When CVS Health (CVS -1.62%) said on May 14 that it would exit its clinical trial services business after just two years in operation, management at Walgreens Boots Alliance (WBA -0.93%) was quick to confirm that it would still be moving forward full speed with building out its own service. Now, the smaller pharmacy chain will have the benefit of one less major competitor trying to work with drug developers to build out their clinical trials. 

But that might not be enough to make the segment into a profitable endeavor for shareholders. Here's why. 

Why bother to get into clinical trials in the first place? 

In mid-2022, Walgreens announced that it'd be following in CVS' footsteps to start a new division -- working with pharmaceutical businesses to enroll patients for clinical trials and help organize their engagement with study staff. In the second quarter of this year, Walgreens reported that it had forged its first five contracts for clinical trials, so the plan is proceeding swimmingly.

It'll likely help with recruiting the trial cohorts from its pharmacies, both using its trove of customer data and its digital infrastructure for tracking customer prescriptions. Once the trials are ongoing, it might also help sponsors stay in touch with patients and ensure that they're complying with study requirements. 

It somewhat makes sense that a company like Walgreens might want to start providing some clinical trial services. Top-line growth is getting hard to come by, and the bottom line is struggling. While it's true that the pharmacy chain generates a massive amount of revenue from its pharmacy services, which in the second fiscal quarter of 2023 totaled $27.5 billion, over the last five years its quarterly revenue was essentially flat, and its quarterly free cash flow fell by 87% to reach $248 million.

So entering a new line of business might do the trick to drive a bit more growth. With the massive reach and widespread distribution of Walgreens' pharmacy locations, it's no surprise that drug developers might want to use its assistance for recruiting their trial cohorts. Walgreens has access to a very diverse swath of the U.S. population, with plenty of representation of people of all types and health statuses.

And because it already has the information from its customer base, it can potentially help streamline the onerous clinical trial recruitment and onboarding process, perhaps by excluding ineligible people automatically rather than requiring study staff to manually examine their data and make the call. 

But is this going to be enough for the company to succeed in its goals, and what would that success (or failure) mean for shareholders? 

Don't buy Walgreens just because CVS is exiting this niche

It's important to remember that CVS had all of the same advantages as Walgreens does when it comes to supporting clinical trials. And at the moment, it's clear that the segment is not a high priority for management, as mentions of it are quite scarce amid recent earnings calls, press releases, and other investor materials.

Expanding its new primary care services and deepening its offerings at every link in the care chain are objectives that are almost certainly going to get more resources and attention allocated. Nor is the clinical trial business something that's do-or-die; as it's envisioned currently, it'll probably be a small contributor to revenue, though with time it could be a relatively high-margin activity compared to the company's others. 

So Walgreens' persistence when CVS decided to quit is hardly a reason to buy the stock. As of right now, there isn't much reason to believe that it has any special sauce that'd allow it to flourish in a market where CVS didn't, but it doesn't have any additional obstacles either.

The clinical trial services initiative is still in its infancy. A lot could change about its economic proposition to shareholders over the next few years, especially as more biopharma players might be attracted by success stories from current customers. It's entirely possible that CVS' move to leave will eventually be seen as a blunder. 

But until investors have a bit more information about the financial impacts of recruiting for the trials, there's not much reason to believe that success would change much for Walgreens. Keep an eye out for leaders discussing revenue and costs from clinical collaborations to see if that changes. If it does, it could be a key element of this company's growth strategy, which might well nudge it closer to being a buy for the average investor than it is today.