Pink Sheet is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call +44 (0) 20 3377 3183

Printed By



Executive Summary

FOXMEYER's HOSPITAL SUPPLY BUSINESS WILL SOAR TO ANNUALIZED RATE OF $175 MIL. in fiscal 1986, from 1985 revenues of about $8 mil., the company told analysts at Robertson, Colman & Stephens' medical conference in San Francisco Oct. 17. The increase will be driven by a major prime vendor supply contract FoxMeyer recently signed with Voluntary Hospitals of America. That agreement alone will be worth "close to $200 mil." when it matures, FoxMeyer President William Tauscher said. Hospital supplies currently account for less than 10% of FoxMeyer's business, with 90% of 1985 revenues coming from drug distribution, Tauscher noted. The company tapped into the supply end of distribution about two years ago with its purchase of a small Denver business, he explained. By January 1986, that initial investment will have grown to 10 facilities handling about 5,000 hospital products, he said. FoxMeyer is based in Aurora, Colorado. FoxMeyer expects to do "$100 mil. to $150 mil." in hospital supply business next year "over and above the VHA contract," Tauscher said. The hospital supply segment, while currently not profitable, "clearly" will be a contributor to income in 1986, Tauscher said. For the fiscal year ended March 31, FoxMeyer reported net revenues of $717.1 mil., with net income of $9 mil. FoxMeyer's hospital supply strategy focuses on group purchasing -- marketing a joint service of both pharmaceutical and hospital supply products, Tauscher continued. The wholesaler does not market to individual hospitals. In addition to the VHA agreement, FoxMeyer has "secured a series of other group contracts," he said. The company is targeting buyer groups that are currently served by large national distributors such as American Hospital Supply Corporation. That type of national, computerized operation can carry expense margins of 18% or 19%, Tauscher pointed out, compared with FoxMeyer's 8% operating cost level. "Further, we think because there is a tremendous amount of hospital supply product that goes direct, ]and[ the manufacturer didn't want to pay the 18% or didn't want to distribute through their competitor ]American Hospital Supply[, that product will become available to the kind of system we and some other people are setting up," he said. FoxMeyer is one of nine distributors which recently signed agreements with VHA. VHA also has contracted with Owens & Minor, which values its contract at $60 mil. to $80 mil. in annual sales over the next three years ("The Pink Sheet" Oct. 14, p. 10). The total value of the nine agreements is estimated at $300 mil. for the first year.

You may also be interested in...

Part D Discount Liability Coming Into Focus: CMS Releases Drug Cost Data

Newly released Medicare Part D data sheds light on the sales hit that branded pharmaceutical manufacturers will face when the coverage gap discount program gets under way in 2011

FDA Skin Infections Guidance Spurs Debate On Endpoint Relevance

FDA appears headed for a showdown with clinicians and the pharmaceutical industry over the proposed new clinical trial endpoints for acute bacterial skin and skin structure infections, the guidance's approach for justifying a non-inferiority margin and proposed changes in the types of patients that should be enrolled in trials

Shire Hopes To Sow Future Deals With $50M Venture Fund

Specialty drug maker Shire has quietly begun scouting deals with a brand-new $50 million venture fund, the latest of several in-house investment arms to launch with their parent company's pipelines, not profits, as the measure of their worth




Ask The Analyst

Please Note: You can also Click below Link for Ask the Analyst
Ask The Analyst

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts