Pharmaceuticals distributor and medical products supplier Cardinal Health (NYSE:CAH) plans to make $90 million in acquisitions this year to boost its business in China.
Dublin, Ohio-based Cardinal entered the Chinese market with the $470 million acquisition in 2010 of Chinese drug distributor Yong Yu.
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Now, Cardinal is looking to make further acquisitions in the country to expand its geographic reach and further its direct distribution business, chief financial officer Jeff Henderson said in a conference call to discuss the company’s second-quarter earnings.
By the end of Cardinal’s third quarter, the company expects to have grown its Chinese business to 10 distribution centers, with a coverage area that includes 250 million people.
Cardinal also hopes to expand its reach in China as a “platform” for medical equipment companies that are looking to break into the market, Henderson said.
Cardinal’s Chinese business enjoyed strong growth in the second quarter, as it expanded at a rate in the “low 20s,” he said.
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“Cardinal Health China continues to perform well, and we’re very optimistic about its future,” Henderson said.
Turning to finances, Cardinal reported diluted earnings per share from continuing operations of 81 cents. That beat analysts’ expectations by 5 cents.
Overall, net earnings rose 22 percent to $262 million on a 7 percent increase in revenue to $27 billion.
Much of Cardinal’s growth was again driven by strong sales of generic pharmaceuticals. The quarter featured the generic launches of blockbuster drugs Lipitor and Zyprexa, both of which “contributed strongly” to 30 percent profit growth in Cardinal’s key pharmaceuticals business, Henderson said.
That was enough to offset an 18 percent decline in profit in Cardinal’s smaller medical equipment segment, which suffered from higher oil costs.
