Friday, July 14, 2006

A busy week for wholesalers!

Wow! This turned out to be a big news week for your friendly neighborhood pharmaceutical distribution expert. The big three wholesalers all made interesting business moves. A few highlights:

  • McKesson sells its acute care (hospital) distribution business to Owens & Minor. Not a surprise given previous announcements, but does make me wonder if their alternate site/physician business next?
  • AmerisourceBergen acquires another Canadian wholesaler. I had the pleasure of speaking on “The Future of Independent Pharmacy” at ABC’s trade show in sunny Las Vegas this week. (Regrettably, I had to fly like an eagle and missed the Steve Miller Band’s performance on the final night.)
  • Cardinal Health announces an agreement to manufacturer Tamiflu, then takes a page from McKesson’s playbook and buys a small healthcare technology company.
  • More intriguingly, Cardinal quietly filed an 8-K announcing a $395 million share repurchase from “an unaffiliated third party.” This share repurchase is part of a new $500 million share repurchase program approved Board on June 28. (They bought back $500M in Q2.) While I can’t tell you what this means for the stock price, it does strike me as an admission that the company is not yet ready to invest in some of its underperforming businesses. Big divestitures to come?

IMO, 2007 will be a make-or-break year for drug wholesalers. I’ll post as news develops, but please feel free to email me comments or questions anytime.

P.S. Watch out for wholesaler earnings, coming soon (ABC: July 25; MCK: July 27; CAH: August 3).

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