McKesson 2014 Annual Report Download - page 23

McKESSON CORPORATION
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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 acquisition of Celesio exposes us to additional risks related to providing pharmacy services. Pharmacies are exposed to
risks inherent in the packaging and distribution of pharmaceuticals and other healthcare products, such as with respect to improper
filling of prescriptions, labeling of prescriptions, adequacy of warnings, unintentional distribution of counterfeit drugs and
expiration of drugs. Although Celesio maintains liability insurance, the coverage may not be adequate to protect us against future
claims. If Celesio’s insurance coverage proves to be inadequate or unavailable or Celesio suffers reputational harm as a result of
an error or omission, it 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
and single entity clinical, patient care, financial, supply chain and strategic management software solutions 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 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 could have a material adverse impact on our results of operations.