McKesson Corporation is the largest distributor of pharmaceuticals, medical supplies and healthcare information technologies in the United States. McKesson delivers prescription and generic drugs, in addition to health and beauty care products to more than 40,000 retail pharmacies in the nation. In addition to providing prescription drugs, this company also wholesales medical supplies to doctors’ offices and surgery centers while providing software and technical services to help health care providers and insurers manage supply chain.
The company was founded in 1833 by John McKesson and Charles Olcott in New York City. Both wanted to focus on importing and wholesaling pharmaceutical products. Now, the company is made up of a number of businesses, proving to be extremely successful. According to the New York Times, this company operates in two segments.
The McKesson Distribution Solutions is the segment that distributes health and beauty care products, drugs, medical-surgical supplies and equipment. The McKesson Technology Solutions segment includes enterprise clinical, patient care, financial, supply chain, strategic management software solutions, and pharmacy automation for hospitals.
McKesson does have a vertical marketing system, where the systems provide channel leadership and consist of producers, wholesalers, and retailers. McKesson’s role in the system is the wholesaler, where the company wholesales pharmaceuticals and other health important health products to pharmacies and health centers. Wholesaling is crucial in the distribution channel for many products. The channel sells directly to the retailer, but not directly to the consumer.
This company brings together all resources to establish pharmacies, providing them with the necessary tools. McKesson’s system is an administered marketing system, where channel members are independently organized. McKesson Corporation is the channel leader, where the different parts of the channel agree to policies based on the leader, but work independently. This corporation’s system could also be considered a contractual VMS.
A contractual vertical marketing system is where firms at different levels of production and distribution work together to achieve greater economies or sales than they would on their own. McKesson as a wholesaler provides marketing programs, merchandise selection, and other services to independent retailers that agree to purchase McKesson’s products.
According to the Pierce College library, McKesson established Valu-Rite, a voluntary chain of pharmacies in which McKesson provides their members with advertising circulars that potentially generate store traffic. The company also provides Valu-Rite with a private label line of health products. McKesson’s system is also an administered marketing system, where channel members are independently organized.
With McKesson’s system being a contractual and administered marketing system, its existence does depend on the firm maintaining control over the system. One of McKesson’s largest customers is CVS Caremark. McKesson’s agreement with CVS brings in a huge portion of McKesson’s revenue, and without the success CVS Caremark, McKesson revenue could potentially decrease.
McKesson Corporation also depends on other agreements, and if McKesson’s relationship with these customers changes, their company could drastically change. Overall, this extremely successful company extends its healthcare services and information technology to many partners, dedicating to make healthcare in America run more efficient and