McKesson FY 2Q16 Earnings Call Notes

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McKesson (MCK) John H. Hammergren on Q2 2016 Results

Our industry is going through a period of dynamic change

“There’s no doubt our industry is going through a period of dynamic change. I’ve been CEO of this company for 15 years and in healthcare my entire career.”

Despite the political headlines, pharmaceuticals are still the most effective and affordable way to treat patients

“Coming back to the broader industry environment, pharmaceutical pricing trends have become the frequent subject of news headlines as we get deeper into this presidential election cycle. The observation I would make is that this pharmaceutical pricing discussions tend to ebb and flow over time. However, what remains clear is that pharmaceuticals are still the most effective and affordable way to treat patients. And innovation and drug development and the trend toward higher levels of generic penetration continue to deliver real value and cost savings through the healthcare industry.”

Clearly there is more media attention on price inflation, but we don’t expect manufacturers to change their strategy

“clearly there is more media attention and there is more discussion about price inflation in the market. But I happen to believe that the manufacturers that we work with at least will largely retain their current strategy. And there may be some outliers that begin to change their perspective slightly, but overall I think we expect the trends to continue.”

We’ll do everything we can to help RAD with this transition

“Clearly we’ve had a longstanding relationship with Rite Aid and we’ll do everything we can to help them in this transition. And we have a great deal of respect for Mr. Pessina and his team at Walgreens and the kind of value they’ve delivered over a long time.”

Our job is to deploy capital intelligently

“our job is to find ways to grow our business and to do it intelligently and to do it in a risk-bounded way and to deploy capital intelligently. So I think our number one priority is to deploy capital in places where we have a base and an expertise and where it’s not a completely new leg of the stool, but it’s something that’s additive to what we’re currently doing.”

This is clearly a period of dynamic change

“Our industry experiences periods of dynamic change, and this is certainly one of them. And I’m confident that we will continue to participate in that change in an extremely positive way. We remain extremely well positioned to deliver the best service and value in the industry on behalf of our customers.”