Today's Technical View on Cardinal Health and McKesson: Emerging Markets to Drive Growth for Drugs Wholesalers

Feb 14, 2013, 08:00 ET from

LONDON, February 14, 2013 /PRNewswire/ --

The weak macroeconomic environment has had an impact on the pharmaceutical industry, however, not as much as other industries. The growth for pharmaceutical wholesalers in 2013 will be driven by emerging markets. Also, the launch of new drugs and potential blockbusters will drive growth for pharmaceutical wholesalers such as Cardinal Health Inc. (NYSE: CAH) and McKesson Corporation (NYSE: MCK). StockCall initiated free in-depth technical analysis on Cardinal Health and McKesson which are currently available upon sign up at

Emerging Markets, New Drug Launches and Potential Blockbusters to Drive Growth

The International Federation of Pharmaceutical Wholesalers (IFPW), which represents a strong, effective platform to establish strategic dialogue within the worldwide pharmaceutical community, expects average annual growth of 13% to 16% for emerging markets (Brazil, Russia, India, China, Turkey, Mexico and Korea). These markets are expected to account for 40% of the global market growth through 2013.

The IFPW believes that despite the pressures, there is still room for new drug launches and potential blockbusters, which should drive growth for drugs wholesalers. This year will see the launch of a number of new drugs, including products targeted at niche uses and narrow patient populations. Overall, IFPW expects pharmaceutical market to grow between 3% and 6% through 2013.

Patent Expirations

The pharmaceutical industry saw a number of patent expirations for blockbuster drugs in 2012 and is likely to see more in 2013. As a result, the share of generic drugs will continue to increase. This will have an impact on the top-line of pharmaceutical wholesalers.

Cardinal Reports Strong Q2 Results

Last week, Cardinal Health reported strong financial results in its second quarter of fiscal 2013. The Dublin, Ohio-based company reported second quarter revenue of $25.2 billion. The company's revenue for the pharmaceutical segment fell 8% to $22.7 billion in the second quarter. The decline was due to non-renewal of Express Scripts contract as well as expected conversions from branded pharmaceuticals to lower-priced generics. The decline was partially offset by revenues from new pharmaceutical distribution customers. Sign up for the free technical analysis on Cardinal Health Inc. at  

Cardinal Health's non-GAAP earnings for the quarter rose 15% to $0.93 per share.

George Barrett, Chairman and CEO of Cardinal Health, noted that the company has now completed a strong first half to its fiscal 2013 with a good second quarter performance. Barrett said that while continued brand-to-generic conversions and the previously announced movement of the Express Scripts contract drove a revenue decline in the Pharmaceutical segment, excellent performance from generic programs and new customer wins fueled profit gains.

McKesson's Q3 Results

McKesson recently reported revenue of $31.2 billion for its third quarter ended December 31, 2012, up 1% over the same period in the previous year. The company's adjusted earnings per share for the quarter was $1.41, up from $1.40 per share reported for the same period in the previous year. Download the free report on McKesson Corporation by registering at  

John H. Hammergren, Chairman and CEO of McKesson, said that the company's full-year view of the operating performance in its Distribution Solutions segment is now better than its original expectations.

For the fiscal year ended on March 31, 2013, McKesson expects adjusted earnings to be between $7.10 per share and $7.30 per share.

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