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Plumb's Drugs, Rexall in [[Bellefonte, Pennsylvania]]
Plumb's Drugs, Rexall in Bellefonte, Pennsylvania

Key Information

Rexall was a chain of American drugstores, and the name of their store-branded products. The stores, having roots in the federation of United Drug Stores starting in 1903, licensed the Rexall brand name to as many as 12,000 drug stores across the United States from 1920 to 1977. The "Rex" in the name was derived from the name of Ellen M. Regis—"Regis" being Latin for "of the king"—who developed "Rexall remedies" and from whom the company purchased the mark.[1]

Founding

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In 1903, Louis K. Liggett persuaded 40 independent drug stores to invest $4,000 (~$111,786 in 2024) in a retailers' cooperative called United Drug Stores, which sold products under the Rexall name. After World War I, the cooperative established a franchise arrangement whereby independently owned retail outlets adopted the Rexall trade name and sold Rexall products. The company was based in Boston,[2] in an area now occupied by Northeastern University.

Rexall Train

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Postcard photo of the Rexall Train

The Rexall Train of March to November 1936 toured the United States and Canada to promote Rexall drug store products and to provide the equivalent of a national convention for local Rexall druggists without the cost of travel. Free tickets for locals to see displays of Rexall products were available at local Rexall drug stores. The 29,000 mile tour visited 47 of the 48 contiguous states (omitting Nevada) and parts of Canada.

A streamlined steam-powered 4-8-2 Mohawk locomotive (No. 2873) from the New York Central Railroad hauled the similarly streamlined blue-and-white train of twelve air-conditioned Pullman cars. Four of the cars contained displays, four contained convention facilities and one housed a dining car. The train was the million-dollar brainchild of Louis Liggett, who traveled in an observation car at its rear.[3]

Growth

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Rexall Drug Store at Rock Rapids, Iowa (2006)
Rexall Drug 120 Panchromatic High Speed Film (1960s)

Justin Whitlock Dart, formerly of the Walgreens drugstore chain, took control of Boston-based United Drug Company in 1943. The chain operated under the Liggett, Owl, Sonta, and Rexall brands, which Dart rebranded under the Rexall name.

Rexall gained national exposure through its sponsorship of two famous classic American radio programs of the 1940s and 1950s: Amos and Andy and The Phil Harris-Alice Faye Show. Both shows were often opened by an advertisement from an actor (Griff Barnett) portraying "your Rexall family druggist", and included the catch phrase "Good health to all from Rexall." They also sponsored the Jimmy Durante Show and references are made by the character Mr. Peavey in some of The Great Gildersleeve radio shows. Rexall also sponsored Richard Diamond, Private Detective starring Dick Powell from April 1950 until Camel replaced Rexall as the sponsor after the December 6, 1950, broadcast.

In 1946, United-Rexall Drug Inc. purchased the Renfro chain in Texas, and Lane Drug Stores which had 58 stores throughout the Southeast.[citation needed] It also launched the Owl Superstores chain. In 1947, the company held a gala opening for their new headquarters and first store in Los Angeles, California. The new Hollywood Owl was reported in Life as 'the World's Biggest Drugstore'.[4] In 1958, the Rexall Drug Company was the largest U.S. drug store franchise, with 11,158 stores (for comparison, fewer than 12,000 McDonald's restaurants are in the U.S. today). Time noted that two-thirds of its stores were in areas where one-third of the population lived. However, this comprised more than 20% of all drug stores in the United States.[citation needed]

Also in 1958, Rexall employee Joe Coulombe was asked to test the launch of Pronto Markets, a store brand to compete against 7-Eleven. After running six Pronto Markets in the Los Angeles area, Rexall asked Coulombe to close them down. Coulombe decided to buy them out instead, and eventually renamed the chain "Trader Joe's".[5]

Dart sold his stake in Rexall in 1978. Dart had acquired stakes in West Bend, Duracell, Hobart Corporation, Tupperware, Ralph Wilson Plastics, and Archer Glass, which were collectively known as Dart Industries.

