Kroger Announces Merger with Axium Pharmacy

The Kroger Co. announced it will acquire the outstanding shares of Axium Pharmacy Holdings, Inc., a leading specialty pharmacy, to create a merger of the two companies.

Founded in 2000, Axium provides drug therapies and patient-support services to treat chronic, genetic and other complex medical conditions such as cancer, Hepatitis C, Rheumatoid Arthritis, Multiple Sclerosis and numerous other chronic care conditions. This partnership gives Kroger significantly enhanced capabilities to serve customers who require complex drug therapies, and to deliver those therapies at greater value to customers and insurance payers. Financial terms were not disclosed.

“Kroger and Axium are a strategic fit as we look to enter the high-growth specialty pharmacy business,” said Lincoln Lutz, Kroger’s vice president of corporate pharmacy. “The combination of Axium’s expertise and Kroger’s 1,950 pharmacy locations, 91 Little Clinic locations, and pharmacists who provide health coaching, biometric screening and other wellness services will deliver positive health outcomes for our patients, cost savings for insurance payers, and unique services for physicians.”

Strong Growth Opportunity                                                                     

Specialty pharmacy is the primary area of growth in pharmaceuticals. Revenue for specialty drugs has grown from $17 Billion in 2000 to $104 Billion in 2011, and is projected to grow to $135 Billion in 2014. In 2011, 80% of new drugs approved by the FDA were specialty drugs.  Currently more than 700 specialty drugs are in the pipeline for approval.

“This partnership supports Kroger’s long-term growth plans, with strong return on invested capital,” said Rodney McMullen, Kroger’s president and chief operating officer.

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