McKesson 2011 Annual Report Download - page 4

technology segments. We were pleased that our
key hospital clinical systems received government
certification in fiscal 2011 for Stage 1 Meaningful Use,
enabling our customers to pursue incentive funds
under the American Recovery and Reinvestment
Act (ARRA). The increased focus on improving
quality and providing greater access affords excellent
opportunities for growing our business.
Robust Market for Generic Medications
According to IMS Health, generic medications have
experienced almost double-digit growth since 2005,
a trend expected to continue. McKesson purchases
generics as a single organization, while providing
tailored offerings for each customer segment. We
create value for customers and manufacturing
partners through our scale, distribution efficiency,
global sourcing initiatives and understanding of each
stakeholder’s individual requirements. McKesson is
among the largest buyers of generics in the United
States, and well positioned to benefit from the
expanding use of generic medications.
Higher-Margin Businesses in Fast-Growth Sectors
McKesson consistently uses its strong balance sheet
to acquire and build higher-margin businesses in the
fast-growth sectors of healthcare, and we combine
our diverse assets to generate additional value for our
customers. Continuing this practice, our acquisition
of US Oncology was a major highlight in fiscal 2011.
One of the largest oncology services companies in
the United States, US Oncology serves more than
1,400 physicians who treat over 850,000 patients
annually throughout the nation. This acquisition
strengthens our position in specialty distribution and
advances our ability to provide enhanced service
offerings to providers, manufacturers, payers and
patients.
Strength and Breadth in Technology Offerings
Today’s hospitals, payers, pharmacies and physician
practices face a broad set of challenges, including
new payment models, regulatory changes, increased
cost pressures and a higher bar for quality of care.
Our technology solutions empower our customers to
overcome these obstacles, while creating stable and
recurring revenue streams for the company. McKesson
Provider Technologies provides a comprehensive suite
of technology solutions to hospitals and physician
offices. Our RelayHealth division connects and
streamlines operations within and between care
settings, and our Health Solutions division combines
expert technology and evidence-based clinical
information to allow payers to manage financial,
administrative and clinical processes and improve
care quality. Our customer relationships will deepen
as we work closely together to lower medical and
administrative costs and improve care coordination
across settings.
Success in Driving Cost Control and
Quality Improvements
McKesson uses Six Sigma process discipline to reduce
costs and continually improve quality in every aspect
of our business. We collaborate with suppliers
to develop joint process improvements and have
extended Six Sigma consulting to our customers,
enabling them to achieve higher levels of operational
excellence and efficiency. We also drive down costs
in other ways, including our global sourcing program,
which coordinates and optimizes purchasing across
the various businesses and geographies of McKesson.
Strong, Stable Relationships with
Manufacturing Partners
Over McKesson’s long and successful history, we
have built excellent relationships with our branded
manufacturing partners through a combination of
best-in-class distribution and marketing services.
Our adherence and compliance programs, for
example, help patients stay on their prescribed
medications, resulting in better health outcomes and
incremental revenue for our manufacturing partners,
our customers and McKesson. Further, our strong
relationships with our manufacturing partners enable
us to earn steady levels of compensation and expand
margins. We will continue to develop innovative
programs that support our partners’ business and
clinical strategies, while remaining laser-focused
on providing the most efficient, cost-effective and
reliable distribution services in the industry.
Financial Strength and Flexibility
Our strong balance sheet and cash flow allow us
to deploy capital to optimize the performance of
our existing portfolio, lay the foundation for future
growth and provide our stockholders with both short
and long-term returns. In fiscal 2011, we repurchased
“Our strong balance sheet and cash
flow allow us to deploy capital to
optimize the performance of our existing
portfolio, lay the foundation for future
growth and provide our stockholders
with both short and long-term returns.”