Decline

[edit]
Night falls on Rexall in Union, Oregon (2012)

By the late 1950s, Rexall's business model of unitary franchised stores, with each store owned independently by the local pharmacist, was already coming under attack by the discount chains, such as Thrifty Drug and Eckerd, and later in the 1960s, CVS Pharmacy. These well-financed corporate entities were able to reduce costs with block purchasing, and were focused on growth. By 1977, the value of the Rexall business had deteriorated to the point that it was sold to private investors for $16 million (~$64.5 million in 2024). The investors divested the company-owned stores, though existing franchise retailers were able to keep the Rexall name. These tended to be weaker stores, and few kept the name as time progressed. The company continued to distribute vitamins, health foods, and plastic items. Across the U.S., some franchise retailers continue to use the Rexall name.[6]

Rexall-Sundown

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Sundown, a maker of sunscreens, acquired the Rexall trademark in 1985, in a hostile takeover, and continued to produce nutritional supplements and remedies under the new name Rexall-Sundown, with no relationship to the remaining chain of Rexall drugstores, nor to the Canadian maker of medicines and sundries. Numico acquired Rexall Sundown in 2000. Numico split up the Rexall divisions and divested them in 2003, selling the name Rexall-Sundown to NBTY, a US vitamin company, and the Unicity Network division was to be sold to Activated Holdings,[7] a privately held company. The deal fell through, and Unicity Network was sold to its management. As of 2022 Nestle was assigned all trademarks of Rexall Sundown.

Dollar General and Rexall

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In March 2010, Dollar General licensed the Rexall name from healthcare giant McKesson Corporation (which acquired Rexall (Canada) in 2016),[8] and announced that it would be the exclusive retailer for Rexall-branded products.[9] Rexall products are in several of the retailer's categories, including over-the-counter medication, dental care, vitamins and supplements, foot care, and first aid.

See also

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References

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Further reading

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Revisions and contributorsEdit on WikipediaRead on Wikipedia

Rexall

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Rexall originated as a and franchise system for drugstores established in 1903 by Louis K. Liggett through the United Drug Company in Boston, Massachusetts, functioning as a that manufactured private-label products for independent pharmacies under the "Rexall" name, derived from "Rex all" signifying a comprehensive remedy line. The model empowered small druggists against emerging chain competitors by providing bulk purchasing, standardized quality goods, and national advertising, rapidly expanding to thousands of affiliated stores across the , , and Britain by the 1920s. Notable innovations included the iconic Rexall , a 1936 promotional tour that visited hundreds of cities to showcase products and build . At its zenith in 1958, the Rexall Drug Company encompassed over 11,000 U.S. franchises, making it the nation's largest drugstore network. Following mid-20th-century decline due to corporate consolidations and shifts in retail, the original American operations fragmented, but the Rexall endures primarily in as Rexall Group ULC, a chain of nearly 400 pharmacies serving as hubs, recently acquired by Birch Hill Equity Partners from in 2024.

Founding and Early History

Establishment by Louis K. Liggett

Louis K. Liggett (1875–1946), a Detroit-based salesman lacking formal pharmaceutical training, identified the vulnerabilities of independent druggists amid aggressive wholesaler pricing and inconsistent product quality in the early 1900s. To counter these pressures, Liggett conceived a that would enable proprietors to collectively manufacture, brand, and distribute their own goods, bypassing middlemen and fostering uniformity. In 1902, he convinced 40 independent druggists across the to each invest $4,000—totaling $160,000—toward this venture, which formalized as the United Drug Company upon incorporation in Boston, Massachusetts, on March 31, 1903. Headquartered initially at 43 Leon Street in , the United Drug Company focused on producing a line of remedies, toiletries, spices, and sundries under the Rexall , which Liggett adapted from earlier "Rexall remedies" formulations to signify regal quality ("rex" evoking Latin roots for kingly standards). Participating druggists, rebranded as Rexall stores, committed to exclusive stocking of these items, benefiting from bulk manufacturing efficiencies that reduced costs by up to 20–30% compared to branded competitors, while adhering to standardized store layouts and signage for national recognition. This franchise-like structure, predating modern chains, empowered small operators by guaranteeing reliability and marketing support, with initial product catalogs emphasizing over 300 Rexall-branded items vetted for purity. Liggett's vision prioritized , with the owning factories in and later expanding production, to insulate members from economic fluctuations and adulterated goods prevalent in the era's unregulated market. By 1904, the network had grown to over 100 stores, demonstrating the model's viability in elevating independent retailers' bargaining power against nascent corporate chains like the Owl Drug Company. This foundational approach, rooted in Liggett's sales acumen rather than retail experience, laid the groundwork for Rexall's emphasis on private-label over mere distribution.

