Net Income Declines at Drug Firm McKesson

McKesson Corp., the biggest U.S. drug wholesaler, said fiscal fourth-quarter earnings fell 15%, hurt by limits on profitable stockpiling.

Net income declined to $220 million, or 70 cents a share, from $259 million, or 85 cents, a year earlier, San Francisco-based McKesson said. Revenue rose 12% to $23.1 billion.

McKesson and other wholesalers are signing more contracts with drug makers that guarantee fees for distribution while limiting stockpiling. About 70% of the distributors’ drug sales are now covered by such fee-for-service agreements, reducing their ability to profit from stockpiling and selling medicines after prices rise, said Lisa Gill, a JPMorgan Securities analyst in New York.

The company forecast fiscal 2007 earnings of $2.55 to $2.70 a share, excluding some items.

McKesson’s shares fell 16 cents to $47.25. The company reported earnings after the close of trading.