But the Distributor Suffered Indigestion After Big Acquisitions
Orange-based Bergen Brunswig Corp. has faced problems with two big acquisitions and a slumping stock price. But the pharmaceutical and healthcare products distributor’s revenue has grown 107% in the past three years, going from $11.3 billion in 12-month sales through June 1997 to $23.3 billion in June of this year.
Bergen is No. 30 on the Business Journal’s list of fastest-growing companies, up from No. 37 on last year’s list.
“The business in general has grown. We have new retail customers, new health systems,” said Donna Dolan, a Bergen spokeswoman.
New customers for Bergen include Duane Reade Inc., a New York drugstore chain, BJC Health System of St. Louis and Save Mart, a central and Northern California supermarket chain.
Bergen employs 750 in Orange County and 15,000 company-wide,
As Bergen sells off units, Dolan said the company expects its sales growth to be in the low- to mid-teens next year. She said the company aims to grow by getting new customers and improving relationships with existing ones.
Wall Street, however, hasn’t looked kindly on Bergen’s industry sector in recent months. Bergen’s stock, which trades on the New York Stock Exchange, fell from nearly 40 in January 1999 to 4 on March 13 of this year. As of last week, the shares were at about 9. Some of Bergen’s rivals, including McKesson HBOC Inc., have also seen their stock prices slide.
Bergen’s most severe problems came from a pair of 1999 acquisitions that Chairman Robert Martini has acknowledged were too costly to the company. They were PharMerica Inc., which provides drugs to nursing homes, and Stadtlander Drug Co., which makes medication for people with the HIV virus.
Bergen spent $400 million to acquire Stadtlander from Counsel Corp. last year, but struck a deal to sell it to CVS Corp. for $120 million in July. Bergen also said it would take a $250 million third-quarter charge relating to the Stadtlander transaction and the sale of Bergen Brunswig Medical Corp. to Cardinal Health Inc.’s Allegiance Corp. subsidiary for $181 million.
Bergen is alleging in a lawsuit against Counsel that Counsel misled Bergen about the actual value of Stadtlander. Counsel has denied Bergen’s allegations.
Bergen also shook up its top management last November, when President and Chief Executive Donald Roden was dismissed. Robert Martini, who is now 68, then came out of semi-retirement to run the family business after Roden’s ouster.
Dolan said a search for a permanent chief executive is ongoing.
There has been some talk about Brent Martini, Robert Martini’s son, becoming Bergen’s permanent chief executive. Brent Martini, 41, joined the company’s board of directors in December.
Brent Martini is president of Bergen Brunswig Drug Co., the company’s largest business unit. He is also a key figure in Bergen Brunswig’s Internet activities, including oversight of Bergen’s own myGNP.com and joint ventures more.com and HealthCentralRx.com, three online business-to-consumer sites allied with health information sites.
Dolan, while acknowledging Bergen’s push into business-to-business e-commerce and facilitating business-to-consumer sites, said she did not think a large portion of the company’s sales growth came from Internet concerns. n
