If you're looking for some sort of barometer on future spending dynamics in the prescription drug industry, Medco Health Solutions'
Medco announced last Wednesday that it had reached an agreement to purchase Accredo for $43.33 per share, a whopping 42% premium to the closing price of its stock the day before. The total price of the deal amounts to $2.2 billion.
Despite the high tag, it's hard to fault Medco for making the move, even though without Accredo, Medco is still well-positioned for long-term growth. As I have noted before, the pharmacy benefit management (PBM) giant has won converts in many payors, including General Motors
Still, Medco's and its cohorts' primary focus has been on administering plans that provide the insured with pills and capsules, or in other words, traditional pharmaceuticals. These drugs still make up the vast majority of spending on medicines. However, based on current trends, the biotechnology category is set to become an ever larger piece of overall drug spending. If so, it will play a bigger role in insurers' drug bills. Managing these pricey drugs as efficiently as possible, then, is likely to become a growing high priority for insurance providers. And that's where Accredo comes in, as a specialist in the distribution and management of biopharmaceuticals.
Looking ahead, Medco appears to be well-positioned to take advantage of different paths to growth. As a one-stop shop for conventional pharmaceuticals and biotech drugs, the company's ability to win clients appears greatly enhanced.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.