McKESSON STAKE IN MEXICO’s NADRO CONVEYS ACCESS TO 83% OF PRIVATE Rx VOLUME

McKESSON STAKE IN MEXICO's NADRO CONVEYS ACCESS TO 83% OF PRIVATE Rx VOLUME in that country, McKesson said April 29. Under the deal, McKesson is paying $50 mil. for 4.4 mil. shares of Nadro SA, Mexico's largest pharmaceuticals distributor, representing a 23% stake in the wholesaler. Nadro has about a 25% share of the Mexican wholesale market, "which accounts for 83% of private sector prescription volume," McKesson said. The Mexico City-based distributor is the principal supplier of pharmaceuticals to about one-third of Mexico's pharmacies, McKesson noted. Nadro had 1992 sales of $672 mil. and an earnings per share compound growth rate exceeding 40% over the past five years. The stake in Nadro is expected to "contribute modestly" to McKesson's fiscal 1994 EPS, the wholesaler noted. Parallel to the North American trade negotiations (NAFTA), McKesson has been pursuing a continental acquisition strategy. The company said that "combined with our successful entry into Canada two years ago, marks an important step in our long-term growth strategy. Together with our partners we have the potential to service supplier and customer distribution requirements anywhere on the continent." Acquisition of Canada's largest wholesaler, Medis Health, was completed in 1991. The San Francisco-based wholesaler highlighted the potential for long-term growth, noting that average per capita consumption of pharmaceuticals is $25 in Mexico versus $160 in the U.S. Pointing to the relative youth of Mexico's population, with 63% under age 25, McKesson also cited the potential increased demand for both pharmaceuticals and health and beauty products as the Mexican population ages. Closely held Nadro is headed by CEO Pablo Escandon and Chief Operating Officer Eustaquio Escandon, who also are the firm's major stockholders. The brothers will continue in management, and McKesson will add two members to Nadro's board. In separate announcements the week of April 26, McKesson disclosed two new prime vendor contracts: a three-year, $100 mil. deal with the Franciscan Health System and $5 mil. agreement with the federal Bureau of Prisons. The Franciscan contract designates McKesson as the sole supplier of prescription and OTC products for the system's hospitals, nursing homes and related health facilities. Based in Aston, Pa., the Franciscan Health System is sponsored by the Sisters of Saint Francis and operates facilities in Pennsylvania, New Jersey, Maryland, Delaware, Idaho, Oregon and Washington state. The Franciscan network previously used four wholesalers. The Bureau of Prisons agreement is contained in three one-year contracts covering 34 prison facilities in 18 states. These represent the bureau's first prime vendor awards, which are administered by the Veterans Affairs Department. McKesson has been the prime vendor for V-A's Northwest region since 1991. The wholesaler also won the Defense Department's first prime vendor contract, covering the Mid-Atlantic region ("The Pink Sheet" Feb. 15, T&G-3).