Development of the Cooperative Model

In 1902, Louis K. Liggett, a former patent medicine salesman from Detroit, conceived the cooperative model as a means for independent druggists to counter the pricing power of wholesalers and emerging chain stores by pooling resources for collective manufacturing and purchasing. Liggett proposed forming a retailers' cooperative where participating pharmacists would invest capital to establish a central entity for producing and distributing branded goods, enabling them to offer competitive pricing and uniform quality without surrendering ownership of their stores. This approach drew from Liggett's observations of fragmented pharmacy operations, emphasizing shared supply chain efficiencies over vertical integration by a single corporation. The United Drug Stores cooperative was formalized that year when Liggett secured commitments from 40 independent druggists, each investing $4,000 to fund the venture's initial manufacturing and distribution infrastructure. Members received exclusive rights to sell products under the —derived from "Regis," Latin for "of the king," to signify superior quality—and agreed to purchase solely from the , which handled bulk procurement of ingredients and standardized formulations for remedies like tonics and sundries. This structure provided independents with access to private-label goods at reduced costs, typically 20-30% below wholesale rates, while the retained profits proportional to members' purchases, fostering and . By 1903, the model expanded rapidly, with United Drug incorporating as a formal entity to oversee production facilities and franchise agreements, growing to over 200 affiliated stores within the first year through targeted of pharmacists seeking branding advantages. The 's success hinged on enforced standards, including store signage and product displays, which created a national "chain-like" identity without corporate ownership, allowing members to retain local autonomy while benefiting from centralized advertising and volume discounts. This demonstrated early viability, as evidenced by annual sales surpassing $1 million by , though it later faced tensions between cooperative ideals and Liggett's growing corporate influences.

Expansion in the United States

Nationwide Growth and Store Network

The Rexall store network expanded rapidly across the through a franchise model established by the United Drug Company in 1903, which licensed the Rexall brand to independent pharmacists. Initially involving 40 drugstore owners who invested in the , the network grew to 1,755 stores by 1910, generating $1.5 million in annual revenue. This growth continued into the , with the Rexall name becoming synonymous with drug retailing nationwide as licensing agreements proliferated, enabling stores in urban centers and rural communities alike. At its peak, the brand was affiliated with as many as 12,000 stores from the through the 1970s, representing approximately one-fifth of all U.S. drugstores. By 1958, the network included 11,158 locations, underscoring its dominance in the voluntary sector. The store network operated as a , where independent owners benefited from centralized purchasing, uniform branding, and exclusive territorial rights to Rexall products, fostering a dense nationwide presence without the capital-intensive model of fully corporate-owned chains. This structure allowed Rexall to penetrate markets from coast to coast, with stores often serving as community hubs for pharmaceuticals, sundries, and health goods.

The Rexall Train Promotional Campaign

In 1936, during the , the United Drug Company, parent of the Rexall chain, initiated a major promotional campaign known as the Rexall Train to advertise its products and engage independent druggists across . Organized by Rexall founder Louis K. Liggett, the campaign utilized a specially equipped 12-car valued at approximately one million dollars, featuring air-conditioning and streamlined aesthetics to symbolize modernity and reliability. The train departed from , , on March 29, 1936, following a three-day public display, and operated until November of that year, traversing roughly 29,000 miles through all 48 U.S. states and portions of . The consist included cars named after prominent Rexall products, with four exhibition cars open to the public for demonstrations of the company's diverse merchandise, such as pharmaceuticals, , and , effectively turning sections into mobile storefronts. Additional cars accommodated private quarters for company executives, meeting spaces for druggist conventions, and logistical support, enabling on-the-road sales meetings and product education sessions for the Rexall cooperative's independent store owners. Powered by various locomotives from cooperating railroads, including a specially streamlined 4-8-2 No. 2873 designed by Carl Kantola, the train stopped in numerous cities, where local Rexall merchants promoted visits through advertisements, flyers, and posters to draw crowds and generate goodwill. The campaign's primary objective was to counteract economic downturn effects by fostering direct interaction between the company and its network of over 10,000 affiliated drugstores, reinforcing and stimulating product orders amid declining . It attracted over two million visitors, who toured the exhibits and witnessed live demonstrations, contributing to heightened public awareness and a temporary uplift for participating stores. By leveraging rail travel's reach and spectacle, the Rexall Train exemplified innovative tailored to the era's constraints, serving as a "tonic" for both the industry and the public through tangible displays of American ingenuity and commerce.

