivery of pharmacy care. By positioning themselves to compete more effectively in an increasingly global marketplace, Walgreens and Alliance Boots have raised the bar — and the stakes — for everyone.