Cardinal Health 2009 Annual Report Download - page 27

With respect to its customers, the pharmaceutical supply chain business differentiates between bulk and
non-bulk customers, because bulk customers generate significantly lower segment profit as a percentage of
revenue than that generated by non-bulk customers. Bulk customers consist of customers’ centralized warehouse
operations and customers’ mail order businesses. All other customers are classified as non-bulk customers (for
example, retail stores, hospitals and alternate care sites). Bulk customers include the warehouse operations of
retail chains whose retail stores are classified as non-bulk customers.
See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” for
additional information about the pharmaceutical supply chain business model.
Clinical and Medical Products
Through its Clinical and Medical Products segment, the Company provides products and services to
hospitals and other healthcare providers. This segment develops, manufactures, leases and sells medical
technology products, including Alaris®intravenous medication safety and infusion therapy delivery systems,
software applications, needle-free disposables and related patient monitoring equipment and Pyxis®dispensing
systems that automate the distribution and management of medications in hospitals and other healthcare
facilities. The segment also develops, manufactures, leases and sells dispensing systems for medical supplies.
This segment also develops and manufactures medical and surgical products for distribution to hospitals,
physician offices, surgery centers and other healthcare providers. These products include the following: infection
prevention products, such as single-use surgical drapes, gowns and apparel, exam and surgical gloves and fluid
suction and collection systems; respiratory care products, such as ventilation equipment and supplies; and
medical specialties products, such as reusable surgical instruments and biopsy needles. This segment also offers a
line of skin disinfection products sold under the ChloraPrep®brand name and provides clinical intelligence
solutions, including products and services that help identify and prevent hospital-acquired infections and provide
barcode-enabled patient identification systems used in hospitals.
This segment primarily distributes its products direct to the customer, although it also distributes some
products through medical products distributors, including through the Healthcare Supply Chain Services
segment. This segment offers products and services principally in the United States and also in Europe, Canada
and other regions.
For information on comparative segment revenue, segment profit and related financial information, see
Note 17 of “Notes to Consolidated Financial Statements,” which is incorporated herein by reference.
All Other
Through this segment, the Company is a franchisor of apothecary-style retail pharmacies through its
Medicine Shoppe International, Inc. and Medicap Pharmacies Incorporated (“Medicap,” and together with
Medicine Shoppe International, Inc., “Medicine Shoppe”) franchise systems in the United States and abroad. In
March 2009, Medicine Shoppe initiated a buyout program to its franchisees. Under the program, existing
franchisees could elect one of three choices: termination of the current franchise agreement and conversion to a
new program; termination of current franchise agreement and exiting the franchise system; or remaining on the
current franchise agreement.
This segment also provides pharmacy services to hospitals and other healthcare facilities, including full-
service department outsourcing, transitional and turn-key services for acute care hospital pharmacies, as well as
remote medication order entry and review and other services.
During fiscal 2009, the Company divested the Tecomet and MedSystems businesses that were part of this
segment.
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