Business Practices and Innovations

Private Label Products and Branding

The United Drug Company, established by Louis K. Liggett in 1903, manufactured a extensive line of products under the Rexall brand exclusively for its franchised drugstore agents, enabling independent pharmacists to offer standardized, high-quality goods competitive with national chains. This model emphasized self-production of items such as medicines, toiletries, and sundries, sold to agents at a guaranteed 10% while restricting distribution to one Rexall store per town to maintain exclusivity and pricing control. The Rexall brand name, derived from "Rex" (Latin for king) combined with "all" to signify the "king of all" products, was applied to hundreds of items starting with early remedies like a dyspepsia treatment, expanding by the to include Baby Cough Syrup and Emulsion. By 1929, the company operated 21 manufacturing plants across the , supplying nearly 5,000 distinct products to approximately 10,000 Rexall agencies, which bolstered the brand's reputation for uniformity and reliability through rigorous quality oversight. Branding innovations included national advertising campaigns via radio and print media that highlighted product quality and expertise rather than low prices—except during biannual "One Cent " promotions—fostering consumer trust in Rexall as a of dependable, -controlled merchandise. This approach differentiated Rexall from generic or manufacturer-branded alternatives, as agents were encouraged to prioritize "own " in their inventories, supported by and publications like Rexall Magazine to reinforce brand loyalty among franchisees. The strategy's success lay in its causal linkage between centralized , exclusive licensing, and localized retail control, allowing the network to scale to over 12,000 stores by the mid-20th century while preserving the private label's perceived superiority.

Quality Control and Supply Chain Efficiency

The cooperative structure of the United Drug Company, established by Louis K. Liggett in 1902, centralized manufacturing and procurement for Rexall private-label products, enabling independent drugstores to achieve economies typically reserved for larger chains and thereby enhancing efficiency through reduced costs and streamlined distribution. This model pooled resources from initial investors—40 druggists contributing $4,000 each—to produce standardized goods exclusively for participating stores, minimizing intermediaries and ensuring consistent availability across a growing network that expanded to thousands of outlets by the . Quality control was maintained via the United Drug Company's Department of Research and Technology, which assayed raw materials and finished products to verify ingredient potency and purity, as exemplified by spectro-photometric monitoring of in Rexall formulations to match standardized levels. Rexall's emphasis on "pure drug products" involved scientific validation of formulations, with company laboratories confirming proper quantities of active ingredients to uphold uniformity across private-label items like aspirin and antiseptics, distinguishing them from variable patent medicines prevalent at the time. This centralized oversight prevented dilution of quality in distributed goods, as was restricted to controlled-brand production for cooperative members only. Supply chain advantages stemmed from the franchise system's exclusivity rules, limiting one Rexall outlet per city to avoid internal while optimizing through direct shipment from company facilities, which supported rapid scaling without the overhead of owned retail operations. By integrating production, branding, and member-only supply, the model reduced and risks for store owners, fostering that Liggett credited for countering trust-dominated markets and enabling competitive on high-volume items.

Challenges and Decline in the US

Competition from Emerging Chain Stores

In the post-World War II era, Rexall's franchise-based model, reliant on independent druggists, faced intensifying pressure from vertically integrated chain stores that achieved through centralized purchasing, uniform branding, and aggressive expansion into high-traffic urban areas. Chains such as , which had grown to over 500 stores by 1940 and emphasized volume-driven retail alongside services, began undercutting Rexall affiliates by offering competitive pricing on both proprietary and generic goods. This shift eroded Rexall's , as franchisees struggled to match the chains' operational efficiencies and promotional capabilities. By the 1950s, Rexall's peak network of approximately 11,000 stores began contracting, with new management decisions exacerbating vulnerabilities, including the sale of exclusive product lines to rivals like , which diluted the cooperative's proprietary advantages. The 1960s and 1970s saw the rise of discount-oriented chains like CVS (founded in 1963) and (established in 1962), which prioritized formats, broader merchandise assortments, and pharmacy-as-retail integration to capture consumer traffic in densely populated regions. These emerging competitors leveraged suburban sprawl and automotive culture to site stores near centers, outpacing Rexall's more fragmented, independently operated outlets that lacked unified or control. Rexall's inability to adapt to this volume-based —where pharmacy sales became secondary to front-end retail—contributed to declining franchise loyalty, as independents defected or closed amid squeezed margins. By 1977, the U.S. Rexall operations had deteriorated to the point of a $16 million sale to private investors, marking the effective end of its store network dominance.

