www.jpmorganmarkets.comNorthAmericaEquityResearch28April2020PharmaceuticalDistributionThoughtsonImpactofCOVID-19AcrosstheBusinesses;UpdatingEstimatesIntotheQuarterHealthcareTechnology&DistributionLisaC.GillAC(1-212)622-6466lisa.c.gill@jpmorgan.comBloombergJPMAGILLMichaelMinchak,CFA(1-212)622-6506michael.minchak@jpmorgan.comAnneE.Samuel(1-212)622-4163anne.e.samuel@jpmorgan.comJ.P.MorganSecuritiesLLCSeepage27foranalystcertificationandimportantdisclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.COVID-19ishavingfarreachingimpactsacrossourbroadercoverageuniverse.Inthefollowingnote,wediscusstheimpactsonthepharmaceuticaldistributors,includingaroundthecoredrugdistributionbusinessaswellasacrossthecompanies’variousancillarybusinesses.WealsodiscussourestimatechangesandprovidethoughtsheadingintotheC1Q20results.Weremainpositiveonthebroaderpharmadistributorgroupgivenanimprovingfundamentalbackdrop,andhighlightOW-ratedAmerisourceBergen(ABC)andMcKesson(MCK)asourfavoritenames.Broadlyspeaking,weseethecorepharmaceuticaldistributionbusinessassomewhatmoreinsulatedfromCOVID-19impacts.Atthispoint,wedon’texpectamaterialimpactonscriptvolumes,outsideofthepull-forwardinMarch,aswellasaminorimpactfromfeweracutescriptstiedtoelectiveproceduresandnewtobrandscriptsduetofewerphysicianofficevisits(althoughweviewthisastemporary).Weseesomeminorimpacttothespecialtydistributionbusinessasvolumesforspecialtydrugsadministeredintheofficesetting(e.g.,oncologyandothercomplexconditions)haveseenadeclineinthepastfewweeks.Impacttoancillarybusinesseslikelytobemoresignificantinthenearterm.Eachofthecompanieshasexpandedintootherverticalmarketsandgeographies,someofwhichmaybemoreexposedintheneartermtoCOVID-19relateddisruption.Forexample,weseealargerimpactonmedicalsupplydistributiong...
