Cardinal Health profits take a dive
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Manufacturing News, Source : TheManufacturer.com
Published : 29 Apr 2005 20:44
Drug wholesaler Cardinal Health Inc. records a 15 percent drop in quarterly profit.
Cardinal blames weaknesses in its drug-manufacturing business and slow adoption of its new drug-dispensing equipment for the recent slump. Though, the entire drug wholesale industry has been suffering through tough times as companies like Cardinal undergo a transition to a new way to make money from distributing drugs to pharmacies and hospitals.
For years, distributors would stockpile drugs before manufacturers made scheduled price increases. Since the US Securities and Exchange Commission investigation of Bristol-Myers Squibb Co. in 2002 for stockpiling wholesalers, drug manufacturers have cut wholesalers’ inventories--thus creating sales limits for companies like Cardinal.
Pointing to volatility in the business, Cardinal had cut its fiscal 2005 earnings forecast three times earlier this year. Net income in the fiscal quarter ended March 31 declined to $365.7 million, or 84 cents a share, from $429.3 million, or 98 cents, a year earlier. Revenue rose 17 percent to $19.1 billion.
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