McKesson 2008 Annual Report Download - page 61

McKESSON CORPORATION
FINANCIAL REVIEW (Continued)
54
The failure of our Technology Solutions business to attract and retain customers due to challenges in software
product integration or to keep pace with technological advances may significantly reduce our revenues or
increase our expenses.
Our Technology Solutions business delivers enterprise-wide clinical, patient care, financial, supply chain,
strategic management software solutions and pharmacy automation to hospitals, physicians, homecare providers,
retail and mail order pharmacies and payors. Challenges in integrating Technology Solutions software products
could impair our ability to attract and retain customers and could have an adverse impact on our results of
operations.
Future advances in the healthcare information systems industry could lead to new technologies, products or
services that are competitive with the products and services offered by our Technology Solutions business. Such
technological advances could also lower the cost of such products and services or otherwise result in competitive
pricing pressure. The success of our Technology Solutions business will depend, in part, on its ability to be
responsive to technological developments, pricing pressures and changing business models. To remain competitive
in the evolving healthcare information systems marketplace, our Technology Solutions business must develop new
products on a timely basis. The failure to develop competitive products and to introduce new products on a timely
basis could curtail the ability of our Technology Solutions business to attract and retain customers and thereby could
have an adverse impact on our results of operations.
The loss of third party licenses utilized by our Technology Solutions segment may adversely impact our
operating results.
We license the rights to use certain technologies from third-party vendors to incorporate in or complement our
Technology Solutions segment’ s products and solutions. These licenses are generally nonexclusive, must be
renewed periodically by mutual consent and may be terminated if we breach the terms of the license. As a result, we
may have to discontinue, delay or reduce product shipments until we obtain equivalent technology, which could hurt
our business. Our competitors may obtain the right to use any of the technology covered by these licenses and use
the technology to compete directly with us. In addition, if our vendors choose to discontinue support of the licensed
technology in the future, we may not be able to modify or adapt our own products.
Proprietary technology protections may not be adequate and products may be found to infringe the rights of
third parties.
We rely on a combination of trade secret, patent, copyright and trademark laws, nondisclosure and other
contractual provisions and technical measures to protect our proprietary rights in our products. There can be no
assurance that these protections will be adequate or that our competitors will not independently develop technologies
that are substantially equivalent or superior to our technology. Although we believe that our products do not
infringe the proprietary rights of third parties, from time to time third parties have asserted infringement claims
against us and there can be no assurance that third parties will not assert infringement claims against us in the future.
If we were found to be infringing others’ rights, we may be required to pay substantial damage awards and forced to
develop non-infringing technology, obtain a license or cease selling the products that contain the infringing
technology. Additionally, we may find it necessary to initiate litigation to protect our trade secrets, to enforce our
patent, copyright and trademark rights, and to determine the scope and validity of the proprietary rights of others.
These types of litigation can be costly and time consuming. These litigation expenses, damage payments or costs of
developing replacement technology could have an adverse impact on our results of operations.