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Health firms in $5B pact
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May 28, 1998: 9:38 a.m. ET
McKesson signs 5-year exclusive supply contract with Columbia/HCA
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NEW YORK (CNNfn) - McKesson Corp. on Thursday signed a five-year agreement with Columbia/HCA to supply the nation's largest hospital company with $5 billion of health-care products across the company's nationwide network of nearly 500 hospitals and surgery centers.
McKesson (MCK) said its Health Systems Group will integrate pharmaceutical and medical-surgical product distribution, provide pharmacy automation and related information systems, and supply consulting services across the Columbia/HCA (COL) network.
Under the deal, McKesson General Medical, another unit of McKesson Corp. and the nation's third-largest distributor of medical and surgical products to hospitals, will become Columbia's exclusive distribution partner for medical-surgical supplies on Jan. 1, 2000.
McKesson General Medical said it expects the agreement to increase its annual revenues annually by $450 million.
The companies also announced plans to team up in redesigning the medical-surgical supply chain to improve the efficiency of Columbia's direct-from-manufacturer purchases.
The agreement also names McKesson Automated Healthcare as the supplier to Columbia of two pharmacy automation technologies, the Robot-Rx robotic drug-dispensing system and the Acudose-Rx unit-dose cabinet.
Richard Hawkins, McKesson's vice president and chief financial officer, said the pact with Columbia would allow his company to boost per-share growth targets from 20 to 25 percent for fiscal years 2000 and 2001.
Shares of McKesson and Columbia/HCA closed unchanged Wednesday on the New York Stock Exchange at 74-3/16 and 31-5/8, respectively.
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