Top Contributor: Jay | Created when MCK was $58.39 | Edit | History
The potential loss of the contract with Caremark it will seriously hurt McKesson, given that Caremark is the company's largest customer, accounting for about 11% of total revenue last year. In 2004, Caremark merged with CVS, which holds a long term distribution contract with Cardinal Health (CAH), McKesson's primary competitor.
The government switching from AWP to AMP on drugs for Medicaid will encroach upon margins on pharmaceuticals and hurt McKesson significantly over time.
Although McKesson has the leading share of the healthcare IT market its lead is small and since the market is highly fragmented, there are many firms with the potential to take over the market, blocking McKesson from the high margins in the industry.