Economic Pressures and Corporate Restructuring

In the 1960s and 1970s, Rexall's U.S. operations encountered severe economic pressures from escalating competition by national drugstore chains, including and Eckerd, which leveraged centralized purchasing, high-density store placements in urban areas, and operational efficiencies to undercut independent retailers. These chains' scale enabled lower prices on pharmaceuticals and sundries, eroding Rexall's franchise-based sales volumes as individual agency stores—numbering over 11,000 in 1958—faced margins squeezed by discounted generics and supermarket pharmacy encroachments. Post-World War II management shifts exacerbated vulnerabilities, with divestitures of key manufacturing assets and the sale of exclusive Rexall product lines to rivals, undermining the cooperative's control and brand exclusivity. Rising operational costs, including labor and in an inflationary environment, further strained profitability, as the decentralized franchise model proved ill-suited to rapid retail evolution toward integrated corporate ownership. These challenges culminated in a drastic valuation drop, prompting Dart Industries to sell the U.S. Rexall Drug Company to , a Palo Alto-based group, on , 1977, for approximately $16 million. The transaction reflected Rexall's diminished standing from its mid-20th-century peak, with the buyers promptly restructuring by offloading retail stores and production facilities to private operators while pivoting corporate focus to select non-pharmacy lines such as vitamins and oral care products. Former franchisees retained rights to the Rexall name for local use, preserving a fragmented legacy amid the broader contraction.

Post-Decline Developments in the US

Formation of Rexall Sundown

Sundown Vitamins was established in 1976 by Carl , initially focusing on the production and mail-order distribution of sunscreens and later expanding into nutritional supplements and sold through retail channels. In 1985, DeSantis-led Sundown acquired the from the declining original Rexall drugstore , which had originated in 1903 as a network of independent pharmacies but faced obsolescence amid the rise of national chains like and CVS. This acquisition allowed Sundown to leverage the Rexall brand's historical recognition in pharmaceuticals for marketing vitamins, minerals, and over-the-counter remedies, without inheriting the chain's retail operations. By the early 1990s, Sundown had grown its supplement portfolio under the Rexall name, prompting a corporate . In 1993, Sundown Vitamins officially changed its name to Rexall Sundown, Inc., headquartered in , to consolidate the dual branding and reflect its expanded focus on Rexall-labeled products. The restructured entity emphasized manufacturing efficiency, with annual sales reaching approximately $32.9 million from a 1993 stock offering that issued 2.5 million shares to fund growth in direct sales via Rexall Showcase International, launched in 1990. This formation marked a pivot from the original Rexall's model to a supplements-oriented , capitalizing on for affordable, branded nutraceuticals amid limited regulatory oversight in the industry. Rexall Sundown's early operations under prioritized , including in-house production facilities, which enabled competitive pricing and broad distribution to mass retailers. The company's revenue streams diversified to include through its direct sales arm, though it primarily relied on traditional retail for volume. By the late , this structure positioned Rexall Sundown as a mid-tier player in the $5.5 billion U.S. nutritional supplements market, setting the stage for later acquisitions, though its formation underscored a pragmatic revival of a faded rather than innovation in retail.

Brief Association with Dollar General

In March 2010, Corporation licensed the Rexall trademark from , the owner of the Rexall brand through its acquisition of the Canadian Rexall chain, to exclusively retail Rexall-branded health and personal care products in its U.S. stores. This arrangement positioned as the sole distributor of Rexall items, which included over-the-counter medications for pain relief, cold and flu remedies, digestive aids, and allergy treatments; vitamins and supplements; essentials; dental care products; foot care solutions; and items. The licensing deal marked a limited revival of the Rexall name in the American market after the original U.S. drugstore chain's decline, leveraging the brand's historical recognition for quality drug products without involving store operations or full corporate integration. Initial rollout focused on vitamins and supplements in 2010, expanding to a comprehensive lineup by fall, with marketing Rexall as a cost-effective alternative blending national-brand heritage with private-label economics. The association remained product-specific and did not extend to services or branded storefronts, distinguishing it from Rexall's earlier independent retail model.

