Medco broadens reach with accredo acquisition

Chain Drug Review, March 28, 2005

FRANKLIN LAKES, N.J. -- Medco Health Solutions Inc. is buying Accredo Health Inc. in a transaction valued at $2.2 billion.

The purchase will create the country's leading provider of specialty pharmacy products and services, generating more than $4 billion in annual net revenues, according to Medco.

"We believe the addition of Accredo's specialty pharmacy expertise into Medco's leading pharmacy benefits model will take the value we have already experienced from our current alliance with Accredo to the next level--providing significant benefits to our clients, members, shareholders and employees," emphasizes David Snow Jr., chairman, president and chief executive officer of Medco, one of the country's largest pharmacy benefits managers. "Medco's shareholders are expected to benefit from further top- and bottom-line growth and the opportunities that lie ahead in this important growth market.

"Medco's clients will be able to take advantage of an integrated specialty service offering, designed to better manage the cost of providing the highest quality of patient care in a critical health care category. Employees from both companies will also benefit from the expanded opportunity to be part of a larger enterprise with the resources and expertise to foster innovation and touch a larger universe of patients."

Medco launched its specialty pharmacy operations about two years ago.

In early 2004 the pharmacy benefits manager forged a 10-year strategic alliance with Accredo to create a single-source platform for all specialty pharmaceuticals.

Accredo chairman and chief executive officer David Stevens says that the transaction unites two complementary best-of-class pharmacy operations and represents an opportunity to extend the adoption of Accredo's specialty business in the marketplace.

"We believe that manufacturers, physicians, payers and the valued patients we serve will realize considerable benefits from the combination of our offering with Medco's sophisticated business model, overall scale and impressive client base," he says.

Medco intends to manage Accredo as an independent business so that it can retain its business model, brands, culture and focus.

The new business will report to Kenny Klepper, Medco's executive vice president and chief operating officer. Stevens will serve as chief executive officer of the combined specialty business.

"This combined team is broad and deep with the proven operational and clinical expertise to drive specialty pharmacy to a new level of focus and innovation for the benefit of our clients and their membership," claims Klepper.

Accredo's business model encompasses drugs to treat such conditions as hemophilia, immunodeficiency disorders, pulmonary arterial hypertension, respiratory syncytial virus and multiple sclerosis.

"Our business alliance with Accredo over the past year made clear the advantages of working even more closely together, and the timing was right to make this happen now," notes Snow. "From the pills and capsules of traditional pharmacy to the injectables and biotech medicines of specialty pharmacy, this enhances Medco's end-to-end leadership in the management of the full pharmacy spectrum for our clients and their members."