By Saabira Chaudhuri
Cardinal Health Inc. (CAH) and rival McKesson Corp. (MCK) have
separately renewed distribution agreements with a major customer,
CVS Caremark Corp. (CVS), lifting a shadow for both drug
wholesalers who count CVS as a major customer.
Cardinal noted its agreements to supply pharmaceuticals to a
network of CVS's retail pharmacies and distribution centers runs
through mid-2016.
Cardinal's contract with CVS was set to end this summer, as was
one with another of the Dublin, Ohio, company's huge
drug-distribution customers, Walgreen Co. (WAG). Cardinal lost that
contract to rival AmerisourceBergen Corp. (ABC) last month.
Combined, the drugstore chains accounted for a major chunk of
Cardinal's revenue in the past fiscal year.
Such big wholesale contracts also draw lots of attention when
they come up for renewal.
AmerisourceBergen notched another big win last July when it won
the legacy business at pharmacy-benefit manager Express Scripts
Holding Co. (ESRX) away from Cardinal.
Cardinal distributes for the retail side at CVS, while McKesson
generally serves the pharmacy-benefit business. In October of last
year, McKesson said it had renewed its supply deal with pharmacy
chain Rite Aid Corp. (RAD), its second-largest customer, in a new
agreement that was set to stretch into 2016.
Shares of Cardinal closed Wednesday at $44.39 while those of
McKesson closed at $107.01. Both companies' stocks were inactive in
recent premarket trading.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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