Canadian Operations and Continuity

Introduction and Independent Growth in Canada

Rexall entered the Canadian market in 1904, shortly following the establishment of the United Drug Company in the United States in 1903, as a network of independently owned pharmacies licensing the Rexall brand for standardized private-label products and marketing support. This model empowered local pharmacists to operate under a unified banner, emphasizing , , and branded goods like remedies and sundries, which differentiated it from traditional apothecaries. Early adoption focused on urban centers, with the brand promoting innovations such as consistent product formulations across outlets, fostering trust in an era of variable drug quality. Unlike the U.S. operations, which peaked at around 12,000 affiliated stores by the 1930s but later fragmented amid competition from corporate chains, Rexall's Canadian presence sustained independent growth through localized management and adaptation to regional needs. By the 1940s and 1950s, approximately 50 Canadian stores contributed to the network's expansion, leveraging the franchise structure to avoid heavy corporate overhead while benefiting from shared supply chains. This autonomy allowed Canadian affiliates to navigate economic shifts, such as post-World War II demand for healthcare products, without the U.S. parent's pressures, leading to steady organic development into a national footprint. The emphasis on independent ownership preserved pharmacist-patient relationships, with stores functioning as hubs offering personalized service alongside Rexall's lines, which accounted for a significant portion of sales. Growth accelerated in subsequent decades, reaching over 400 pharmacies by the late , supported by innovations in retail pharmacy like expanded wellness offerings, while maintaining the core model of affiliated independents rather than full . This trajectory contrasted sharply with the U.S. decline, where the Rexall name largely detached from storefronts by the , underscoring Canada's operational resilience through decentralized control and market responsiveness.

Ownership Transitions: Katz Group to McKesson

In March 2016, McKesson Corporation, a major U.S.-based pharmaceutical distributor, announced a definitive agreement to acquire Rexall Health from the Katz Group, a privately held Canadian conglomerate founded in 1991 by the Katz family and led by Daryl Katz. The transaction valued Rexall Health at C$3 billion (approximately US$2.2 billion at announcement exchange rates), aiming to integrate Rexall's retail operations with McKesson's existing Canadian distribution network to enhance supply chain efficiency and pharmacy services. Katz Group, which had built Rexall into a network of over 470 pharmacies operating under the Rexall and Pharma Plus banners, along with associated family health clinics under Medicentres Canada, viewed the sale as an opportunity to refocus on other ventures, including sports and entertainment through its ownership of the Edmonton Oilers NHL franchise. The acquisition encompassed Rexall Health's full retail pharmacy portfolio, including corporate-owned stores, franchises, and related healthcare services, but excluded certain independent banner operations previously divested by Katz in 2012. McKesson financed the deal through a combination of and debt, expecting it to close by late 2016 pending regulatory approvals. The move was strategically positioned to bolster McKesson's in , combining Rexall's front-end retail presence with McKesson's backend wholesale distribution, thereby improving access to pharmaceuticals and health products amid growing competition from chains like . Regulatory scrutiny focused on potential reductions in competition in pharmacy distribution and retail. The of Canada required McKesson to divest 27 Rexall pharmacies to independent operator RXDM Pharmacy Inc. to address overlap concerns, with transfers occurring between mid-June and August 31, 2017. The deal received approval under the Investment Canada Act, certifying net economic benefits such as job preservation and enhancements. The acquisition closed on , 2016, at a final value of C$2.9 billion (approximately $2.1 billion), reflecting minor adjustments including tax benefits. Concurrently, McKesson appointed Domenic Pilla, formerly of Katz Group, as CEO of McKesson effective January 3, 2017, to oversee integration and operations. This transition marked the end of Katz Group's direct control over Rexall's Canadian operations, shifting the chain to foreign ownership under a multinational while maintaining its branding and store network largely intact.

2024 Acquisition by Birch Hill Equity Partners

On September 5, 2024, McKesson Corporation announced a definitive agreement to divest its Canada-based Rexall Pharmacy Group and Well.ca online retail businesses to Birch Hill Equity Partners, a Toronto-based private equity firm focused on mid-market investments in North America. The deal encompassed Rexall's network of over 400 pharmacies across Canada, positioning it as one of the country's largest pharmacy chains by store count, alongside Well.ca's e-commerce platform for health and wellness products. The transaction, terms of which were not publicly disclosed, received necessary regulatory clearances and closed on December 30, 2024, with McKesson confirming the completion of the divestiture. Birch Hill stated its intent to leverage operational expertise to drive growth, including potential expansion of retail pharmacy services and offerings, while maintaining Rexall's established brand in community-based care. This shift followed McKesson's acquisition of Rexall via its 2016 purchase of the Katz Group, reflecting a strategic refocus by the U.S.-based parent on its U.S. distribution and pharmaceutical services core operations.

