McKesson Unveils Insight Into Hospital Pharmacy Trends

Sarika Anand Sarika Anand
Nov 28, 2020 8 min read
McKesson Unveils Insight Into Hospital Pharmacy Trends

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McKesson Corporation is an American company distributing pharmaceuticals and providing health information technology, medical supplies, and care management tools. The company had revenues of $231.1 billion in 2020.

McKesson is based in Irving, Texas and distributes health care systems, medical supplies and pharmaceutical products. Additionally, McKesson provides extensive network infrastructure for the health care industry; also, it was an early adopter of technologies like bar-code scanning for distribution, pharmacy robotics, and RFID tags.

McKesson - Company Highlights

Startup Name McKesson Corporation
Former Names Olcott & McKesson(1833–1853), McKesson & Robbins(1853–1999), McKessonHBOC(1999–2001)
Headquarters Irving, Texas, U.S.
Industry Healthcare
Founded 1833
Founder McKesson, Charles Olcott
CEO Brian S. Tyler
Areas Served Worldwide

McKesson - About and How it Works?
McKesson - Logo and its Meaning
McKesson - Founder and History
McKesson - Mission
McKesson - Business Model
McKesson - Revenue and Growth
McKesson - Investments
McKesson - Acquisitions
McKesson - Competitors
McKesson - Challenges Faced
McKesson - Future Plans

McKesson - About and How it Works?

McKesson Corporation is a healthcare supply chain management solution, retail pharmacy, community oncology and speciality care, and healthcare information technology company. The Company provides medicines, medical products and healthcare services by partnering with pharmaceutical manufacturers, providers, pharmacies, governments and other organizations in healthcare.

It operates through three segments: United States Pharmaceutical and Speciality Solutions, European Pharmaceutical Solutions and Medical-Surgical Solutions. The United States Pharmaceutical and Speciality Solutions segment distributes pharmaceutical and other healthcare related products and provides pharmaceutical solutions to life sciences companies. European Pharmaceutical Solutions segment provides distribution and services to wholesale, institutional and retail customers. Medical-Surgical Solutions segment distributes medical-surgical supplies and provides logistics and other services to healthcare providers.

McKesson - Logo and its Meaning

The McKesson logo is a great example of how a simple strict word mark can look modern and stylish.

Logo of McKesson
Logo of McKesson

The brand’s logo is composed of its word mark and the slogan beneath. The key role in the logo design takes the colour palette. Its main colour is common for the pharmaceutical industry design blue. But it has a small and bright accent, which changes everything – an orange line under the letter β€œC”.

This colour accent makes the logo look fresher and contemporary, even though the typefaces used in the word mark and slogan are both very classic.

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McKesson - Founder and History

In 1833 Charles Olcott and his partner John McKesson founded Olcott & McKesson, a wholesaler and importer of botanical drugs. Twenty years later, with the death of Olcott and the addition of Daniel Robbins, the firm was renamed McKesson & Robbins. Over the next 100 years the company grew significantly by persuading other distributors of wholesale drugs to become its subsidiaries.

In 1967 the firm faced a hostile takeover by Foremost Dairies, being renamed Foremost-McKesson. The parent had no corporate strategy and began acquiring diverse businesses, from sporting goods to candy. In 1976, new executives worked to streamline its operations by selling low-profit units. They also reorganized it into four groups: drugs/healthcare, wine/spirits, foods, and chemicals.

The new leaders also aimed to redefine the firm’s β€œmiddleman” distributor role by making it more indispensable. They did so by offering data processing procedures that were essential for both customers and suppliers, enabling the company to act as part of their marketing teams. The value-added partnership was prized by small businesses that had difficulty competing with national chains.

The strategy made it a top wholesaler and led to annual profit increases of 20% on average. Β In 1979, it divested over one-third of its holdings to focus on retail and healthcare products. It also began acquiring much healthcare product distribution firms, including technology-related outfits, and shortened its name to McKesson in 1984. By 1990 it was the leader of the drug wholesaling industry.

McKesson - Mission

McKesson's mission statement says, "To provide products, services and solutions of the highest quality and deliver more value to our customers that earns their respect and loyalty."

McKesson - Business Model

McKesson is a distributor and provider of healthcare services and technology. The company operates two reportable business segments:

  • Distribution Solutions – Distributes generic and branded pharmaceutical drugs and other healthcare-related products, and provides practice management, clinical support, technology, and business solutions to community-based oncology and other speciality practices.
  • Technology Solutions – Provides enterprise-wide clinical, financial, patient care, strategic management, and supply chain technology solutions, as well as outsourcing, connectivity, and other services (including managed and remote hosting services) to healthcare organizations.

