McKesson 2012 Annual Report Download - page 22

McKESSON CORPORATION
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Our Distribution Solutions segment is dependent upon sophisticated information systems. The implementation
delay, malfunction, or failure of these systems for any extended period of time or breach of these systems could
have a material adverse impact on our business.
We rely on sophisticated information systems in our business to obtain, rapidly process, analyze and manage
data to: (1) facilitate the purchase and distribution of thousands of inventory items from numerous distribution
centers; (2) receive, process and ship orders and handle other product and services on a timely basis; (3) manage the
accurate billing and collections for thousands of customers; and (4) process payments to suppliers. If these systems
are interrupted, damaged or breached by an unforeseen event or actions of a third party, such as a cyber attack, or
fail for any extended period of time, we could have a material adverse impact on our results of operations.
We could experience losses or liability not covered by insurance.
In order to provide prompt and complete service to our major Distribution Solutions segment’s customers, we
maintain significant product inventory at certain of our distribution centers. While we seek to maintain property
insurance coverage in amounts sufficient for our business, there can be no assurance that our property insurance will
be adequate or available on acceptable terms. One or more large casualty losses caused by fire, earthquake or other
natural disaster in excess of our coverage limits could have a material adverse impact on our results of operations.
Our business exposes us to risks that are inherent in the distribution, manufacturing, dispensing and
administration of pharmaceuticals and medical-surgical supplies, the provision of ancillary services, the conduct of
our payer businesses (which include care management programs and our nurse advice services) and the provision of
products that assist clinical decision-making and relate to patient medical histories and treatment plans. If customers
or individuals assert liability claims against our products and/or services, any ensuing litigation, regardless of
outcome, could result in a substantial cost to us, divert management’s attention from operations and decrease market
acceptance of our products. We attempt to limit our liability to customers by contract; however, the limitations of
liability set forth in the contracts may not be enforceable or may not otherwise protect us from liability for damages.
Additionally, we may be subject to claims that are not explicitly covered by contract, such as a claim directly by a
patient. We also maintain general liability coverage; however, this coverage may not continue to be available on
acceptable terms, may not be available in sufficient amounts to cover one or more large claims against us and may
include larger self-insured retentions or exclusions for certain products. In addition, the insurer might disclaim
coverage as to any future claim. A successful product or professional liability claim not fully covered by our
insurance could have a material adverse impact on our results of operations.
The failure of our healthcare technology businesses to attract and retain customers due to challenges in software
product integration or to keep pace with technological advances may significantly reduce our results of
operations.
Our healthcare technology businesses, the bulk of which resides in our Technology Solutions segment, deliver
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 payers.
Challenges integrating software products could impair our ability to attract and retain customers, and it could have a
material adverse impact on our consolidated results of operations and a disproportionate impact on the results of
operations of our Technology Solutions segment.
Future advances in the healthcare information systems industry could lead to new technologies, products or
services that are competitive with the technology products and services offered by our various businesses. Such
technological advances could also lower the cost of such products and services or otherwise result in competitive
pricing pressure or render our products obsolete.
The success of our technology businesses will depend, in part, on our 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 businesses must also 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 businesses to attract and retain customers, and thereby it could have a material adverse impact on our
results of operations.