Our latest analysis shows how the Big Three companies—Cencora, Cardinal Health, and McKesson—are extending their reach far beyond drug distribution, building influence throughout the drug channel.
In recent years, these companies have spent more than $16 billion to acquire management service organizations (MSOs) that oversee physician practices in such specialties as gastroenterology, oncology, ophthalmology, and urology.
Below, we highlight the largest MSO transactions and explore five ways wholesalers benefit from ownership in their downstream physician customers. Ultimately, these strategies may allow wholesalers to exert unprecedented control over market access for provider-administered drugs—if they can figure out how to realize this power.
Today’s post is adapted from Section 6.3.2. in DCIs 2025-26 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Special launch pricing discounts are available through October 27, 2025.
ROLL-UP FEVER
Private equity firms have emerged as the primary buyers of specialty physician practices in dermatology, gastroenterology, oncology, ophthalmology, urology, and other specialties. In most cases, the financial buyers use roll-up strategies, which involve funding a management service organization (MSO) that acquires one or more platform physician practices and then layers on smaller practices.
From 2013 through 2024, DCI estimates that private equity firms acquired more than 2,400 physician practices—with oncology representing about one-quarter of these transactions. (See Exhibit 144 in our new report.) Acquisition activity has slowed over the past two years.
As we discussed in 2023’s The Battle for Oncology Margin, the Big Three wholesalers have become dominant players in acquiring or partnering with private-equity-backed MSOs.
Together, they’ve spent over $16 billion to acquire complete or partial ownership in the eight transactions with disclosed values. The table below summarizes 10 significant MSO acquisitions that were announced or completed over the past three years. Prior to this buying spree, the only notable transaction had been McKesson’s 2010 acquisition of US Oncology.
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Section 6.3.2. of our new 2025-26 report provides brief histories of the MSOs acquired by the three companies.
VERTICAL MAGIC
By owning or investing in their downstream physician customers, wholesalers can pursue five strategic objectives:
1. Protect Distribution Revenues and Channel Role
By forward-integrating into ownership of an MSO, neither a manufacturer nor a competitor can disrupt the business relationship. Vertical transactions remove the option for manufacturers to disintermediate the wholesale distribution channel and sell directly to physician practices.
For example, OneOncology is aligned both with Cencora’s Oncology Supply as its primary distributor and with Cencora’s ION Oncology Practice Network for GPO services. Cencora’s ownership stake safeguards the purchasing and contracting relationships.
Consequently, wholesalers have acquired MSOs of physician practices that generate a significant share of revenues from the infusion of provider-administered drugs and related services.
For example, OneOncology is aligned both with Cencora’s Oncology Supply as its primary distributor and with Cencora’s ION Oncology Practice Network for GPO services. Cencora’s ownership stake safeguards the purchasing and contracting relationships.
Consequently, wholesalers have acquired MSOs of physician practices that generate a significant share of revenues from the infusion of provider-administered drugs and related services.
2. Capture Market Share and Customers
Acquisitions of MSOs enable a wholesaler to redirect practices’ purchasing, GPO, and other services away from competitors.
Consider Florida Cancer Specialists (FCS), which had a relationship with Cencora’s Oncology Supply business that dates back to 2014. Following McKesson’s Core Ventures deal, FCS’s shifted from Cencora’s ION Solutions GPO and Oncology Supply distributor to McKesson’s Unity GPO and distribution network.
Consider Florida Cancer Specialists (FCS), which had a relationship with Cencora’s Oncology Supply business that dates back to 2014. Following McKesson’s Core Ventures deal, FCS’s shifted from Cencora’s ION Solutions GPO and Oncology Supply distributor to McKesson’s Unity GPO and distribution network.
3. Facilitate Practice Expansion with Partner Capital
Some MSO transactions are joint ventures with a private equity firm. This facilitates further acquisitions without necessarily comprising a wholesaler’s capital deployment.
The OneOncology transaction gives 65% ownership to private equity firm TPG and 35% ownership to Cencora, which has an option to purchase the entire business. This structure provides Cencora with future control while leveraging TPG’s capital for growth, which will further increase Cencora’s scale in oncology and specialty distribution. OneOncology has already made additional investments with its acquisitions of United Urology and GenesisCare.
The OneOncology transaction gives 65% ownership to private equity firm TPG and 35% ownership to Cencora, which has an option to purchase the entire business. This structure provides Cencora with future control while leveraging TPG’s capital for growth, which will further increase Cencora’s scale in oncology and specialty distribution. OneOncology has already made additional investments with its acquisitions of United Urology and GenesisCare.
4. Strengthen Market Access Influence
Historically, specialty distributors have limited ability to influence product selection decisions for provider-administered drugs.
The growth of biosimilars has altered this dynamic, allowing wholesalers to profit from their ability to encourage providers’ selection of one manufacturer’s biosimilar drug over another manufacturer’s version.
By owning MSOs, the companies gain visibility into prescribing patterns and more influence over formulary decisions, particularly when combined with GPO and specialty distribution operations.
The growth of biosimilars has altered this dynamic, allowing wholesalers to profit from their ability to encourage providers’ selection of one manufacturer’s biosimilar drug over another manufacturer’s version.
By owning MSOs, the companies gain visibility into prescribing patterns and more influence over formulary decisions, particularly when combined with GPO and specialty distribution operations.
5 . Diversify Revenue and Margin Sources
Physician practices generate substantial clinical, diagnostic, and other medical revenues. These revenue streams contribute higher gross margins relative to product distribution, which remains the largest contributor to the Big Three companies’ revenues. Owning MSOs, therefore, allows wholesalers to stabilize profits and reduce dependency on distribution spread economics.
EVOLVING THE WHOLESALER MODEL?
At its core, the drug distribution business model remains straightforward: Buy low, sell high, collect early, and pay late. Frankly, that’s the key conclusion from the extensive financial analyses in Chapters 4 and 5 of our report.
The MSO transactions could be an evolutionary pivot that will enable wholesalers to benefit from the coming wave of provider-administered biosimilars.
They will have to contend with the Inflation Reduction Act’s anti-biosimilar bias and, from 2028 onwards, the massive step down in Medicare Part B reimbursement to physician practices. Wholesalers with MSOs may be better positioned to manage these headwinds.
But a key question remains: Can wholesalers successfully transform from transactional intermediaries to true market makers that can leverage ownership, contracting, data, and access to influence therapy and extract incremental profits? Will the companies add leaders with benefit management skills and health insurance expertise to augment their existing logistical and distribution prowess?
As the Big Three’s executives steer through this transformation, it’s worth recalling John Maxwell’s infamous insight: “Change is inevitable. Growth is optional.”
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