Drug distributors' M&A race likely at its peak
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DRUG DISTRIBUTORS' M&A RACE LIKELY AT ITS PEAK
The recent spree of acquisitions from major U.S. drug distributors to boost their specialty medicines businesses have likely reached its peak, according to Jefferies analysts.
"While we think the strategic rationale for all of these deals are sound, we believe this recent run of deals in the space is likely the deal activity peak," the analysts say.
Higher margins and growing demand for specialty medicines that treat complex conditions such as rheumatoid arthritis and cancer have encouraged drug distributors to double down on the business.
The trend, kicked off by Mckesson MCK.N in 2010 with its acquisition of U.S. Oncology, has gained pace this year, with more than $10 billion in spending in the past 12 months, the brokerage says.
McKesson recently bought a controlling stake in community cancer center Florida Cancer Specialists & Research Institute's business and administrative services unit for $2.49 billion.
Cardinal Health CAH.N has played "catch up" on this front, spending more than $6 billion in four deals this year, while peer Cencora COR.N struck a $4.6 billion deal earlier in the month to add nearly 300 eye specialists to its portfolio of physician management services.
(Mariam Sunny)
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