Monday, March 15, 2010

Is McKesson in the hunt for an EU acquisition?

Dow Jones is reporting that big EU drug wholesaler The Phoenix Group may be be up for sale after all. McKesson (NYSE:MCK) and Medco Health Solutions (NYSE:MHS) are both mentioned as possible bidders. See Merckle Family Could Sell Parts Of Phoenix.

McKesson seems to be the more likely candidate. Perhaps you noticed that McKesson ended 2009 with $3.4 billion in cash and cash equivalents and only $2.3 billion in long-term debt (source). They could certainly swing a big deal to create the world's first truly global wholesaler.

FYI, the Phoenix Group is one of the big three pan-European drug wholesalers. Phoenix had about $21.5 billion euro in 2008/2009 revenues according to their annual report. The other two are Celesio and Alliance Healthcare, which is part of Alliance Boots and owned by private equity firm Kohlberg Kravis Roberts.

P.S. I believe that the "media report" referenced in the Dow Jones article is the Bloomberg story Heir Merckle in tussle with banks over Phoenix.

6 comments:

  1. And we think importation is dead?

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  2. Al,

    I have long speculated that importation would trigger cross-border deals, e.g., Drug Importation and Global Wholesale. But national importation legislation doesn't seem likely after last Fall's defeat.

    Adam

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  3. My knee-jerk speculation concludes that the presence of a "truly global wholesaler" would strengthen the position for proponents of drug importation.

    i.e. If an EU McKesson facility can buy pharmaceutical product directly from manufacturers in EU, and without that product ever leaving legal ownership of McKesson, is then shipped to a McKesson facility in the U.S., the argument that this imported medicine could be unsafe is significantly diluted. Does anyone honestly believe a company as experienced as McKesson could not implement whatever measures necessary for full traceability and to ensure there is no tampering/diversion of their own product that they moved between their own facilities, even if those facilities are separated by the Atlantic ? It would be easy for them with their logistics expertise.

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  4. EU citizenMarch 15, 2010

    I prefer Medco because of his IT or healthcare (it seems like managed care?) activities in EU...

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  5. It seems less likely but a Medco purchase would be interesting. EU experience may give them a leg up if Healthcare Reform results in government negotiated prices.

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  6. Nice way to shake up the rumor mill at the DMC meeting. And I didn't even see you on the registration list! HA!

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