Mckesson

How McKesson Operates

McKesson can be split into two business segments: distribution solutions and technology solutions. The distribution solutions segment distributes drugs, medical-surgical supplies and equipment, and health and beauty care products throughout North America. This segment also offers other services such as consulting. As well it offers specialty pharmaceutical solutions for biotech/pharmaceutical manufacturers. It does this by offering financial, operational, and clinical solutions for the pharmacies in retail, hospitals, and long-term care facilities. Drug makers desire more supply chain control, so less inventory will have to be held by McKesson. This means increased flexibility due to an increase in working capital. They can expand their operating margin by improving their productivity or by generic drug penetration as generics have higher margins. 97.1% of McKesson’s revenues and 84% of EBIT are from this segment.

The second segment is technology solutions. This segment deals with clinical, patient care, financial, supply chain and management software applications, as well as pharmacy automation for hospital. It also offers connectivity solutions to remote hosting and managed services in healthcare organizations. Its customers include hospitals, physicians, homecare providers, and retail pharmacies. McKesson operates this segment in various parts of the world including North America, Europe, Asia Pacific and Israel. This segment contributes 2.9% of McKesson’s of the 2010 revenues, and 16% of its EBIT.

The services McKesson offers are nurse advice, care enhancing navigation service and care enhancing online service. The solutions offered are business intelligence and reporting, care management workflow, claims management solutions, disease management solutions, predictive modelling, and professional certification. The professional services provided are business consulting services, implementation services, technology and integration...