U.S. wholesaler McKesson dove head-first into the German wholesale drug market five years back with its $5.4 billion deal for Germany’s Celesio. But having found the country’s market “complex,” it will now join forces with a competitor, pharmacy giant Walgreens Boots Alliance.
The two last week announced a joint venture in which McKesson’s Alliance Healthcare Deutschland and Walgreens’ GEHE Pharma Handel will be combined. Walgreens will hold a 70% interest and McKesson will own the rest. Terms and value of the deal were not disclosed.
“This transaction provides a unique opportunity to drive operational success in a complex environment,” Kevin Kettler, chairman of McKesson Europe’s management board said in a statement.
Ornella Barra, co-chief operating officer of Walgreens’ German business, said the JV should create a sustainable business for both companies.
McKesson, the largest drug wholesaler in the U.S., had only a small presence in Europe when in 2013 it followed its U.S. competitor AmerisourceBergen into global expansion. Celesio had operations in 16 European countries. At the time, the two believed the moves were needed to get more pricing leverage in a drug industry that already was global.
AmerisourceBergen had beat McKesson into Europe with a deal with Walgreens. The pharmacy giant in 2012 paid $6.7 billion for a 45% stake in Alliance Boots, with an option to buy the rest of the wholesaler and retailer. It then struck a deal to invest in AmerisourceBergen and give it some of its distribution business in the U.S. and Europe. The two talked about Walgreens buying out AmerisourceBergen but they later dropped that idea.