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I’m sticking with you: McKesson and CVS JV solid for 3 more years

By Fiona Barry +

30-Jul-2014
Last updated on 30-Jul-2014 at 17:24 GMT

I’m sticking with you: McKesson and CVS JV solid for 3 more years

McKesson Corporation, a healthcare services and information technology company, today announced a three-year extension to its pharmaceutical distribution agreement with CVS Caremark.

CVS Caremark is a US retailer and healthcare firm which owns specialty pharmacy division Caremark Pharma Services, MinuteClinic and the CVS and Longs Drugs pharmacy chains.

McKesson is the distributor for the Caremark portion of CVS' branded drugs as well as some west coast pharmacies. The agreement will prolong their partnership until June 2019. 

Ross Muken, senior managing director at analyst group ISI, told Outsourcing-Pharma.com the extension is “unsurprising given the long-standing successful history between the two companies as well as CVS' desire to maintain stability with regards to its distribution agreements.

With the CVS/CAH [Cardinal Health Inc – a services company which announced its partnership with CVS last December] joint venture lasting through 2024, it made sense for CVS to lock in its mail distribution partner as well.

"With CVS being the largest customer for McKesson, we view pricing as already rational/efficient, so there is likely no material changes to the relative profitability of the transaction.

Muken said overall the announcement was “a modest net positive” which “removes the overhang that is ever-present with any large potential renewal.

McKesson’s EVP and Group President, Paul Julian, said: “We have a long track record of delivering comprehensive supply chain solutions to CVS Caremark which in turn allows CVS Caremark to ensure the highest level of pharmaceutical care to its customers.

This week, CVS Caremark Advisor Karen Thompson was awarded 2014 Professional Woman of the Year by the National Association of Professional Women for her 24-year career at the company.

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