A pair of billion-dollar mergers involving four of the nation's largest drug wholesalers have been scrapped just one week after a federal judge blocked the deals because of antitrust concerns.
In one deal, McKesson Corp., the largest wholesaler, had planned to purchase No. 4 AmeriSource Health Corp. for $2.3 billion.
The other merger, between Cardinal Health, the second-largest wholesaler, and No. 3 Bergen Brunswig Corp., was valued at $2.5 billion.
"We're obviously very disappointed with the court's decision in this case," Robert Walter, chairman and chief executive officer of Dublin, Ohio-based Cardinal, said in a prepared statement. "Our proposed transaction with Bergen was pro-competitive and would have been highly beneficial for our customers, who were very supportive of the merger."
Officials at San Francisco-based McKesson did not respond to a request for comment.
After a six-month investigation of the deals, the Federal Trade Commission in March sued to block the mergers in U.S. District Court in Washington.
The FTC argued that the deals would have given the two new companies nearly 80% of the $80 billion wholesale drug industry and would likely have driven up prices. The remaining 20% of the industry would have been divided among 40 smaller companies, the agency contended.
U.S. District Judge Stanley Sporkin agreed with the agency, granting its request for a preliminary injunction to block the deals until an administrative hearing could take place.
David Risinger, vice president of healthcare research at Morgan Stanley in New York, said both Cardinal and McKesson continue to be well-positioned for growth.
"I don't think the companies will pursue any major drug wholesaler deals," Risinger said. "Both (McKesson and Cardinal) will pursue companies that serve drug manufacturers."
McKesson, for example, is likely to acquire some medical distribution companies to beef up its presence in that business.
Walter said Cardinal will continue to pursue other opportunities, including its $2 billion acquisition of R.P. Scherer Corp., a developer of drug delivery systems. That deal was set to close late last week.