AmerisourceBergen Corporation (ABC) recently announced the completion of the acquisition of privately-held Premier Source. The financial terms of the transaction were not disclosed. Premier Source provides consulting and reimbursement services to medical device, pharmaceutical, molecular diagnostic, and biotechnology manufacturers, as well as other health services companies.
Following the acquisition, Premier Source has been merged with AmerisourceBergen’s AmerisourceBergen Consulting Services (ABCS) segment, thereby expanding the department’s capabilities. The integration will also help the company strengthen its focus on emerging diagnostic, biotech and device manufacturers.
We note that the company has been pretty active on the acquisition front in order to supplement organic growth, spending more than $1 billion on acquisitions in the last eight years.
The October 2007 acquisition of Bellco Health allowed AmerisourceBergen to expand its presence in New York City where Bellco has a strong presence. In 2009, AmerisourceBergen acquired Innomar Strategies Inc., a Canadian specialty pharmaceutical services company. This acquisition helped the company strengthen its position in Canada. Going forward, we believe the company will continue to pursue acquisitions, which will help drive growth.
AmerisourceBergen exited the third quarter of fiscal 2011 with a cash balance of about $2.0 billion and plans to spend around $200 to $300 million in 2011 on the acquisition of pharmaceutical, distribution or related services business.
Our Take
We currently have a Neutral recommendation on AmerisourceBergen. The stock carries a Zacks #3 Rank (Hold rating) in the short-run. We believe the company is well-positioned for growth given the strong performance of its generics and specialty business. AmerisourceBergen boasts of a robust plasma and vaccine business, with strong revenues expected to flow from it in the coming quarters.
However, AmerisourceBergen operates in a highly competitive pharmaceutical distribution market. The company’s primary competitors are Cardinal Health Inc. (CAH) and McKesson Corporation (MCK).
AMERISOURCEBRGN (ABC): Free Stock Analysis Report
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MCKESSON CORP (MCK): Free Stock Analysis Report
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