U.S. markets closed

McKesson, Walgreens Form JV for European Pharmaceutical Unit

Zacks Equity Research

McKesson Corporation MCK recently entered an agreement with Walgreens Boots Alliance WBA to create a joint venture (JV) that will combine the companies’ pharmaceutical wholesale businesses in Germany.

Following the announcement, shares of McKesson inched up 0.3% to $143.93 at close.

Notably, the company has also been selected by the Department of Veterans Affairs to continue as the prime pharmaceutical supplier to more than 750 locations.

How Does McKesson Stand to Gain?

Per the terms of the JV, Walgreens will have a 70% controlling equity interest, while McKesson will have the rest. Financial terms of the transaction have been kept under wraps.

The latest move is also expected to boost McKesson’s European Pharmaceutical Solutions segment. For investors’ notice, the segment distributes branded and generic pharmaceutical drugs along with other healthcare-related products in Europe, operating in 13 countries.

It is encouraging to note that, in the last reported quarter, the unit grew 4% at constant currency on market growth in the pharmaceutical distribution business.

Management at McKesson expects revenues to rise in Europe in the second half of fiscal 2020.

Market Prospects

MarketWatch predicts that the global drug distribution market will reach a worth of $12.70 billion by 2024, given the rise in chronic diseases worldwide.

Hence, the latest development has been a well-timed one for McKesson.

Price Performance

In a year’s time, this Zacks Rank #3 (Hold) company has rallied 24.8% compared with the industry’s 1.4% rise.

Key Picks

Some better-ranked stocks from the broader medical space are CONMED Corporation CNMD and HealthEquity HQY. While CONMED carries a Zacks Rank #2 (Buy), HealthEquity sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Conmed has a long-term earnings growth rate of 17%.

 HealthEquity has a long-term earnings growth rate of 25%.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CONMED Corporation (CNMD) : Free Stock Analysis Report
 
Walgreens Boots Alliance, Inc. (WBA) : Free Stock Analysis Report
 
HealthEquity, Inc. (HQY) : Free Stock Analysis Report
 
McKesson Corporation (MCK) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research