Cardinal Health: Investigations and Acquisitions

Cardinal Health is an organization in the health care industry, providing products and services to hospitals, individuals, and facilities. With quality health care goods, such as pharmaceuticals provided at an efficient price, Cardinal Health is a brand popular within this field. They work with hospitals and doctors nationwide and across the globe. This includes doctors, acute care services, ambulatory care, and other health care facilities. The company also manufactures and distributes their products and pharmaceuticals to health care officials. This makes them the number one company in the industry. Currently, they are going global. They have distribution facilities across the world including Europe and Canada. Cardinal health has won over many organizations and individuals recognized within the health industry. They have done this by coming up with new products and technology that makes it easier to help people and diagnosis their problems. Cardinal Health is a company dedicated to helping others; “we identified critical issues, develop and implement cutting edge initiatives that make wellness a priority and the utmost in quality patient care the norm”, (“Essential to our,” 2012).

One of the challenges that Cardinal Health faces is issues with the law. One such incident occurred in 2006 Cardinal Health when faced with an investigation. According to the New York Times, the company was being investigated for “improper secondary marketing trading of pharmaceuticals”, (REUTER, 2006). The attorney general explained this incident further saying that it was not necessarily illegal. “Wholesalers trade drugs among themselves after they are sold by manufacturers, but before they are bought by pharmacies and hospitals”, (REUTER, 2006). This proves to be a gray area as this is neither legal nor illegal. The gray area makes it difficult to track down who the drugs are going to and why it is going to there.

The company responded to the investigation by settling out of court. The New York Times reported that Cardinal Health paid out $11 million dollars to get rid themselves of these charges. Out of $11 million, only $1 million went to cover court cost, while $7 million went to nonprofit health research and $3 million went to the state. Although Cardinal Health was able to avoid the legal repercussions, sweeping the issue under the rug proved to be an inadequate response to the problem.

Cardinal Health faces additional challenges for the future. Cardinal Health is known as the leader in health care products and pharmaceuticals. This means the company must come up with new ways to make a profit. To do this, they have bought out many other companies taking with them their products and customers. Pearce and Robinson state that Cardinal averaged an acquisition once every six weeks between 2000 and 2001. Now, the company must continue to be the leader in health care products and pharmaceuticals. To do this, the company is looking to become the leader in specialty drugs. The Motley Fool says, “sales of specialty drugs are expected to explode in coming years”. This prediction has caused Cardinal Health to take an interest in the industry. However, it may be difficult for the company to accomplish. Professionals assert that the challenge can be observed in their competitor as AmerisourceBergen has possession of half the market. McKesson, another Cardinal Health competitor, has control of a remaining 25%, (Glenn, 2011). This leaves little left for Cardinal Health to market.

In response to this challenge, Cardinal Health continues to acquire businesses to build their profits and remain leader in health manufacturing and distribution. To gain customers for specialty drugs the company bought South Carolina Oncology Associates. This is part of their strategy. The new company had something called “P4” and Cardinal Health wants to use this to bring in additional revenue. “P4 works with doctors to develop best practices called ‘clinical pathways’ for treating patients [and] is to align incentives… to deliver higher quality, lower cost care” (Glenn, 2011). Cardinal Health has already gain additional profits from this. Motley Fool reports that the company experienced a growth of 30% in their specialty drugs department. This means that Cardinal Health is on the right path to success to take over the distribution of specialty drugs.

Acquisition and absorbing other companies gives Cardinal Health access to ideas, products, and customers. Once a company gets to the top they must continue to work hard to stay there. Cardinal is number one in their industry and must remain on top. They did this by working hard and staying ahead of the game. They also used technology, partnered with doctors and hospitals to come up with new and better products. This is all done to become the number one pharmaceutical, product and service manufacture and distribution in the world. This is a large step for any company. Through the success of their organization through acquisition and P4, there is little left to deter Cardinal Health from accomplishing their goal.  

                                                                                                                   

  

References

Essential to our communities. (2012, Feb 8). Retrieved from http://www.cardinalhealth.com/mps/public/!ut/p/c1/04_SB8K8xLLM9MSSzPy8xBz9CP0os3gjA3cDAwtfZ18fV2NTA09HL_dAYz8TQ4NQM_3g1Dz9cJAus3gDHMDRQN_PIz83Vb8g28sCAIfp8jU!/dl2/d1/L0lDU0lKSWdra0EhIS9JTlJBQUlpQ2dBek15cUEhL1lCSkoxTkExTkk1MC13ISEvN18yMEcwMDhNQ01MQ1FEMEk2S0w5MTJLMzAwNQ!!/?WCM_PORTLET=PC_7_20G008MCMLCQD0I6KL912K3005_WCM&WCM_GLOBAL_CONTEXT=/mps/wcm/connect/us/en/communityrelations

Glenn, B. (2011, August 27). Cardinal health sees opportunity (but faces challenges) in speciality drugs. The Motley Fool, Retrieved from http://www.fool.com/investing/general/2011/08/24/cardinal-health-sees-opportunity-but-faces-challen.aspx

REUTER,  “Cardinal health will settle inquiry.” New York Times [New York] 27 Dec 2006, Business. Print. <http://www.nytimes.com/2006/12/27/business/27health.html?ref=cardinalhealthinc&gt;.

Strategic Management, Twelfth edition, by Pearce and Robinson, McGraw-Hill/Irwin, 2011.

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About Russia Robinson

I am an independent freelance writer and free thinker. I strive to use my writing talents to benefit the greater good of society, one word, one sentence, one page at a time. Originally from Richmond, California I attended San Francisco State University receiving a BA in English Creative Writing and American Literature in 2004. After this I attended post graduate studies in 2008 at Georgia’s Kennesaw State University in Technical Writing. With an academic background in English, I have spent more than 10 years’ helping young people succeed. This can be seen in my career background in education and mental health. I am a certifiable Language Arts teacher for the state of Georgia. I also worked in social services including juvenile mental health treatment services and counseling. As a result, I understand the diversity of problems people face in their everyday lives. With words put together like so, I promote equality and a healthy society for all people regardless of individual differences. Conducting research, writing articles, essays, and blogging, I push to educate others about various issues that affect people. I also do this creatively through short stories, poems, pictures, and a novel in progress. My hobbies and interest are reading and learning. I enjoy all things art and all things nature. From camping and astronomy to photography and cooking, I enjoy sighting seeing and socializing just as much as I enjoy curling in bed with a good book or binge watching TV.
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