Cardinal Health Essay

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Nineteenth on the Fortune 500 list, Cardinal Health is one of the leading wholesale drug and health products companies in the world. Ohio businessman Robert Walter founded the company in 1971, as Cardinal Foods, a food wholesaler.

Cardinal Foods expanded its operations throughout the 1970s, ending the decade with its 1979 purchase of the Bailey Drug Company, a regional drug distributor, and reorganization as Cardinal Distribution, distributing both pharmaceuticals and food. In 1983, having expanded to four distribution centers in the Midwest, Cardinal went public. It soon expanded its coverage by buying out the Buffalo-based Ellicott Drug Company in 1984, John L. Thompson Sons & Co. (Peabody, MA) and James W. Daly Inc. (Troy, NY) in 1986, and Leader Drug Stores (Buffalo) in 1987. Most of these acquisitions expanded the pharmaceutical half of Cardinal’s business, and the company decided to focus on that exclusively, selling its food distribution operations to Roundy’s Inc. Newly reorganized, the company grew rapidly, becoming one of the top two distributors in every region in which it did business by the 1990s.

Expansion from the 1990s on remained within the health services industry. Acquisitions included more drug distributors, but also the Medicine Shoppe pharmacy franchise, the pharmaceutical packing company PCI Services, the surgical product manufacturer Allegiance Corporation, the medical surgical distribution company Bergen Brunswig, and Owen Healthcare, a hospital pharmacy management company—among others. In 1994 Cardinal Distribution became Cardinal Health Inc., and began to expand beyond its regional coverage to a national focus. By 1996 the company was operating some of its services in England and Germany as well as the United States. launched in 2000, the crest of the dotcom boom, and has become the largest healthcare supply online catalogue. After further acquisitions, the company again streamlined, offering its services worldwide under the Cardinal Health brand name, while entering into the pharmaceutical and biotech research field with its acquisition of Magellan Laboratories.

More cutting-edge technologies followed, including the gene insertion techniques developed by 2003 acquisition Gala Biotech. The consultancy firm Beckloff Associates was acquired in 2004 to assist with strategies for bringing biotech and pharmaceutical products to market in the United States, Canada, and the European Union, markets with very specific legal and regulatory concerns.

Increasingly, Cardinal’s characteristic approach to doing business and organizing its firm has been to emulate the vertical integration practiced by Andrew Carnegie a century earlier, albeit adjusting for a different industry and different climate. While Pharmacy Benefits Management companies are increasingly affiliated with chains of pharmacies in order to streamline their business, companies like Cardinal go further than that, an approach that could almost be called holistic. As Carnegie controlled the stages of life of steel, and the businesses that shepherded it through them, Cardinal takes a similar approach to pharmaceuticals, maintaining watch over them from their conception and birth through their sale at the point of purchase.

Robert Walter no longer serves as CEO, but has remained on the board of directors, with plans to retire in the summer of 2009.


  1. Jack W. Plunkett and Michelle LeGate Plunkett, Plunkett’s Health Care Industry Almanac 2009 (Plunkett Research, 2004);
  2. Rhea, “Cardinal Health Digs Deep,” Modern Healthcare (April 30, 2007);
  3. Robert E. Spekman and Anwar Harahsheh, “Collaborative E-Commerce: Shaping the Future of Partnerships in the Healthcare Industry,” (cited March 2009).

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