McKesson, a Texas-based company, that provides health information technology and distributes pharmaceuticals has recently acquired a 70% stake in Community Oncology Revitalization Enterprise Ventures from Florida Cancer Specialists & Research Institute (FCS). FCS is an independent medical oncology practice, offering services from chemotherapy infusion, and diagnostic imaging to clinical trials. The total transaction value was deemed to be £1,884mn, relative to the overall enterprise value which settled at £2,691mn. The key service provider in this deal was JP Morgan, which acted as a financial advisor to McKesson.
It was previously reported that McKesson competed with rival drug distributors Cencora and Cardinal Health, in the race to buy FCS. The stake of the CV unit was eventually bought in an all-cash transaction on 26 Aug 2024. As a result of missing out on this opportunity, Cencora shares fell 1.4% to $234.52 in early trading, shortly after the deal took place. On the contrary, the shares of McKesson have seemed to be on an upward trend. The drug distributor, McKesson has been looking to increase its market share in new specialty services, especially in the field of oncology, a medical specialty that focuses on the diagnosis, treatment, and prevention of cancer. They want to move past branded, generic drugs, and physician management services. The deal attempts to improve the care experience for patients and advance community-based oncology.
FCS has provided exceptional care to cancer patients for over 40 years and its recent initiative, Core Ventures (CV), was created in early 2024. CV partners with distributors, providing operational and advisory support services to FCS clinics across Florida. It was formed due to the high cost associated with producing these drugs, which is passed onto consumers in the form of high prices. It is imperative to reduce the allocative inefficiency and produce a combination of cancer resources that maximizes welfare. Alongside this, CV helped reduce drug shortages, helping to produce more at a lower cost. Additionally, whilst FCS remains independent, they will join McKesson's vast network of independent, community-based cancer centres. McKessons’s oncology organisation consists of more than 60 care sites and 2,500 affiliated providers that aim to provide affordable oncology products and services.
Overall, the transaction will aim to utilise the expertise of FCS and Core Ventures to improve the quality of cancer care, and patient outcomes, accelerate clinical development, and sustain a patient-first approach. McKesson can gain a competitive advantage by delving into community-based oncology, as a continued strategic focus and investment area. The key stakeholders include McKesson and its patients as they are expected to be major beneficiaries of this deal. Following on, the transaction is expected to be a part of major changes in the healthcare field, where there is a constant re-evaluation of the landscape.
Written by: Jansher Verscht
Sources: MergerLinks, Reuters, Yahoo Finance
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