McKesson partners with pharmaceutical manufacturers, providers,
pharmacies, governments and other organizations in healthcare to help provide
the right medicines, medical products and healthcare services to the right
patients at the right time, safely and cost-effectively.  Shifts in the healthcare industry could lead
to cuts in Medicare and Medicaid reimbursement levels which could impact McKesson’s revenues and
earnings.  If there is a price inflation
from suppliers this could squeeze margins and reduce revenues and earnings and
may impact McKesson various range of products and services.  The generic drug manufactures could progressively challenge the validity and enforceability of McKesson patent on branded
pharmaceutical products which may lead to bigger competition and loss of market
share.  If McKesson cannot secure promising
distribution business agreements with its current suppliers than they might
loss major customers (Pysh, 2017).

            Whenever an investment is considered one
must compare it to any alternatives to weigh up the opportunity cost. “At
present 10-year treasuries are yielding 2.16%, if we take inflation into
account the real return is likely to be closer to 1%. The S&P 500 Index is
currently trading at a Shiller P/E of x 30 meaning it is priced for an earnings
yield of 3.3% (Pysh, 2017)”.  Investors
must also consider macroeconomic factors that could impact economic and market
performances.  “At present the S&P is priced at a Shiller P/E of 30,
this is over 85% higher than the historical average of 16.8 suggesting markets
are at elevated levels. US unemployment figures are at a 30 year low suggesting
that the current business cycle is nearing its peak. US private debt/GDP
currently stands at 199.6% and is at its highest point since 2009 when the last
financial crisis prompted private sector deleveraging (Pysh, 2017)”.

            McKesson has brought employment
opportunity to the Dallas Forth area with its new state of the art facility
this has created 1,000 new jobs. 
McKesson has a number of offices located in the Dallas-Fort Worth area
that employees about 900 people.  With
the move of its corporate headquarters from San Francisco to Irving Texas McKesson
has promised to “add 975 new jobs and spend $157 million in capital investments
(Repko, nd)”.  McKesson also has been
awarded a grant of $9.75 million in economic incentives from the Texas
Enterprise Fund. 

            John Hammergren, Chief executive officer said “McKesson
looked to Dallas-Fort Worth for expansion because of its large existing
employee base, its reasonable cost of living and Texas’ business-friendly
climate (Repko, nd)”.  This is a great
location for a pharmaceutical supply chain company.

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is good and bad social cultural environments that effect McKesson Corporation.  Let’s start with the bad McKesson outsources
its deliveries to customers with a transportation courier.  Each driver has his/her own route and
deliveries product in secure totes to hospitals, and pharmacy’s.  There have been times when the driver’s truck
has been stolen during his/her deliveries resulting in pharmaceutical drugs
being sold on the streets.  We are
talking about drugs like Morphine, OxyContin, and Hydromorphone these drugs in
the wrong hands have a huge impact on our society not to mention the hospital
or pharmacy that the order was intended for is now out of product and that could
result in patient care.  A black could
that lingers over McKesson’s head is a story that was aired on 60 minutes
claiming that the company is the cause of the opioid crisis in America (“Opioid Abuse – Fighting the Epidemic |
McKesson,” n.d.).  McKesson settled with the Department of
Justice for $150 million dollars for violating the Control Substance Act.  A Control Substance Monitoring Program was implanted
for all customers.  What this does is assign
customers monthly thresholds for all controlled substance items and the process
goes through three levels of review. 
This review helps report suspicious customers and suspicious orders and
then McKesson can report this to the DEA (Fry, 2017).

            As a company
McKesson believes that better business health and better patient healthcare are
intimately linked together.  Through
their distribution and technology solutions McKesson helps it customers by
improving the efficiency and effectiveness of their healthcare operations.  McKesson also focuses on the delivery of care
across different healthcare settings. 
This ensures that right medication or medical tool is given at the right
time.  And finally McKesson focuses on
connectivity among all parts of the healthcare system.  From the manufacturers, to the hospitals, to
the pharmacies, to the payer, and ultimately the patient better connectivity
enables high quality care at a lower cost (“McKesson Investor Center | McKesson Investor Relations,”


Technology Solutions division provides a complete portfolio of software services
to help its customers improve quality, patient safety, and reduce cost.  The divisions that make up this portfolio are
McKesson Health Solutions, Connected Care and Analytics, Imaging and Workflow
Solutions, Business Performance Services, and Enterprise Information
Solutions.  McKesson Health Solutions is a service that provides software
products to manage the cost and quality of care for payers, providers, hospitals
and government organizations.  Connected
Cared and Analytics uses a third party vendor to provide health
information exchange solutions that streamline clinical and administrative
communications between patients, providers, payers, pharmacies, manufactures, government
entities and financial institutions.  Imaging
and Workflow Solutions offers
medical imaging and information management systems for healthcare organizations.  Business Performance Services helps providers to focus on delivering
healthcare while McKesson manages their revenue cycle operations and
information technology through a comprehensive suite of managed services.  Enterprise Information Solutions provides
comprehensive clinical and financial information systems for hospitals of all
sizes.  This system is designed to improve
the safety and quality of patience care and improve clinical, financial and
operational performances (“McKesson
Investor Center | McKesson Investor Relations,” 2018).


            By acquiring Celesio McKesson has made its mark on the global
environment.  Celesio is a leading international wholesale and retail company and
provider of logistics and services to the pharmaceutical and healthcare
sectors. “With 38,000 employees, Celesio operates in 14 countries around the
world. Every day, the group serves over 2 million customers – at 2,200
pharmacies of its own and 4,100 participants in brand partnership schemes. With
132 wholesale branches, Celesio supplies 65,000 pharmacies and hospitals every
day with up to 130,000 pharmaceutical products. The services benefit a patient
pool of about 15 million per day (“McKesson Secures Acquisition of Celesio Through New Agreements |
McKesson,” n.d.)”.   By acquiring Celesio McKesson has significantly
increased the importance of their foreign operations foot print and expanding
the future of their growth.


            In the
world of pharmaceutical distribution operations the competitive market is
between three players McKesson Corporation, Cardinal Health, and Amerisource Bergen.  You might think that because there are only
three companies that the competition would not be so bad.  Think again. 
To keep existing customers and to get new customers drug distributors need
to have competitive pricing, great service, third party logistics, and a large
payer organization.  In recent years some
pharmaceutical supplier have been subject to increasing consolidation.  When this happens it results in a small
number of very large companies to control a significant share of the market.  If this trend continues it could reduce the
number of market participates resulting in greater bargaining power which leads
to erosion of prices for product and services (“McKesson Investor Center | McKesson Investor
Relations,” 2018).


            McKesson recognizes that the
decisions made by policymakers can have an extreme impact on their industry.
With businesses and customers that extend over all settings of health care they
are actively involved in several public policy issues that influences their
operations, and those of their customers. McKesson’s Public Affairs team
functions at the intersection of healthcare, policy and politics on behalf of
the company.  Their role is to establish and strengthen governmental
relationships with federal, state and local elected and government officials
and educate them on McKesson’s operations.  Public policy at McKesson is
an important business strategy and their mission is to work with business unit
partners to effectively impact the outcome of public policy actions taken by
federal, state and local government.  Only by staying ahead of the policy
curve and helping to shape the environment in a way that best supports the
needs of our customers, the patients they serve and a more efficient,
quality-driven healthcare delivery system, can we ensure that McKesson’s policy
brand enhances our overall value proposition and competitive position (“Public Affairs | McKesson,” n.d.).





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