Cardinal Health and Walgreen’s renew drug distribution deal

Cardinal Health Inc. (NYSE:CAH) has reached an early renewal of its agreement to supply pharmaceuticals to Walgreen Co.’s national network of retail pharmacies.

The Walgreen deal is a critical one for Cardinal. Walgreen accounted for 24 percent of its revenues in each of the last two years — more than any other customer — according to Cardinal’s fiscal 2010 annual report. Losing Walgreen as a customer would be devastating to Dublin, Ohio-based Cardinal’s top line.

The news sent Cardinal’s shares up about 2 percent to $37.93 in early trading Tuesday.

The renewed deal with Walgreen’s runs through 2013, according to a statement from Cardinal. The two companies signed their last distribution contract in 2008, and the deal was scheduled to run into 2011.

Additionally, Cardinal’s specialty care group, P4 Healthcare, signed deals with two new clients, as well as an existing customer. P4 Healthcare will help each client work with physicians to develop clinical protocols that improve the consistency, quality and cost-effectiveness of treatment regimens for common types of cancer, according to the statement.

The new P4 clients are AmeriHealth and PerformRx, and CareFirst BlueCross BlueShield is the existing customer.

Cardinal acquired the P4 business in its $517 million purchase of Healthcare Solutions Holding LLC in June.