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Walmart-Humana talks put pressure on the remaining health care players



The emergence of discussions between

Walmart
Inc.

and

Humana
Inc.

puts pressure on healthcare companies that have not yet done business in the midst of rapid integration that is reshaping the healthcare business.

A Walmart-Humana business – that's far from certain as companies At an early stage of discussions about a multitude of possible options-would be the latest sign of the industry's rapid change to combinations that unite various companies under one roof. It would become part of the $ 69 billion agreement between the drugstore chain and pharmacy-use manager CVS Health Corp. and the insurer Aetna Inc. and the insurer

Cigna
Corp.

$ 54 billion agreement to acquire the largest PBM,

Hold express scripts
Co.

In the limelight are remaining companies such as

Walgreens boots alliance
Inc.

and

anthem
Inc.,

as well as smaller health insurers, which could extend their roles to different sectors, analysts said.

"Whether you are a payer, a retailer, a retailer, a PBM, or a pharmaceutical company, you think, how do I start blurring those lines and play across those lines," said Gurpreet Singh, head of the health service PwC

US drugstores are under pressure to go beyond dispensing prescriptions and selling sweets, make-up and soda

Amazon.de
Inc.

Austerity measures at the retail companies and cost control by insurers are putting pressure on drug margins. Amazon has also signaled that it could penetrate deeper into the health care and pharmaceutical sectors, which would add to the threat.

Asked about the possibility of a deal during a call with analysts on Wednesday, Walgreens Boot General Manager

Stefano Pessina

The pharmaceutical industry needs a major overhaul, but "I do not think the change is only possible if you merge with a health plan. He added, "The most important change will be to adjust the business to suit the future customer."

Walgreens has nonetheless pursued a big deal. The resistance of the German antitrust authorities has nullified the company's attempt to acquire a competing pharmacy chain last year

rite

Aid Corp. Instead, it agreed to buy some 2,000 Rite Aid deals for about $ 4 billion.

Deerfield, Illinois, with more than 1

3,000 stores in 11 countries, has recently adopted a drug distribution approach

AmerisourceBergen
Corp.

The Wall Street Journal reported in February. The negotiations have stalled since then, but could start again, according to those familiar with the talks. Walgreens executives refused to discuss Amerisource's discussions when they were asked to make a profit call this week.

In the insurance sector, analysts said smaller companies like

WellCare health plans
Inc.

For a long time, they were considered targets for acquisition.

Centene
Corp.

, a giant in the Medicaid sector, has grown rapidly through acquisitions, including its efforts to take over the nonprofit New York health insurer Fidelis Care. Centene "did not sit still," said Ana Gupte, an analyst at Leerink Partners LLC. "They have grown organically and inorganically."

Centene also recently invested in a PBM, known as RxAdvance, a step that is CEO

Michael Neidorff

highlighted at the recent Investor Conference. "You will hear much more about it," he said.

UnitedHealth Group
Inc.,

The parent company of the largest US insurer is already vertically integrated and has a growing number of physician groups and operations centers as well as its own PBM. The health giant has stayed on the M & A warpath in recent months, including announcing in December that it will buy

DaVita
Inc.

Large group of doctors

anthem for their part has started a vertical movement without big acquisition – they start their own PBM, which should start in 2020, when the current PBM contract ends with Express Scripts. The new CEO of the insurer,

Gail K. Boudreaux,

She said she was focused on strengthening Anthem's own businesses and expects the new PBM to bring huge savings and growth that could serve, among others, Anthems Blue Cross and Blue Shield insurers.

Asked about the Cigna deal at an investor conference Ms Boudreaux said it had not changed Anthem's thinking. "We love the capital efficiency of the model we have and feel really good about what we did," she said.

Anthem, which has a high local market share, has the extent to make it alone for a while. Said Mrs. Gupte. On the other hand, analysts have said that Anthem could also offer employment opportunities among other Blue Cross and Blue Shield insurers, an option that would be much more difficult for other large national insurers who are not already Blue plans. Anthem already has blue plans in 14 states.

Write to Anna Wilde Mathews at [email protected] and Sharon Terlep at [email protected]


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