Behind the familiar Boots stores found on most British high streets is a global group on a quest to become the world’s leading pharmacy chain and pharmaceutical wholesaler. Alliance Boots executive chairman Stefano Pessina is prioritising the US, China and Latin America in his search for growth beyond the firm’s traditional markets, where the 73-year-old says opportunities are now more limited. This strategy has borne fruit so far in 2014, with acquisitions of pharmacy chains in Mexico and Chile, alongside attaining Chinese government approval to buy a 12% stake in one of China’s big pharmaceutical wholesalers. The company has benefited from its gradual merger with the Walgreens drugstore chain. The American group acquired 45% of Alliance Boots for £4.2bn in 2012, with the option to buy the other 55% in 2015. Boots brands, including the No7 beauty range, are now on sale in Walgreens’ American stores. Pessina struck the deal with Walgreens in 2012, five years after he took Boots private in an £11bn deal with funding from private equity firm KKR and a consortium of banks. The Switzerland-based group, which has more than 3,150 shops in nine countries, partly attributed deals with Walgreens for its sales growth of 4% to £23.4bn in the year to the end of March. It reduced net debt by £1bn to £5bn – a 41% reduction from debt of £8.4bn just four years earlier, accumulated as a result of the buyout. Profits (before interest payments, tax and depreciation) were unchanged at £1.5bn. Italian-born Pessina created the Alliance Boots business in 2006 when he merged his European pharmaceuticals company Alliance Unichem with the Boots Group. The UK Boots business remains a significant source of revenue, increasing sales by 2% to £6.7bn in its latest year. The group attributes this to Boots’ multi-faceted offering, providing health and beauty shopping, opticians, pharmacies and more in its stores. However, it’s the wholesale business, operating in 20 countries, that is the greatest source of revenues, generating three-quarters of sales last year.
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