Cardinal Health to buy drug distributor for $1.1 billion

Cardinal Health announced that it plans to purchase The Harvard Drug Group, based in Livonia, Mich. The deal, worth $1.115 billion, is expected to close by the beginning of the company’s fiscal year 2016.

Cardinal Health Chairman and CEO George Barrett said that the acquisition of The Harvard Drug Group would enhance the company’s generic pharmaceutical distribution business and expand Cardinal’s existing telesales team and capabilities. It would also broaden the company’s portfolio of over-the-counter drug products and provide specialized packaging solutions to health systems and other institutions.

CVS and Cardinal Health team up to supply generic drugs

“This acquisition enhances our ability to support retail and institutional customers and further utilizes Red Oak, our joint venture with CVS Health to source generics,” said Barrett. “We look with enthusiasm to what we believe will be a solid FY 2016 and feel good about our strategic positioning.”

As part of The Harvard Drug Group transaction, Cardinal Health also will acquire the small veterinary supply business and the private label business for specialized packaging for institutional businesses.

“That is an opportunity for us as we look across our retail and IDN business,” Barrett noted during its June 5 webcast. “This is not a signal that we have made a big play to be a private label company. This doesn’t change our view on that at all. That was not the driver for our interest in [The Harvard Drug Group].”

The acquisition will be beneficial to Cardinal Health in terms of purchasing volume going to Red Oak Sourcing LLC, a joint venture between Cardinal Health and CVS Health that was established last year. Red Oak Sourcing is one of the largest generic sourcing entities in the United States, Barrett noted.