Benefits companies and regional players on alert as $3 billion deal is completed
Pressure could be placed on independents and regional players in the drugstore industry – and potentially benefits companies too – after one healthcare giant swooped for a national drugstore chain.
Canadian Rexall Health is being scooped up by McKesson Corp., a major player in the US healthcare sector. The deal, worth C$3 billion, is said to have been driven, in part, by the fall of the Canadian dollar. The sale is still subject to regulatory approval, but is set to incorporate 470 retail pharmacies, as well as ClaimSecure Inc, which is a technology and healthcare management firm, and some family doctor clinics.
The sale was carried out by Katz Group, and follows on from McKesson’s decision to buy Katz’s franchise businesses and independent outlets back in 2012 for around $920 million. The latest move was described by the companies as “the next natural step” for a 20-year business relationship.
The move however, has caused some trepidation in the industry. There has been speculation that prices may rise following a takeover, placing benefits companies on alert; while there has also been suggestion that some independents and regional players may face pressure as McKesson becomes an even larger retail competitor and also a supplier of drugs at a time when many are feeling their profits pinched.
Clint Mahlman, COO of London Drugs Ltd, which receives its drugs from McKesson, commented that “I think it will place pressure on the whole industry”. He stated that there is the potential for conflict, although it is not so unusual for suppliers to become competitors in the present marketplace.
Speaking in a statement, John Hammergren, the CEO and chairman of McKesson, commented that there are considerable opportunities in Canada.
“Canada’s healthcare environment is rapidly evolving; it is marked by a move of primary care into pharmacy and increasingly complex patient demand,” he said.
“With today’s announcement, McKesson will bring together the strengths and expertise of our diverse portfolio to address challenges and opportunities in delivering the very best patient care.”
Speaking to Bloomberg, Bruce Winder, a retail analyst, suggested that the low Canadian dollar probably had a significant impact. He stated that: “With the US economy surely but slowly picking up and the Canadian dollar being as weak as it is, everything is on sale in Canada.”
In addition, he suggested that McKesson is likely to see value in the number of retail outlets that Rexall possesses.
Meanwhile, Daryl Katz, the chairman and founder of the Katz Group, commented that his firm will continue to look at other business types – investments, entertainment and real estate.
Canadian Rexall Health is being scooped up by McKesson Corp., a major player in the US healthcare sector. The deal, worth C$3 billion, is said to have been driven, in part, by the fall of the Canadian dollar. The sale is still subject to regulatory approval, but is set to incorporate 470 retail pharmacies, as well as ClaimSecure Inc, which is a technology and healthcare management firm, and some family doctor clinics.
The sale was carried out by Katz Group, and follows on from McKesson’s decision to buy Katz’s franchise businesses and independent outlets back in 2012 for around $920 million. The latest move was described by the companies as “the next natural step” for a 20-year business relationship.
The move however, has caused some trepidation in the industry. There has been speculation that prices may rise following a takeover, placing benefits companies on alert; while there has also been suggestion that some independents and regional players may face pressure as McKesson becomes an even larger retail competitor and also a supplier of drugs at a time when many are feeling their profits pinched.
Clint Mahlman, COO of London Drugs Ltd, which receives its drugs from McKesson, commented that “I think it will place pressure on the whole industry”. He stated that there is the potential for conflict, although it is not so unusual for suppliers to become competitors in the present marketplace.
Speaking in a statement, John Hammergren, the CEO and chairman of McKesson, commented that there are considerable opportunities in Canada.
“Canada’s healthcare environment is rapidly evolving; it is marked by a move of primary care into pharmacy and increasingly complex patient demand,” he said.
“With today’s announcement, McKesson will bring together the strengths and expertise of our diverse portfolio to address challenges and opportunities in delivering the very best patient care.”
Speaking to Bloomberg, Bruce Winder, a retail analyst, suggested that the low Canadian dollar probably had a significant impact. He stated that: “With the US economy surely but slowly picking up and the Canadian dollar being as weak as it is, everything is on sale in Canada.”
In addition, he suggested that McKesson is likely to see value in the number of retail outlets that Rexall possesses.
Meanwhile, Daryl Katz, the chairman and founder of the Katz Group, commented that his firm will continue to look at other business types – investments, entertainment and real estate.
