Cardinal Health 2011 Annual Report Download - page 32

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T
he Pharmaceutical distribution business is a party to distribution service agreements with pharmaceutical
manu
f
acturers. T
h
ese agreements genera
ll
y
h
ave terms rang
i
ng
f
rom one year w
i
t
h
an automat
i
c renewa
lf
eatur
e
to five
y
ears. Generall
y
, these a
g
reements are terminable before the
y
expire onl
y
if the parties mutuall
y
a
g
ree, if
there is an uncured breach of the agreement, or if one party is the subject of a bankruptcy filing or similar
i
nso
l
vency event. Some agreements a
ll
ow t
h
e manu
f
acturer to term
i
nate t
h
e agreement w
i
t
h
out cause w
i
t
hi
na
d
efined notice
p
eriod
.
O
ur P
h
armaceut
i
ca
l
segment’s nuc
l
ear p
h
armacy serv
i
ces
b
us
i
ness
di
spenses severa
l
pro
d
ucts prepare
d
u
sin
g
a particular radioisotope. Durin
g
fiscal 2010, it was difficult to acquire sufficient quantities of that
radioisotope from third-party suppliers because of a continued and prolonged shortage of a critical raw material
u
se
d
to
d
er
i
ve t
h
at ra
di
o
i
sotope. However, t
h
e supp
l
yo
f
raw mater
i
a
l
norma
li
ze
di
nt
h
e
fi
rst
h
a
lf
o
ffi
sca
l
2011
.
Competitio
n
We operate in a hi
g
hl
y
competitive environment in the distribution of pharmaceuticals and relate
d
h
ealthcare services. We also operate in a highly competitive environment in the development, manufacturing an
d
di
str
ib
ut
i
on o
f
me
di
ca
l
an
d
surg
i
ca
l
pro
d
ucts. We compete on many
l
eve
l
s,
i
nc
l
u
di
ng serv
i
ce o
ff
er
i
ngs, suppor
t
services, breadth of
p
roduct lines, and
p
rice.
I
nt
h
eP
h
armaceut
i
ca
l
segment, we compete w
i
t
h
two ot
h
er nat
i
ona
l
,
f
u
ll
-
li
ne w
h
o
l
esa
l
e
di
str
ib
utors
(McKesson Corporation and AmerisourceBer
g
en Corporation) and a number of re
g
ional wholesale distributors,
self-warehousing chains, direct selling manufacturers, specialty distributors, third-party logistics companies, an
d
nuc
l
ear p
h
armac
i
es, among ot
h
ers. In a
ddi
t
i
on, t
h
eP
h
armaceut
i
ca
l
segment
h
as exper
i
ence
d
compet
i
t
i
on
f
rom
a
number of or
g
anizations offerin
gg
eneric pharmaceuticals, includin
g
telemarketers.
I
nt
h
eMe
di
ca
l
segment, we compete w
i
t
h
many
diff
erent
di
str
ib
utors,
i
nc
l
u
di
ng Owens & M
i
nor, Inc.,
T
hermo Fisher Scientific Inc., PSS World Medical, Inc., Henr
y
Schein, Inc., and Medline Industries, Inc. I
n
a
ddition, we compete with regional medical products distributors, third-party logistics companies an
d
manu
f
acturers’
di
rect
di
str
ib
ut
i
on. Compet
i
tors o
f
t
h
eMe
di
ca
l
segment’s manu
f
actur
i
ng an
d
proce
d
ura
lki
t
businesses include Kimberl
y
-Clark Corporation, Ansell Limited, DeRo
y
al Industries Inc., Medline Industries,
I
nc., Mölnlycke Health Care, America Contract Sterilization, Professional Hospital Supply and Medical Actio
n
I
n
d
ustr
i
es.
E
mp
l
oyees
A
s of June 30, 2011, we had approximatel
y
22,600 emplo
y
ees in the United States and approximatel
y
9,30
0
employees outside of the United States. Overall, we consider our employee relations to be good
.
I
nte
ll
ectua
lP
ro
p
ert
y
We re
l
y on a com
bi
nat
i
on o
f
tra
d
e secret, patent, copyr
i
g
h
tan
d
tra
d
emar
kl
aws, non
di
sc
l
osure an
d
ot
h
e
r
contractual provisions, and technical measures to protect our products, services and intan
g
ible assets. We hol
d
patents relating to aspects of our distribution operations, including our nuclear pharmacy products and service
off
er
i
ngs, an
d
re
l
at
i
ng to me
di
ca
l
an
d
surg
i
ca
l
pro
d
ucts, suc
h
as
fl
u
id
suct
i
on an
di
rr
i
gat
i
on
d
ev
i
ces; surg
i
ca
l
waste mana
g
ement s
y
stems; sur
g
ical and medical examination
g
loves; sur
g
ical drapes,
g
owns and facial
protection products; and patient temperature management products. We also operate under licenses for certain
propr
i
etary tec
h
no
l
og
i
es, an
di
n certa
i
n
i
nstances we
li
cense our tec
h
no
l
og
i
es to t
hi
r
d
part
i
es. A
ll
o
f
t
h
ese
proprietar
y
ri
g
hts are important to our operations, but we do not consider an
y
particular patent, trademark,
l
icense
,
franchise or concession to be material to our overall business.
6