The healthcare industry has been evolving with new regulations and aging customers. Companies need to add services, expand their customer bases and find new markets for growth, all while reducing costs. Specialty pharmacy is one area in which providers are seeking targets. Strategic buyers have been actively pursuing deals in the space, particularly in oncology and rheumatology.

McKesson Corp. executive vice president of corporate strategy and business development Bansi Nagji tells Mergers & Acquisitions that the company is currently focusing on expanding in oncology and has deals in the space, including the purchase of oncology pharmacy provider Biologics.

“The entire industry is evolving to meet new macro-level shifts and challenges, such as the increased global nature of healthcare, new entrants into the value chain and expanded patient access,” says Nagji. “It is clear that specialty drugs will continue to be a significant growth driver in the U.S. and European pharmaceutical markets.”

Kroger Co. (NYSE: KR) is another strategic buyer that has been expanding in specialty pharmacies through acquisitions. The company has acquired Orlando, Florida-based Modern Healthcare, a pharmacy that focuses on complex illnesses, from San Francisco, California-based Altamont Capital Partners for an undisclosed amount.

Cincinnati-based Kroger says the acquisition will help both companies reduce costs, while it allows Kroger to expand in the West and Southwest. Modern Healthcare helps treat patients in several areas including: rheumatology, dermatology, hepatitis C and cystic fibrosis. Kroger mentions that specialty pharmacy is one of the main areas where it is seeking growth.

Nagji adds that although McKesson (NYSE: MCK) evaluates several potential deals, the company will stay disciplined and make acquisitions that fit McKesson’s M&A strategy and goals.

Nagji says San Francisco-based McKesson will continue to look for specialty pharmacy targets. “We have placed a priority on deals that extend our channel influence and provide value-added services in the specialty space.”  

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