Cardinal and Cumberland Ink Deal - Analyst Blog

Cardinal Health (CAH), one of the largest distributors of pharmaceuticals and medical supplies, has reportedly inked a distribution agreement with Nashville, Tennessee-based Cumberland Pharmaceuticals (CPIX), a specialty pharmaceutical firm focused on the acute-care hospital and gastroenterology markets. Financial terms of the deal were not divulged by the companies. 

Under the three-year deal, Cardinal will exclusively distribute three of Cumberland’s drugs in the U.S, Puerto Rico and other specific countries. The drugs covered by the deal are Acetadote, Caldolor and Kristalose. Cumberland will be responsible for delivering these drugs to Cardinal’s distribution center in LaVergne, Tennessee.  

The deal represents another instance of the long-standing bond between the two companies. Cardinal teamed up with Cumberland in 2002 to market Kristalose (used to treat constipation and hepatic encephalopathy, a brain disorder) in the U.S. through its Specialty Pharmaceutical Services (SPS) unit. Moreover, Cardinal offered its sales force in 2004 to promote Acetadote to hospitals and poison control centers across the U.S.

Cardinal Health is one of the largest global healthcare companies that help pharmacies, hospitals and ambulatory care sites to focus on low-cost patient care. The company is also a leading manufacturer of medical and surgical products. It has a diversified product portfolio, which is a natural hedge against the risk of revenue shortfall in testing times.

Cardinal Health is one of the largest distributors of pharmaceuticals and medical supplies. Its Healthcare Supply Chain Services segment distributes pharmaceutical products, medical and surgical products, and over-the-counter healthcare products to various hospitals, surgery centers, laboratories, physician offices, alternate care providers and retail customers in North America and Puerto Rico. The division accounted for 96% of the company’s sales in fiscal 2009. 

However, Cardinal is facing tough competition across all its business segments, which may pressure pricing. Its major competitors in the pharmaceutical supply chain segment are McKesson Corporation (MCK) and AmerisourceBergen Corporation (ABC). We currently have a Neutral recommendation on Cardinal.