By Sharon Terlep and Dave Sebastian

Updated July 27, 2020 1:42 pm ET

Walgreens Boots Alliance Inc. said Stefano Pessina will step down as chief executive, kicking off a search for a new leader at the company as the coronavirus pandemic has dented profits and complicated a turnaround.

Mr. Pessina, a 79-year-old Italian billionaire and one of the drugstore chain’s largest single shareholders, took over five years ago following the merger of Walgreens and European pharmacy chain Alliance Boots.

Walgreens, the largest U.S. drugstore chain by stores, said Monday that Mr. Pessina will remain CEO during the search for his replacement. He will become executive chairman upon stepping down, replacing James Skinner, who will remain on the board.

Even before the coronavirus outbreak, Walgreens and rival CVS Health Corp. were dealing with smaller profits from prescription drugs and competition from online rivals that have hurt retail sales. Illinois-based Walgreen responded by cutting costs in its home market and last year said it was closing 200 stores.

The pandemic has put further pressure on drugstores, as patients put off visiting doctors and other health providers, which has cut into prescription sales. Lockdowns have also reduced stores visits and retail sales.

Walgreens this month said it was cutting about 4,000 jobs in the U.K. and suspending stock buybacks as demand fell off in its international business. For its quarter ended May 31, the company said the Covid-19 pandemic sliced off $700 million to $750 million in sales, with most of the effects tied to its global retail-pharmacy business.

Where CVS has built itself into a health-care behemoth through acquisitions of pharmacy benefit manager Caremark in 2006 and insurer Aetna Inc. in 2018, Walgreens shifted away from all-out acquisitions came after unsuccessful attempts to buy Humana and rival Rite Aid Corp.

Mr. Pessina in recent years has championed a strategy of partnerships, with Walgreens teaming up with companies ranging from insurer Humana Inc. to grocer Kroger Co. In June, the company announced a deal with primary-care provider VillageMD to attach physician offices to hundreds of U.S. drugstores.

Walgreens’s efforts have yet to deliver higher revenue and profits, but Mr. Pessina has urged Wall Street to be patient. Walgreen shares are down nearly 30% in the past year while CVS shares rose 14% in the same period.

Mr. Pessina, who has a degree in nuclear engineering, worked for several years in academia before taking over his family drug-distribution business. He has claimed to have completed more than 150 acquisitions as he consolidated the business around Europe.

One of those acquisitions was a company headed by Ornella Barra, who has been Mr. Pessina’s life partner for three decades. Today she is Walgreens’s co-chief operating officer.

In 2006, he merged his business, then known as Alliance UniChem, with the U.K.-based Boots drugstore chain. A year later, he joined with KKR & Co. to buy out the company and take it private for $18.5 billion. The deal making continued, and in 2012 Alliance Boots agreed to sell a 45% stake to Walgreens for $6.7 billion. Last year, Walgreens bought the rest of Alliance Boots for around $14.7 billion.

Mr. Pessina became the company’s executive vice chairman in January 2015, a month after the Alliance Boots deal, and subsequently served as interim CEO before being confirmed in the role in June 2015. Mr. Skinner, who once led McDonald’s Corp., has been executive chairman of Walgreens since January 2015.

The company’s shares fell 2.4% in late-morning trading.

Write to Sharon Terlep at sharon.terlep@wsj.com and Dave Sebastian at dave.sebastian@wsj.com