Fool.com: Merck and CVS Unite Internet and Retail Strengths (Breakfast News) October 6, 1999

BREAKFAST WITH THE FOOL

Wednesday, October 6, 1999

"It is much easier to be critical than to be correct."
-- Benjamin Disraeli

Merck and CVS Unite Internet and Retail Strengths

By Richard McCaffery (TMF Gibson)

Pharmaceutical firm Merck (NYSE: MRK) and drugstore leader CVS (NYSE: CVS) have struck an alliance to pool their online and retail services in a deal that highlights the strengths of doing business on the Web. It's the latest alliance in a gaggle of partnerships among companies in the pharmaceutical industry.

The agreement unites Merck, one of the world's largest prescription drug companies, with CVS, the country's largest drugstore chain. While both companies have an online presence, the partnership will unite Merck's health plan clients with CVS' retail customers.

Here's how it works. Merck-Medco, which helps provide prescription refill and renewal services for 51 million Americans through its healthcare plan, has teamed up with CVS.com to offer the same services for over-the-counter medicines and general healthcare products. CVS will also become the only online retail pharmacy that takes prescription drug orders from Merck-Medco members over the Internet for delivery through Merck's network or for pick up at CVS.

As a result, Merck-Medco gets to round out its service offering. Its customers can click on to merck-medco.com and get all their pharmacy needs handled in one place, either for delivery or pick up. Before the Web it was difficult for a manufacturer to get that close to its customers. This should build the company's brand name and grow sales.

CVS gets access to a potential customer base of 51 million prescription drug users, many of whom live in the West. CVS has about 4,100 outlets, but no stores west of the Mississippi.

News to Go

Retail giant Wal-Mart (NYSE: WMT) plans to sell airline tickets and offer travel reservation services online. In related news, the company plans to offer a Wal-Mart store credit card to be administered and financed by GE Capital, a unit of General Electric (NYSE: GE).

Chipmaker Intel (Nasdaq: INTC) is buying IPivot, a privately held manufacturer of Internet commerce equipment, for $500 million in cash to bolster its e-commerce capabilities.

Aerospace and defense company Boeing (NYSE: BA) won a 15-year, $1.3 billion contract with the Air Force to repair intercontinental ballistic missiles and aircraft guidance and navigation systems.

Chemical manufacturer DuPont (NYSE: DD) agreed to acquire computational drug discovery company CombiChem (Nasdaq: CCHM) for $95 million in cash to strengthen its pharmaceutical business.

More Foolishness

More Psychology of Investing from David Gardner... Jeff Fischer looks at the big cats in the Drip Portfolio.... And Warren Gump tackles Talbots.


Remember to start each business day with Breakfast With the Fool at 9 a.m. Let us know what you think of this feature. Send all comments and suggestions (including Foolish quotes) to the Breakfast Fools.