Economic and Cultural Impact

Contributions to Retail Pharmacy Innovation

Rexall pioneered the franchise model in retail pharmacy through the United Drug Company, founded in 1903 by Louis K. Liggett as a of independent drugstores that invested in centralized manufacturing and branded distribution. This structure granted franchisees exclusive territorial rights to sell Rexall private-label products, enabling small-town pharmacies to access uniform, factory-produced goods like standardized pills and capsules produced via early mechanized processes, which minimized inconsistencies in pharmacist-compounded medications. By nearly 10,000 stores—comprising about one-fifth of U.S. drugstores—Rexall shifted the industry from fragmented independents toward a scalable chain-like system that emphasized brand consistency and . The company's of manufacturing, wholesale distribution, and retail franchising fostered innovations in supply chain efficiency, allowing Rexall to produce and deliver high-quality, affordable private-label items that undercut proprietary patent medicines while assuring purity post-1906 . Rexall's private brands, developed from the cooperative's inception with 40 initial investor-stores each contributing $4,000, extended to over 300 product lines by the mid-20th century, promoting consumer trust through standardized packaging and labeling. This approach not only elevated product reliability but also professionalized by aligning retail practices with industrial manufacturing standards. Marketing innovations further distinguished Rexall, including the Rexall One Cent Sale—a promotional tactic bundling high-margin items with low-cost purchases to drive traffic and loyalty—and aggressive national advertising via full-page newspaper ads and radio endorsements from figures like . These strategies, rooted in Liggett's vision of unified branding, expanded pharmacy's role beyond dispensing to branded retail experiences, influencing modern dynamics despite later corporate challenges.

Criticisms and Market Realities

In the Canadian pharmacy market, Rexall operates amid fierce competition from dominant chains such as (owned by ) and Jean Coutu, within a sector encompassing over 10,200 outlets as of recent analyses. Provincial reforms, including reductions in reimbursements for generic drugs, have compressed profit margins across the industry, prompting Rexall to close underperforming stores starting around 2018 to enhance financial viability. These pressures contributed to McKesson Corporation's decision in early 2024 to divest Rexall, potentially at a loss, as the U.S.-based wholesaler reassessed its Canadian retail exposure amid ongoing consolidation and regulatory scrutiny. In the United States, the Rexall drugstore brand experienced a marked decline by the late , overtaken by national chains like and CVS, as well as big-box retailers offering pharmacy services at scale; by the , the original distribution agreements collapsed, leading to the effective dissolution of the widespread Rexall store network. This reflected broader market dynamics favoring vertically integrated giants with superior over insurers and suppliers, leaving smaller or regional players like Rexall unable to compete on pricing or convenience. Criticisms of Rexall operations have centered on revenue-driven practices and product claims. In , internal pressures at Rexall pharmacies included directives from managers to conduct billable medication reviews at drive-thru windows, as reported by insiders in 2015, raising concerns over prioritizing income over patient consultation quality. Similarly, in response to Ontario's 2010 generic drug funding cuts, Rexall imposed prescription delivery fees, which drew backlash for shifting costs to consumers amid store closure threats and layoffs. On the U.S. side, Rexall Sundown (the successor entity focused on vitamins and supplements) faced multiple regulatory actions for deceptive marketing. The charged the company in 2000 with false claims that its Cellasene product reduced , unsubstantiated by clinical evidence, resulting in a settlement requiring up to $12 million in redress. Additional lawsuits alleged misleading representations for joint supplements and multivitamins, with a 2002 jury finding deceptive marketing; these cases highlighted systemic issues in the industry, where lax pre-market oversight enabled exaggerated efficacy claims without rigorous proof. Such incidents underscore Rexall's historical challenges in maintaining evidentiary standards amid aggressive promotion, though they primarily pertained to the post-drugstore supplement phase rather than core retail services.

