Business

Walgreens bid for AmerisourceBergen can be a head-scratcher: analysts


(Reuters) – Walgreens’ potential transfer to purchase a drug distributor by which it already has a 26 p.c stake has some analysts questioning the logic and questioning if it will be sufficient to compete in an evolving U.S. healthcare sector.

Analysts mentioned any deal wouldn’t be a shock, however may cost Walgreens alternatives down the road as the corporate tries to maintain tempo with rival CVS Well being Corp, which is about to purchase well being insurer Aetna Inc, and an impending menace from Amazon.com.

Walgreens Boots Alliance Inc, the most important U.S. drugstore operator, has made a takeover method to AmerisourceBergen Corp, the Wall Road Journal reported on Monday, however mentioned the talks have been in early phases.

AmerisourceBergen shares have been up 12 p.c in early buying and selling, whereas Walgreens shares have been up 1.four p.c. Shares of drug distributors Mckesson Corp and Cardinal Well being have been decrease.

“This purported deal wouldn’t be surprising … however we’re at the moment struggling to see the strategic attract of the mixture for Walgreens,” Baird analyst Eric Coldwell mentioned in a observe.

The 2 firms are already intently allied, having struck a 10-year deal in 2013 for AmerisourceBergen to purchase medication for Walgreens, which subsequently acquired 26 p.c of the distributor.

The rationale for such a deal is a little bit of a head-scratcher as Walgreens and AmerisourceBergen have already got a three way partnership that affords each the strategic worth that combining would offer, Jefferies analyst Brian Tanquilut mentioned.

The information comes because the U.S. healthcare panorama stays in a state of flux, with adjustments to the U.S. Inexpensive Care Act escalating drug costs and Amazon’s potential entry.

Walgreens has highlighted that it tends to want partnerships, which analysts say might ultimately flip into acquisitions.

A deal, nonetheless, would give Walgreens a much bigger presence within the specialty pharmacy house, the place it doesn’t have enough publicity, setting it as much as compete higher in opposition to CVS and pharmacy profit supervisor Categorical Scripts Holding Co.

“Because the broader healthcare sector focuses extra on shifting specialty drug administration out of facility-based (hospital/doctor’s workplace) settings, gaining a powerful foothold in specialty by means of ABC may very well be a useful strategic transfer,” Tanquilut mentioned.

Reporting by Ankur Banerjee in Bengaluru; Modifying by Sayantani Ghosh

Yasir Ali
This platform is providing Business news, sports news, fashion news, bitcoin news, weather and technology news.
https://writingforacademies.com

Leave a Reply

Your email address will not be published. Required fields are marked *