Health-Care Distributor Stocks Fall on News of Consolidation and Competition From Amazon
February 13 2018 - 3:39PM
Dow Jones News
By Melanie Evans
Shares of health-care distributors fell Tuesday on news the
sector could experience more consolidation and heightened
competition from retail giant Amazon.com Inc.
News that three distributors face antitrust allegations from the
Federal Trade Commission also weighed on shares.
A Wall Street Journal report Monday evening that Walgreens Boots
Alliance Inc. has made a takeover approach to pharmaceutical
distributor AmerisourceBergen Corp. helped push down shares in
McKesson Corp., a rival distributor of pharmaceuticals, Jefferies
& Co. equities analyst Brian Tanquilut said.
The news buoyed Amerisource's stock Tuesday, an exception to the
broader market dip. Amerisource shares were up 8.79% as of early
Tuesday afternoon. Walgreens and Amerisource declined to
comment.
McKesson is also a medical supply distributor, a segment of the
market that is under increasing pressure from Amazon, as the online
retail giant intensifies its push into distribution to U.S.
hospitals and clinics, The Wall Street Journal reported
Tuesday.
Amazon has invited hospital executives to Seattle in recent
months to sound out ideas for expanding the retailer's
medical-supply business, and sent employees to a large Midwestern
hospital system to pilot its effort, the Journal reported. That
news likely contributed to volatility in stocks for McKesson,
Cardinal Health Inc. and Owens & Minor Inc., analysts said.
Amazon has in recent months started to actively compete for a
slice of the distribution business to U.S. hospitals, pitching its
business-to-business marketplace as a place to shop for medical
supplies, which are typically purchased under contract with
distributors and manufacturers, said Rick Conlin, a partner with
the Advisory Board, a unit of UnitedHealth Group Inc. that offers
consulting services to hospitals.
Shares in distributor McKesson were down 2.17% Tuesday
afternoon. Medical supply distributors Cardinal Health and Owens
& Minor stocks were down 3.18% and 5.10%, respectively.
McKesson and Owens & Minor didn't respond to requests for
comment. Cardinal Health declined to comment.
Stocks also dipped Tuesday for dental distributors Henry Schein,
Inc. and Patterson Companies, Inc. after allegations by the Federal
Trade Commission that the large dental distributors conspired to
deny discounts to group purchasers for dentists.
The FTC said it filed its complaint Monday against Henry Schein,
Patterson Companies and Benco Dental Supply Co. in administrative
court in Washington, D.C. A copy of the complaint isn't yet
public.
Brandon Couillard, an analyst with Jefferies & Co., said the
FTC's compliant sent stocks in Henry Schein and Patterson Companies
lower.
In separate statements, Henry Schein and Patterson Companies
dismissed the allegations as "meritless" and said the companies
would defend themselves vigorously.
Kristie Ceruti, a spokeswoman for Benco, called the FTC
allegations "completely contrary to our long-held belief in, and
actions to create, an open and growing dental marketplace founded
on greater choice, convenience and improved value."
The FTC separately alleged Benco invited a fourth dental
distributor to collude to deny discounts to purchasing groups.
"We expect to fully resolve this issue in a way that clarifies
the integrity of our people and processes," Ms. Ceruti said.
Write to Melanie Evans at Melanie.Evans@wsj.com
(END) Dow Jones Newswires
February 13, 2018 15:24 ET (20:24 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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