Careers at McKesson
McKesson’s mission is to create a sustainable future for health care.
McKesson is a distributor and provider of healthcare services and technology. The company operates two reportable business segments:
- Distribution Solutions – Distributes generic and branded pharmaceutical drugs and other healthcare-related products, and provides practice management, clinical support, technology, and business solutions to community-based oncology and other specialty practices.
- Technology Solutions – Provides enterprise-wide clinical, financial, patient care, strategic management, and supply chain technology solutions, as well as outsourcing, connectivity, and other services (including managed and remote hosting services) to healthcare organizations.
In 1833 Charles Olcott and his partner John McKesson founded Olcott & McKesson, a wholesaler and importer of botanical drugs. Twenty years later, with the death of Olcott and the addition of Daniel Robbins, the firm was renamed McKesson & Robbins. Over the next 100 years the company grew significantly by persuading other distributors of wholesale drugs to become its subsidiaries.
In 1967 the firm faced a hostile takeover by Foremost Dairies, being renamed Foremost-McKesson. The parent had no corporate strategy and began acquiring diverse businesses, from sporting goods to candy. In 1976, new executives worked to streamline its operations by selling low-profit units. They also reorganized it into four groups: drugs/healthcare, wine/spirits, foods, and chemicals.
The new leaders also aimed to redefine the firm’s “middleman” distributor role by making it more indispensable. They did so by offering data processing procedures that were essential for both customers and suppliers, enabling the company to act as part of their marketing teams. The value-added partnership was prized by small businesses that had difficulty competing with national chains.
The strategy made it a top wholesaler and led to annual profit increases of 20% on average. In 1979 it divested over one-third of its holdings to focus on retail and healthcare products. It also began acquiring many healthcare product distribution firms, including technology-related outfits, and shortened its name to McKesson in 1984. By 1990 it was the leader of the drug wholesaling industry.
Benefits at McKesson
Business model of McKesson
McKesson has a niche market business model, with a specialized customer segment. The company targets its offerings at pharmacies, pharmaceutical manufacturers, and healthcare providers. In its most recent fiscal year, sales to its 10 largest customers accounted for 52.4% of its total revenues.
McKesson offers one primary value proposition: brand/status.
The company has established itself as a powerful brand as a result of its success. It bills itself as the oldest and largest healthcare company in the U.S. It is also the second-largest specialty firm (after acquiring U.S. Uncology in 2010) and the fourth largest pharmacy chain, with 3,000 retail pharmacies compromising its Health Mart franchise. McKesson also has the following customer statistics:
- Serves over 50% of American hospitals, and 76% of hospitals with 200+ beds
- Serves 20% of U.S. physicians (over 200,000)
- Serves 100% of the top 25 health plans
- Delivers one-third of all medications used each day in North America
McKesson’s main channels are its direct sales team and retail channels (regional and national pharmaceutical chains, independent pharmacies, and mass merchandisers). The company promotes its offerings through its website, social media pages, seminars, webinars, trade shows, and conferences.
McKesson’s customer relationship is primarily of a self-service nature. Customers utilize its products and services while having limited interaction with employees. That said, there is a personal assistance component in the form of phone and e-mail support.
McKesson’s business model entails distributing healthcare-related products and designing and delivering related services. It obtains its products from third-party manufacturers.
McKesson maintains the following partnership programs:
CommonWell Health Alliance – The company is a founding member of this group, which is a non-profit trade association consisting of health IT firms devoted to health IT interoperability. Members evaluate service expansion into various care settings for the benefit of providers and patients.
Alliance Partners – The company maintains partnerships with leading healthcare IT providers to ensure that customers have a wide array of launch points into InterQual content. Partners undergo a comprehensive certification process in order to have CareEnhance Review Manager Enterprise integrated into their product workflows. They are then responsible for installing, maintaining, and supporting the combined offering for mutual customers. There are more than 20 partners serving over 700 clients; they include 3M, Acesis, AllScripts, CaseNet, CaseTrakker, Cerner, DST Health Solutions, Epic, Essette, Exl Healthcare, HealthEdge, HP, MedHok, Pega, and ZeOmega.
McKesson Ventures – The company invests in and partners with firms seeking to create solutions for positive change in the health care economy. It targets businesses operating in the following areas: Alternative Care Delivery Models, Consumerism, Pharma Value Chain, and Data Value Chain.
McKesson also maintains strategic business partnerships with several prominent firms and associations, including the American Medical Association, BMC Software, Cisco Systems, EMC Corporation, Oracle Corporation, Symantec Corporation, Toshiba, and Wolters Kluwers Health.
McKesson’s main resources are its human resources. They include sales and marketing staff that promote the offerings it distributes and its customer service staff, which provides support.
McKesson has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing, administration, and R&D, all fixed costs.
McKesson has one revenue stream: the revenues it generates from distributing products and delivering services to its customers.
info: John earned a B.A. in Business Administration from the University of Minnesota and an MBA from Xavier University. He has held several roles at McKesson, including President of Supply Management.
info: James earned a B.S. in Aeronautical Engineering from Imperial College, London University and an MBA from Harvard Business School. He previously served as EVP and CFO of Symantec Corporation and CFO of American Airlines and AMR Corporation.
info: Kathy earned a Bachelor of Business Administration degree in Computer Science from Kent State University and an MBA from Xavier University. She previously served as CIO of Emerson and GE Aircraft Engines.
info: Lori earned a B.A. from Cornell University and a J.D. from Yale Law School. She previously served as Associate General Counsel of McKesson and as a litigation partner at Morrison & Foerster.
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