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Drug distributor McKesson to restructure segments to focus on high-margin businesses

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  Published in Business and Finance on Thursday, September 18th 2025 at 10:53 GMT by reuters.com
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McKesson to Re‑structure Segments, Zeroing in on High‑Margin Businesses

In a bold move to sharpen its competitive edge, drug‑distributor McKesson Corp. announced on Tuesday that it will reorganise its operating structure, carving out its lower‑margin logistics and wholesale operations and focusing on high‑margin specialty pharmacy, technology and pharmacy‑benefit‑management (PBM) services. The company said the new arrangement will be in place by the end of 2025 and is expected to lift operating income by 2‑3 percentage points over the next three years.

Why the shift?

McKesson has long been the backbone of the United States’ pharmaceutical supply chain, handling the delivery of drugs to hospitals, clinics and community pharmacies. But the industry’s profit margins have been under pressure for years, driven by cost‑cutting from payers, tighter reimbursement from Medicare and Medicaid, and rising competition from rivals such as Cardinal Health, AmerisourceBergen and even non‑traditional players like Walmart’s “Health & Wellness” arm.

“The margins on traditional wholesale and logistics are tightening. We need to invest in the services that generate the most value for our customers and our shareholders,” said CEO Brian J. McMurray in a statement. “By realigning our business around specialty pharmacy, technology and PBM services, we can create a more sustainable, growth‑oriented platform.”

The company’s Chief Financial Officer, Dr. Laura Kim, added that the re‑organisation will streamline decision‑making, improve capital allocation and reduce the complexity that has hampered operational agility in the past.

The new segment structure

McKesson’s current organisation consists of four main units:

1. Wholesale & Distribution – the core of the company’s logistics business, handling the shipment of generic and branded drugs to pharmacies and health‑care providers.
2. Specialty Pharmacy – serving high‑cost, high‑complexity conditions such as oncology, rare diseases and biologics.
3. Health‑Tech & Digital – providing electronic prescribing, medication therapy management and supply‑chain visibility tools.
4. Pharmacy Benefit Management (PBM) – managing drug formularies, rebates and cost‑sharing arrangements for insurers and health‑plans.

Under the new structure, McKesson will split its operations into three focused segments:

• Specialty Pharmacy & Digital Health – this new umbrella will bring together the existing specialty pharmacy unit and the health‑tech offerings. The goal is to build an integrated platform that can manage the entire patient journey, from prescribing to delivery to monitoring outcomes.
• PBM & Strategic Partnerships – the company will deepen its PBM capabilities, expanding the scope of its rebate‑and‑utilisation‑management tools and forging alliances with insurers and employers. McKesson plans to position itself as a “one‑stop shop” for payers looking to optimise drug spend.
• Core Distribution & Logistics – the legacy wholesale arm will become a leaner, more technology‑driven entity. McKesson will divest or spin off under‑performing distribution centers and reduce its workforce in that area.

The move also includes a decision to phase out the company’s “Medical‑Supply” sub‑segment, which historically offered low‑margin items such as gloves, masks and other consumables. “We are concentrating on the high‑margin, high‑complexity services that truly differentiate us in the marketplace,” McMurray said.

Expected benefits

According to McKesson’s preliminary projections, the re‑organisation should:

• Improve Operating Margins – by moving away from the highly competitive wholesale model and focusing on specialty, technology and PBM services, the company expects a 2‑3 pp increase in operating margin by 2028.
• Boost Cash Flow – the new structure is projected to free up $500 million in annual working‑capital needs, which McKesson plans to reinvest in technology or return to shareholders.
• Accelerate Innovation – the company will double its R&D spend on digital health tools, with a target of launching three new integrated care platforms by 2027.
• Strengthen Customer Relationships – with a smaller, more focused portfolio, McKesson will provide higher‑value consulting and analytics to health‑systems and payers.

Industry context

The pharmaceutical distribution landscape is changing rapidly. While traditional wholesalers have historically enjoyed thin margins, the rise of “health‑tech” and integrated care models has pushed distributors to become more than just logistics players. The industry’s big three – McKesson, Cardinal Health and AmerisourceBergen – are all moving in this direction. Cardinal Health, for instance, recently announced a $1.5 billion investment in its specialty pharmacy unit, while AmerisourceBergen has begun to phase out its “medical‑supply” division in favour of a greater focus on specialty drugs.

The regulatory environment is also becoming more complex. The Centers for Medicare & Medicaid Services (CMS) has tightened rules around drug pricing, and the Department of Health & Human Services has pushed for greater transparency in PBM rebate structures. McKesson’s new focus on PBM services places it at the centre of this evolving dialogue.

Timeline and implementation

McKesson said the re‑organisation will be completed in three stages:

1. Q4 2025 – the establishment of the three new segments, including the spin‑off of the legacy distribution arm.
2. Q2 2026 – full integration of specialty pharmacy and digital health platforms, with the launch of the first integrated care pilot in a key health system.
3. Q4 2026 – final reporting and financial reconciliation, with a full set of segment‑level financial statements available to investors.

The company will also announce a series of workforce reductions in the distribution segment, targeting a 10 % cut in headcount over the next two years. “We’re not making layoffs a headline; we’re making our workforce leaner and more efficient,” said Dr. Kim.

Looking ahead

McKesson’s decision to re‑orient around high‑margin specialty and technology services is a clear signal that the traditional wholesale model is no longer the engine of growth for the largest U.S. drug distributor. If executed successfully, the strategy could set a new industry standard and give McKesson a competitive advantage in an era where value‑based care and data‑driven decision‑making are paramount.

The move also underscores the increasing convergence of healthcare delivery and technology, as distributors seek to become the “platform” for medication management rather than just a logistics hub. In a market where payers are demanding greater transparency and cost‑control, McKesson’s PBM and digital health focus could make it a key partner for insurers and health‑systems alike.

As the pharmaceutical landscape continues to evolve, McKesson’s restructuring will be closely watched by investors, competitors and regulators alike, all of whom will be keen to see whether the new focus on high‑margin services delivers the promised financial upside and positions the company for the next decade of healthcare transformation.