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1 Year : From Aug 2017 to Aug 2018
By Melanie Evans
Shares of health-care distributors fell Tuesday on news the sector could experience more consolidation and heightened competition from retail giant Amazon.com Inc.
News that three distributors face antitrust allegations from the Federal Trade Commission also weighed on shares.
A Wall Street Journal report Monday evening that Walgreens Boots Alliance Inc. has made a takeover approach to pharmaceutical distributor AmerisourceBergen Corp. helped push down shares in McKesson Corp., a rival distributor of pharmaceuticals, Jefferies & Co. equities analyst Brian Tanquilut said.
The news buoyed Amerisource's stock Tuesday, an exception to the broader market dip. Amerisource shares were up 8.79% as of early Tuesday afternoon. Walgreens and Amerisource declined to comment.
McKesson is also a medical supply distributor, a segment of the market that is under increasing pressure from Amazon, as the online retail giant intensifies its push into distribution to U.S. hospitals and clinics, The Wall Street Journal reported Tuesday.
Amazon has invited hospital executives to Seattle in recent months to sound out ideas for expanding the retailer's medical-supply business, and sent employees to a large Midwestern hospital system to pilot its effort, the Journal reported. That news likely contributed to volatility in stocks for McKesson, Cardinal Health Inc. and Owens & Minor Inc., analysts said.
Amazon has in recent months started to actively compete for a slice of the distribution business to U.S. hospitals, pitching its business-to-business marketplace as a place to shop for medical supplies, which are typically purchased under contract with distributors and manufacturers, said Rick Conlin, a partner with the Advisory Board, a unit of UnitedHealth Group Inc. that offers consulting services to hospitals.
Shares in distributor McKesson were down 2.17% Tuesday afternoon. Medical supply distributors Cardinal Health and Owens & Minor stocks were down 3.18% and 5.10%, respectively. McKesson and Owens & Minor didn't respond to requests for comment. Cardinal Health declined to comment.
Stocks also dipped Tuesday for dental distributors Henry Schein, Inc. and Patterson Companies, Inc. after allegations by the Federal Trade Commission that the large dental distributors conspired to deny discounts to group purchasers for dentists.
The FTC said it filed its complaint Monday against Henry Schein, Patterson Companies and Benco Dental Supply Co. in administrative court in Washington, D.C. A copy of the complaint isn't yet public.
Brandon Couillard, an analyst with Jefferies & Co., said the FTC's compliant sent stocks in Henry Schein and Patterson Companies lower.
In separate statements, Henry Schein and Patterson Companies dismissed the allegations as "meritless" and said the companies would defend themselves vigorously.
Kristie Ceruti, a spokeswoman for Benco, called the FTC allegations "completely contrary to our long-held belief in, and actions to create, an open and growing dental marketplace founded on greater choice, convenience and improved value."
The FTC separately alleged Benco invited a fourth dental distributor to collude to deny discounts to purchasing groups.
"We expect to fully resolve this issue in a way that clarifies the integrity of our people and processes," Ms. Ceruti said.
Write to Melanie Evans at Melanie.Evans@wsj.com
(END) Dow Jones Newswires
February 13, 2018 15:24 ET (20:24 GMT)
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