Pharmaceutical wholesalers are no longer growth companies. They are struggling with ever larger customers, ongoing generic deflation, and the downsides of specialty pharmacy.
McKesson has illustrated these challenges in the financial results for its 2018 fiscal year. (See the links below.) The company projects that its 2019 fiscal year distribution profits will be flat to negative, due to customer losses and/or lower margins from contract renewals.
Below, I consider McKesson’s challenges with many of its largest customers, including:
- CVS Health
- Rite Aid
- Albertsons
- Ahold Delhaize
- Cigna
Like its peers, McKesson faces an uncomfortable conflux of uncommon customer crosswinds. Investors are surely hoping that rough seas make good sailors.
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