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McKesson - Revenue and Growth

| Year | Amount | Change From Last Year |
| --- | --- | --- | --- |
| 2020 | $234.194B | +5.5% |
| 2019 | $214.319B | +2.86% |
| 2018 | $208.357B | +4.95% |

McKesson - Investments

McKesson has made 2 investments. Their most recent investment was on Mar 27, 2019, when Xealth raised $11M.

Date Organization Name Round Amount
Mar 27, 2019 Xealth Series A $11M
Mar 29, 2017 SHYFT Series B $7.5M

McKesson - Acquisitions

McKesson has acquired 44 organizations. Their most recent acquisition was Echo on Jun 19, 2019.

Acquiree Date Amount About Acquiree
Echo Jun 19, 2019 - Simplifying pharmacy, helping everyone get the medicine they need
Medical Specialties Distributors Apr 25, 2018 - Full service medical supply and biomedical equipment distributor Dec 4, 2017 - is a Canadian online store for health, wellness, beauty and baby essentials
RxCrossroads Nov 6, 2017 - RxCrossroads Specialty Solutions is committed to connecting patients to therapy
CoverMyMeds Jan 25, 2017 $1.1B CoverMyMeds is a healthcare tech platform helping doctors and pharmacists complete PA and insurance coverage determination forms for drugs
HealthQx Jul 12, 2016 - HealthQx specializes in data analytics and decision support software to bring transparency to the healthcare industry
Vantage Oncology Apr 4, 2016 $525M Vantage Oncology, Inc., offers a comprehensive development, implementation and management solution for radiation oncology
Rexall Mar 2, 2016 $2.1B Rexall is a drugstore operator with a dynamic history of innovation and growth
Biologics Feb 25, 2016 $1.2B Biologics provides a patient-focused platform for managing the financial, emotional, and physical burdens of cancer treatment
UDG Healthcare Sep 16, 2015 €408M UDG Healthcare specializes in supply chain, packaging, medical, regulatory, and sales and marketing

McKesson - Competitors

McKesson top competitors include EMIS Group, Walgreens Boots Alliance, Owens & Minor, Henry Schein, AmerisourceBergen, Cardinal Health and Walgreens.

McKesson - Challenges Faced

  • Increasing complexity and growth in integrated delivery networks : The lines between care settings are blurring as hospitals integrate with medical practices, infusion centres and home care, to form sophisticated networks delivering comprehensive patient care. While the number of hospital mergers declined in 2018, mega mergers are the new standard. The need for business partners to help networks diminish complexity and streamline operations across the continuum of care has become increasingly important as leaders work diligently to do what is right for the patient.
  • Hospitals expanding speciality pharmacy footprint, swiftly : Speciality pharmacy has been a top trend for the past several years as utilization and drug spend have dramatically increased across healthcare. As hospital and health systems experienced nearly 20% growth in the speciality drug market in 2018, health systems continue to establish their own speciality pharmacies or expand their existing capabilities. Speed to therapy and ongoing patient support are still critical.
  • Out-of-pocket costs impacting patients and revenue : Speciality drugs have emerged as important treatment options for cancer and other complex diseases, but there can be significant access and affordability issues with speciality drugs. The cost of speciality medications and the increased adoption of high-deductible health plans (HDHP) have placed a higher financial burden on patients. As out-of-pocket costs increase – from higher costs or insurance denials – patients are more likely to abandon their treatment plans.
  • Finance and pharmacy leadership relying on data-informed decisions, not intuition : Pharmacy directors face increasing pressure from performance-based reimbursement and diminishing resources. To alleviate these pressures, pharmacists need to leverage data and analytics to reduce costs, help maintain a healthy bottom line and support quality patient care. However, not all health systems have the tools and resources to aggregate and sift through data in order to apply comprehensive, real-time analytics to deliver better care effectively while maintaining a healthy balance sheet.

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McKesson - Future Plans

A new strategic planning solution for oncology practices is now available to customers through McKesson’s Business Advisory Services, a team of experts dedicated to helping speciality practices solve financial and operational challenges through consulting, analytics and technology.

β€œTremendous change is happening in the healthcare industry, especially in oncology,” said Catherine Swick, VP of Speciality Provider Strategy at McKesson. β€œWhile practices cannot control the future, strategic planning can help them prepare for what may come, while identifying opportunities to remain strong and viable. As an advocate of community oncology, we are excited to offer our strategic planning solution to our oncology customers as it will enable them to grow and thrive in a way that’s meaningful and valuable to their practices.”

McKesson’s strategic planning process helps practices create a vision for the future, while equipping them with short-term tactical planning to drive momentum and results. The comprehensive planning process starts with an analysis of the practice’s data, so the McKesson team thoroughly understands its challenges and opportunities and the practice has baseline metrics to guide its discussion and decisions. This is followed by a facilitated retreat with physicians and key staff to align on top priorities and culminates in a detailed three-year action plan for each initiative selected by the practice, providing the structure to make daily decisions that follow the larger vision.

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