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  27. https://www.bionity.com/en/encyclopedia/Rexall.html
  28. https://www.sun-sentinel.com/2000/05/02/boca-based-rexall-sundown-goes-dutch-for-18-billion/
  29. https://quackwatch.org/mlm/c/rsi/rsi01/
  30. https://insights.citeline.com/PS088062/In-Brief-Rexall-Sundown/
  31. https://www.wsj.com/articles/SB873729113154309500
  32. https://cspdailynews.com/general-merchandise/dollar-general-be-exclusive-retailer-rexall
  33. https://chainstoreage.com/news/dollar-general-named-exclusive-retailer-rexall-products
  34. https://www.dollargeneral.com/c/dg-brands/rexall
  35. https://massmarketretailers.com/dollar-general-to-carry-rexall-health-care-brand/
  36. https://www.supermarketnews.com/finance/dollar-general-expands-rexall-line
  37. https://www.hrreporter.com/best-in-hr/c/363028
  38. https://retail-insider.com/retail-insider/2024/09/rexall-and-well-ca-to-be-acquired-by-birch-hill-equity-partners/
  39. https://investor.mckesson.com/news/financial-news/2016/McKesson-to-Acquire-Rexall-Health-From-Katz-Group-Strengthening-Its-Position-in-Canadas-Pharmaceutical-Supply-Chain/default.aspx
  40. https://www.mckesson.com/about-us/newsroom/press-releases/2016/mckesson-to-acquire-rexall-health-from-katz-group-strengthens-its-position-in-canadas-pharmaceutical-supply-chain/
  41. https://globalnews.ca/news/2552480/katz-group-selling-rexall-health-drugstore-chain-in-3-billion-deal/
  42. https://investor.mckesson.com/news/financial-news/2012/McKesson-to-Acquire-Independent-Banner-and-Franchise-Businesses-of-Katz-Group-Canada-Inc/default.aspx
  43. https://drugstorenews.com/news/mckesson-acquires-rexall-health-katz-group
  44. https://www.rttnews.com/2620749/mckesson-to-buy-rexall-health-from-canada-s-katz-group-for-c-3-bln.aspx
  45. https://www.canada.ca/en/competition-bureau/news/2017/06/rxdm_to_acquire_27formerrexallpharmaciesacrosscanada.html
  46. https://investor.mckesson.com/news/financial-news/2016/McKesson-Completes-Acquisition-of-Rexall-Health-and-Appoints-Domenic-Pilla-as-CEO-of-McKesson-Canada/default.aspx
  47. https://s24.q4cdn.com/128197368/files/doc_news/archive/89b6ae59-a4f8-4ffe-8076-a1611f21bd2a.pdf
  48. https://www.pangaea-consultants.com/blog/mckesson-acquires-rexall/
  49. https://www.mckesson.com/about-us/newsroom/press-releases/2024/mckesson-corporation-announces-sale-of-rexall-and-well.ca-businesses-to-birch-hill-equity-partners
  50. https://www.rexall.ca/newsroom/view/74/Rexall-and-Well.ca-to-be-acquired-by-Birch-Hill-Equity-Partners
  51. https://www.costar.com/article/2000452147/mckesson-agrees-to-sell-one-of-canadas-largest-pharmacy-chains
  52. https://www.privateequitywire.co.uk/birch-hill-to-acquire-rexall-and-well-ca-from-mckesson-corp/
  53. https://finance.yahoo.com/news/mckesson-corporation-completes-divestiture-canada-130000212.html
  54. https://www.torys.com/work/2024/12/800147f1-9a0d-4363-9aef-57f6edefc1d8
  55. https://www.lexpert.ca/big-deals/mckesson-corp-sells-rexall-and-wellca-businesses-to-birch-hill-equity-partners/392907
  56. https://drugstorenews.com/mckesson-completes-divestiture-canada-based-rexall-wellca
  57. https://www.precisely.com/resource-center/customerstories/rexall-uses-geospatial-data-analytics-to-align-offerings-with-demand/
  58. https://www.theglobeandmail.com/business/article-how-rexall-plans-to-keep-up-in-the-competitive-drugstore-market/
  59. https://www.theglobeandmail.com/business/article-why-rexalls-american-owner-wants-to-sell-the-pharmacy-chain-and-might/
  60. https://www.cbc.ca/news/health/rexall-managers-pushed-for-medication-reviews-at-drive-thrus-insiders-say-1.3095248
  61. https://globalnews.ca/news/87531/rexall-blames-ontario-cutbacks-for-prescription-deliver-fees/
  62. https://www.ftc.gov/news-events/news/press-releases/2000/07/rexall-sundown-charged-ftc-making-false-unsubstantiated-claims-cellasene
  63. https://news.bloomberglaw.com/litigation/rexall-sundown-glucosamine-supplement-deception-suit-revived
  64. https://quackwatch.org/consumer-education/news/rexallsuit/
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