The Deerfield, Ill.-based pharmacy big is reportedly in talks to purchase wholesale drug distributor AmerisourceBergen Corp. The pharmacy chain already owns a roughly 26% stake in AmerisourceBergen, and the 2 corporations buy medication collectively by a three way partnership.
Valley Forge, Pa.-based AmerisourceBergen provides medication to 1000’s of well being methods, doctor workplaces, oncology teams and different healthcare suppliers, none of whom ought to anticipate the deal—if it comes to fruition—to decrease their already sky-high drug spending.
“I don’t think it really does anything for the providers,” mentioned Jefferies & Co. healthcare analyst Brian Tanquilut.
Representatives with Walgreens and AmerisourceBergen declined to remark for this story.
On Tuesday, business consultants mentioned they battle to see a lot of an upside within the rumored transfer by Walgreens. RBC Capital Markets’ analysts wrote that it is tough to see benefit in Walgreens getting concerned within the tough world of pharmaceutical wholesaling, an business fraught with structural challenges. Walgreens can be higher off consolidating market share in its core pharmacy enterprise, thereby securing a aggressive edge over CVS, RBC Capital wrote.
To that finish, Tanquilut mentioned it is attainable Walgreens may merge with AmerisourceBergen after which attempt to purchase a pharmacy profit supervisor to leverage its scale. The most strategic deal for Walgreens within the present payer-centric atmosphere, although, can be shopping for an insurer, he mentioned. Buying AmerisourceBergen does not deliver it any nearer to doing that, Tanquilut mentioned.
Walgreens and AmerisourceBergen already take pleasure in appreciable profit from their current partnership, and it is unclear what an acquisition would accomplish, mentioned Vishnu Lekraj, a senior fairness analyst with Morningstar.
“I suspect there is going to be something else on the horizon for them that they’re looking at doing,” he mentioned. “So, I’m not sure exactly if this is the best move given what’s already established between the two companies.”
There is one, barely ho-hum perk that Walgreens may obtain by the deal: a lift to the corporate’s steadiness sheet. RBC Capital Markets wrote that the deal, though it could haven’t any significant enterprise attrition, would end in earnings per share progress of up to 10% in its first three years.
Lekraj, nonetheless, does not see a lot profitability profit. In truth, he mentioned AmerisourceBergen stands to lose lots of its small- and mid-tier retail pharmacy purchasers, that are at the moment Walgreens opponents.
Rather than shopping for from their “arch enemy,” many unbiased pharmacies may swap to a competitor like McKesson, RBC Capital wrote.
AmerisourceBergen “will almost certainly be worth less when owned by Walgreens than it is as a stand-alone company,” in accordance to RBC Capital.
AmerisourceBergen’s inventory was up 9.four% Tuesday afternoon, whereas Walgreens Boots Alliance was down barely.