McKesson Corporation (MCK) Stock Analysis

McKesson’s primary competitive advantage is its scale and efficiency in pharmaceutical distribution. Alongside Cardinal Health and Cencora (formerly AmerisourceBergen), McKesson forms an oligopoly controlling over 90% of U.S. drug distribution. This scale enables superior purchasing power with manufacturers and cost efficiencies that smaller rivals cannot match. For example, McKesson’s U.S. Pharmaceutical segment alone generated $328 billion in revenue in FY2025, dwarfing most competitors.

The company’s integrated platforms—spanning distribution, technology, and specialty services—create high switching costs for customers. McKesson’s U.S. Oncology Network, for instance, offers not just drug supply but also practice management, clinical trial access, and data analytics, making it a “one-stop shop” for community oncology practices. This breadth is difficult for niche or regional players to replicate.

Customer relationships are sticky: McKesson’s ten largest customers account for 72% of revenue, with CVS Health alone representing 24%. Long-term contracts and embedded technology solutions further entrench these ties.

Operational excellence is reinforced by a culture emphasizing efficiency, compliance, and digital innovation. Recent investments in AI and data platforms (e.g., the Compile acquisition) aim to modernize offerings and support biopharma partners.

Risks include customer concentration, thin margins (net margin ~1%), and exposure to regulatory and litigation threats. However, McKesson’s scale, integrated services, and entrenched customer relationships provide a durable edge over both traditional and tech-enabled entrants.