McKesson 2014 Annual Report Download - page 9

McKESSON CORPORATION
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We also offer our industry leading iKnowMedSM and iKnowMed Generation 2 Electronic Health Record, Lynx® integrated
technologies, and clinical and practice management tools, all of which help community practices achieve better business health-
improving inventory management and practice workflow and reimbursement processes, as well as delivering business efficiencies
and clinical-decision support. McKesson Specialty Health works with manufacturers across all phases of the product development
and commercialization lifecycle, including clinical research, to optimize delivery of complex medication to patients. Through
custom distribution and safety programs, we help support appropriate product utilization, as well as the development and
management of Risk Evaluation Mitigation Strategies reimbursement, healthcare informatics and patient access programs, and
we enable manufacturers to deliver cost effective patient access to needed therapies. McKesson Specialty Health supports The
US Oncology Network and US Oncology Research. The US Oncology Network is one of the nation’s largest networks of
community-based oncology physicians dedicated to advancing high-quality, evidence-based cancer care. US Oncology Research
is one of the nation’s largest research networks, specializing in Phase I — Phase IV oncology clinical trials.
McKesson Canada: McKesson Canada is one of the largest pharmaceutical distributors in Canada. McKesson Canada,
through its network of 16 distribution centers, provides logistics and distribution to more than 800 manufacturers — delivering
their products to retail pharmacies, hospitals, long-term care centers, clinics and institutions throughout Canada. Beyond
pharmaceutical distribution, logistics and order fulfillment, McKesson Canada also provides automation solutions to its retail and
hospital customers, dispensing millions of doses each year. In partnership with other McKesson businesses, McKesson Canada
provides a full range of services to Canadian manufacturers and healthcare providers, contributing to the quality and safety of care
for patients. In March 2012, we acquired substantially all of the assets of Drug Trading Company Limited, the independent banner
business of the Katz Group Canada Inc. (“Katz Group”), and Medicine Shoppe Canada Inc., the franchise business of the Katz
Group. The acquisition of the assets from the Drug Trading Company Limited consisted of a marketing and purchasing arm of
independently owned pharmacies in Canada. The acquisition of Medicine Shoppe Canada Inc. consisted of the franchise business
of providing services to independent pharmacies in Canada.
McKesson Pharmacy Systems and Automation: This business supplies integrated pharmacy management systems, automated
dispensing systems and related services to retail, outpatient, central fill, specialty and mail order pharmacies. Its primary approach
is to provide the customer with a pharmacy management system that best suits the particular needs of their business operation.
This objective is achieved by offering three pharmacy management products: EnterpriseRx®, an industry-leading, Software as
a Service or SaaS-based management system that intelligently integrates all workflow and communication processes within the
pharmacy environment; Pharmaserv®, a fully integrated, server-based pharmacy management system that gives the customer
complete control of their pharmacy data; and PharmacyRx, a cost-effective, SaaS-based pharmacy management system that can
be installed quickly and makes processing prescriptions fast and easy. These offerings allow large retail chain, hospital outpatient
pharmacies and small and independent pharmacies to meet the high demand for prescriptions while maximizing profits and
optimizing operations. We also own a 39% interest in Parata Systems, LLC (“Parata”), which sells automated pharmacy and
supply management systems and services to retail and institutional pharmacies.
International pharmaceutical distribution and services
On February 6, 2014, we completed the acquisition of 77.6% of the then outstanding common shares of Celesio and certain
convertible bonds of Celesio for cash consideration of $4.5 billion, net of cash acquired. Upon the acquisition, our ownership of
Celesio’s fully diluted common shares was 75.6% and, as required, we consolidated Celesio’s debt with a fair value of $2.3 billion
as a liability on our consolidated balance sheet. At March 31, 2014, we owned approximately 75.4% of Celesio’s outstanding and
fully diluted common shares. Celesio is an international wholesale and retail company and a provider of logistics and services to
the pharmaceutical and healthcare sectors. Celesio’s headquarters is in Stuttgart, Germany and it operates in 14 countries around
the world.
Celesio’s pharmaceutical wholesale business supplies pharmaceuticals and other healthcare-related products generally to retail
pharmacies and institutional customers. Celesio’s wholesale network consisting of 133 branches delivers to over 65,000 pharmacies
daily in ten European countries and Brazil. Celesio functions as a vital link between manufacturers and pharmacies in supplying
pharmaceuticals to patients, and generally procures the medicines approved in each country as well as other products sold in
pharmacies directly from the manufacturers. Celesio stores pharmaceutical and other products at regional wholesale branches
with the support of its efficient warehousing management system. With a refined distribution system, Celesio strives to ensure
rapid and reliable delivery directly to its pharmacy customers.
Celesio’s retail pharmacy business serves patients and consumers in six European countries directly through 2,175 of its own
pharmacies and almost 4,300 participant pharmacies operating under brand partnership arrangements. Celesio provides non-
prescription products and medical services in addition to traditional prescription pharmaceuticals. Celesio operates under the
Lloyds Pharmacy brand in the United Kingdom, which accounted for approximately 66% of the total volume of Celesio’s retail
pharmacy business for its fiscal year ended December 31, 2013.