November 6, 2017 / 9:36 PM / a year ago

Drug distributor McKesson to buy CVS Health's services unit

(Reuters) - Drug distributor McKesson Corp (MCK.N) said on Monday it would buy drugstore operator CVS Health Corp’s (CVS.N) unit that provides various tailored services to pharma firms in a $735 million deal to expand the range of services it offers.

The unit, RxCrossroads, provides reimbursement support, integration with network pharmacies, patient adherence programs, specialty logistics services, sales operations support and mail-order pharmacy services.

McKesson said the deal will also add plasma logistics to its manufacturer services, which will allow it “to serve biopharma companies of all sizes and throughout the product life cycle.”

The deal comes as growing speculation that Inc (AMZN.O) is planning to enter the prescription drug business has sent tremors through the pharmaceutical supply chain and rattled the shares of the drug distributors, pharmacy benefit managers and drug retailers.

Many companies in the industry are preparing for the online retailer’s entry, with the latest comments coming from CVS Health itself earlier in the day after it reported a better-than-expected quarterly profit.

CVS Health said it would start next-day delivery from its stores in 2018, a move analysts said was to fortify itself against Amazon’s possible entry.

CVS Health, which acquired RxCrossroads from Omnicare Inc in 2015, is also reported to be in talks to buy health insurer Aetna Inc AET.N.

McKesson said the deal to buy RxCrossroads was valued at about $635 million, net of the present value of incremental cash tax benefits. The deal will be funded by cash on hand.

McKesson said the deal will add about 20 cents to its adjusted earnings per share by the third year after the deal closes, which is expected in the fourth quarter of fiscal 2018.

Shares of McKesson and CVS Health were little changed in trading after the bell.

Reporting by Divya Grover in Bangalore; Editing by Savio D'Souza

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