) recently announced that it has expanded its distribution
Rite Aid Corporation
The agreement includes both brand and generic pharmaceuticals.
The new agreement spans for five years up to Mar 2019.
The agreement will allow both the companies to leverage each
other's expertise. Rite Aid is one of the leading national
drugstore chains in the U.S. while McKesson is a leader in
pharmaceutical sourcing and supply chain management.
As per the terms of the expanded agreement, McKesson will be
responsible for sourcing and distribution of generic
pharmaceuticals for Rite Aid as a part its proprietary One Stop
Generics program. On the other hand, Rite Aid stores will benefit
from McKesson's daily direct-to-store delivery service model for
brand and generic pharmaceutical products.
We remind investors that Rite Aid has been McKesson's customer
for more than 16 years. During fiscal 2013, Rite Aid purchased
brand and some generic pharmaceuticals for approximately 88.7% of
the dollar volume of its prescription drugs from McKesson under a
supply contract (which is scheduled to expire in Mar 2016).
We note that McKesson has been actively pursuing deals and
acquisitions to drive growth. In Feb 2014, McKesson acquired a
majority stake in Germany-based drug distribution company Celesio
for approximately €23.50 per share. Celesio provides logistics
and services in the pharmaceutical and healthcare sector with
operations in approximately 14 countries.
The deal will allow McKesson to gain a foothold in Europe,
thereby geographically expanding its core operations further. The
combined company is expected to generate annual revenues in
excess of $150 billion with operations in twenty countries.
McKesson currently carries a Zacks Rank #3 (Hold) while Rite
Aid Corporation holds a Zacks Rank #4 (Sell). Stocks that
currently look attractive include
Cardinal Health, Inc
Align Technology Inc
). Both carry a Zacks Rank #1 (Strong Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
MCKESSON CORP (MCK): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
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