Monday, March 16, 2009

Wholesalers In the News

Here is a news story that caught my attention last week:

Some Drug Wholesalers Fall Ill From Pharma Consolidation

Drug wholesaler stock prices took a tumble last week. As the Wall Street Journal article noted:
  • “[S]ome believe that the wholesalers, who are paid by the manufacturers to package and distribute products, will have less leverage when drawing up contracts with the large pharmaceutical companies.”

  • “Worries about a default by retailer Rite Aid Corp. -- it was included on a list published by Moody's Investors Service highlighting companies considered likely to default on their debt -- pressured shares of McKesson.”
Well, these items may sound familiar if you read my blog posts last Tuesday (Rite-Aid Hits the Bottom Rung) and Wednesday morning (My Comments on MRK-SCP). Of course, last week’s comments by McKesson Corporation’s (MCK) CFO about “some increased pressure on our sell-side margins in US pharmaceutical distribution” may have spooked some folks, too.

Astute readers will realize that I have not commented publicly on the dynamics behind the unexpectedly unresolved CVS Caremark (CVS) rebid. Last September's Wholesaler Impact of a Longs Drug Deal has some general background for the curious.


  1. Adam,
    What happened to CVS/Caremark rebid? I thought that it was due to be resolved mid 2009?

  2. You are correct, but the outcome of the CVS Caremark rebid has not been announced yet. I am not commenting publicly on possible outcomes but am available to discuss privately with clients.