Cardinal Health 2011 Annual Report Download - page 7
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Our preferred products, central to our category management
strategy, grew faster than the rest of our product portfolio.
However, as previously noted, surgical procedure volumes
remain somewhat sluggish, which disproportionately impacts
our preferred products business. We continue to build out
product categories with Cardinal Health-branded products, as
well as select national brands. And we feel very good about our
expanded global sourcing capabilities, our geographic presence,
and the regulatory capabilities required to drive this strategy.
The ambulatory care channel — where we have made
investments to grow our footprint with an awareness that
care continues to move to non-acute sites — performed well,
outpacing industry growth. We were also pleased to see
that the cross-selling eort between our Pharmaceutical and
Medical segments is bearing fruit in the physician oce space.
Overall, scal 2011 was a tremendous year with strong
operational execution, excellent nancial performance,
important strategic moves and, notably, robust total shareholder
return of more than 37 percent. I am very pleased with the
work we have done over the past two years to strengthen
our core businesses, expand our gross margin rate, optimize
working capital, and make strategic investments for the future
— these actions have helped us to reshape our trajectory
and begin to deliver against our long-term sustainable total
shareholder return goal of at least 11 percent annually.
During scal 2011, we took signicant steps to reposition
our Medical business and continued our investment in major
infrastructure change, which is on track for our pilot launch
in October 2011, followed by our national implementation in
the second half of scal 2012. And we continue to expect a
meaningful contribution to margins from this major business
transformation initiative as we move into scal 2013.
Although our Medical segment faced some unique
challenges, namely commodity price increases, a one-time
CareFusion revenue recognition in scal 2010 triggered
by the spino, and sluggish healthcare utilization trends, the
underlying performance of the business is strong. The
Medical teams continue to compete well with a value
proposition which is increasingly resonant with customers,
as evidenced by a number of key wins, including several
large hospital networks and the expansion of our business
with the Department of Defense.
We also nished our reorganization around channels, moving
decision-making closer to the customer and, at the same time,
we accelerated our capabilities in category management,
which we believe will be increasingly valuable to customers
looking for eciencies and for suppliers looking to grow share.
“The acquisition of Yong Yu in China not only expanded our pharmaceutical business in a
market which is growing rapidly, but it also enables growth opportunities for other parts
of our portfolio, including nuclear, consumer health, and medical product distribution.”