I think his point was that in the BIG scheme of things, 300m (or 800m) of 40b isn't a big impact (which it isn't) ... 300m is less than 1% of revenue; 800m is 2%. Doesn't appear to be a company buster.
Goose - don't take things so personally. I knew the Bergen generics program and it created value for many customers. It now creates value for AAS - more leverage for more customers. Its critical margin for the distributor.
See RxMan post. AAS is viewed as a good service company that focuses on price to differentiate...and since the margin comes from the mfgr. not the customer, its a tired formula.
As for Webcast, I listened. Nice PR. What we all want to see is a press release announcing an "Anthem-like" win because of Bridge. Tenet picked McKesson despite service problems with them years ago....suggesting something else was in the winning formula. Perhaps you have insight?
I'm pulling for ABC, just concerned when someone posts that losing 800 million with flagship accounts doesn't mean anything. It does.
>>Bergen created strategic relationships that generated much more than distribution fees.<<
Is tenet the best & ONLY example you can give? I heard nothing but negative feedback about BBC's Generic Program. BBC's Generic Program also got them kicked out of some national buying groups, such as VHA.
You do not have a clue about Bridge. Do yourself a favor and listen to ABC's Investor Webcast on 12/05/02.
If Tenet prefers Pyxis, then why did Tenet go with McKesson?
Goose - I gave you an example of Tenet buying generics, which everyone knows generates more margin for the distributor; and Tenet saved money or would not have converted from their own file - so want to venture a guess why they switched back?
And you think the VA will take up the slack for Tenet, HCA and Anthems' preferring robust Pyxis solutions (versus Bridge?) Well maybe...they do spend alot for toilet seats and hammers as I recall.
Thanks for your point of view.
I don't work for the company so I can't evaluate whether or not there was/is better value creation via customer relationships at BBC vs. AAS.
I'm more of a number cruncher at the company level and I think the overall record at AAS was better.
I am all ears though if you have more to contribute. :-)
Who is going to buy a Bridge system?.....VA
Tenet bought Bergen generics....and probably the reason the contract was lost.
AAS sells price.....Why so many customer service awards then?
Bergen created strategic relationships that generated much more than distribution fees....Plese give me an example?
I generally find your posts informative and agree with most...including your assessment of (mis)management as it regards past Bergen acquisitions. However, I found value creation in customer dealings to be just the opposite. AAS sells price. Bergen created strategic relationships that generated much more than distribution fees. Margin will be markedly thinner going forward, just watch. And, when you serve the Healthcare space and must rely on GPO's because you couldn't demonstrate value to the more savvy Investor Owned Chains (Tenet and HCA) - well, you lose twice. e.g. Tenet bought Bergen generics. Who is going to buy a Bridge system? Anthem or a GPO?
Heading further south IMO.
No big deal...what is a big deal then ?? On top of losing over 500mm with Tenet and dismissing since THC is under pressure...look at where Columbia is today versus 3 years ago when they had their issues...that's 800mm in revs missing...how many 800mm customer opportunities do you think there are out there !! and I bet it's not over yet !! Any good customers of former Bergen who don't like the bogus approach of AAS guys to the market place are going to make their moves in the next year...No wonder they can't figure out if their growing the business by 11 or 14%..
We'll see exactly how much new business was added when the company releases numbers on jan 24th. I expect that the Medco renewal plus the addition of some smaller clients will more than make up for the loss of the Anthem/Tenet contracts. Remember ABC will do $45B+ in revenues this year, dont sweat over $300M.
One thing to keep in mind is that Amerisource management is much more "shareholder" and "value creation" oriented than the Bergen management was. The major criticism of Bergen management was the tendency to overpay for deals and make other questionable financial moves.
I do not know the details of these individual contracts, but it would not shock me if they weren't particulary "economic". It is quite possible they were "allowed to walk" because they weren't profitable enough to retain.