- McKesson, the largest pharmaceutical distributor in the U.S., is teaming up with retailing giant Walmart to jointly source generic drugs, expanding a three-decade old distribution partnership.
- Using their scale, the two should be able to better negotiate lower prices – something Walmart has done across its businesses.
- Walmart sells $20 billion worth of pharmaceuticals each year, $4 billion of which is generated from generic drugs, according to an analyst cited by Bloomberg.
Walmart has been working to further boost its already successful healthcare business, and wants a bigger piece of the store-based pharmacy market. Competition is high, with major pharmacies like CVS Health and Walgreens commanding a substantial market share.
While sparse on details, Walmart and McKesson in a joint statement both pointed to the higher efficiency and scale jointly sourcing generics would bring.
"Expanding our relationship to include a sourcing partnership for generics makes economic and strategic sense for both of us—by bringing together our respective scale and sourcing expertise, we will make our businesses stronger and create more value for our customers and patients, said Mark Walchirk, president of U.S. Pharmaceutical for McKesson.
The deal between the two companies is reflects a larger trend of increased consolidation in the pharmaceutical supply chain. Not only has pharma-biotech M&A continued, but pharmacy chains have developed closer relationships with benefit managers (such as Walgreens and Optum Rx).