Bor­ing firm is re­fresh­ing these days

The Signal - - OPINION - Joe MATHEWS Joe Mathews writes the Con­nect­ing Cal­i­for­nia col­umn for Zócalo Public Square.

Cal­i­for­nia is so big that you can be an enor­mous Amer­i­can cor­po­ra­tion, and still hide here.

For ex­am­ple, here’s a trivia ques­tion that stumps even Cal­i­for­ni­ans who know the state well: What’s the sec­ond-rich­est com­pany in Cal­i­for­nia after Ap­ple? “Google?” No. The an­swer: McKes­son. Never heard of it? You’re not alone. McKes­son is “a mas­sive cor­po­ra­tion hid­ing in plain sight,” For­tune wrote re­cently. Its head­quar­ters hides in a con­spic­u­ous place—at Post and Mar­ket Streets in San Fran­cisco. That a com­pany can be both so big and so un­known shows how the tech sec­tor has warped Cal­i­for­ni­ans’ sense of what mat­ters in busi­ness.

McKes­son is not only Cal­i­for­nia’s sec­ond-largest com­pany, with $200 bil­lion in an­nual rev­enues, but also the fifth-largest com­pany in Amer­ica. A mas­sive health­care mid­dle­man, McKes­son dis­trib­utes phar­ma­ceu­ti­cals and other sup­plies from man­u­fac­tur­ers to doc­tors and hos­pi­tals.

This is an un­sexy, low-mar­gin busi­ness — which is why, de­spite its mas­sive rev­enues and reach, McKes­son’s mar­ket cap of $32 bil­lion badly lags Ap­ple ($772 bil­lion) and Face­book ($542 bil­lion). And while other Cal­i­for­nia giants dom­i­nate the head­lines, McKes­son al­most never makes state news.

When I called McKes­son to ex­plain I was writ­ing a col­umn about the com­pany, the po­lite ex­ec­u­tive who called back seemed gen­uinely puz­zled about my in­ter­est. And on re­cent vis­its to McKes­son Plaza, the space out­side the head­quar­ters, I en­coun­tered two sets of pro­tes­tors— one op­pos­ing U.S. Sen. Dianne Fe­in­stein, who has of­fices in the build­ing, and the other sup­port­ing higher wages for jan­i­tors who work there. Not one pro­tes­tor, how­ever, knew any­thing about McKes­son, the com­pany.

This is un­sur­pris­ing. McKes­son is so ubiq­ui­tous, it hasn’t put the great ef­forts into brand­ing that star­tups do. McKes­son also hap­pens to be one of the coun­try’s old­est com­pa­nies—a longevity worth study­ing in a state that wor­ships high-fly­ing and oft-crash­ing tech star­tups.

McKes­son be­gan in 1833, when a young en­tre­pre­neur named John McKes­son and his part­ner opened a drug im­port and whole­sale busi­ness in Man­hat­tan, which went on to pi­o­neer the de­vel­op­ment of gelat­in­coated pills in the 1870s. By the early 1900s, it had cre­ated a na­tion­wide dis­tri­bu­tion net­work that moved medicines and other prod­ucts, from chem­i­cals to liquor.

McKes­son be­came a Cal­i­for­nia com­pany through its 1967 merger with Fore­most, a food-cen­tric con­glom­er­ate co-founded by re­tailer J.C. Pen­ney. By 1970, the firm had set up its San Fran­cisco head­quar­ters.

In 1984, the com­pany was re­named McKes­son Cor­po­ra­tion, and for two decades it ac­quired busi­nesses that dis­trib­uted health-re­lated prod­ucts, while jet­ti­son­ing food and chem­i­cal com­pa­nies that were part of the con­glom­er­ate.

That de­vo­tion to health care, in an aging coun­try with ris­ing health spend­ing, has paid off. A com­pany that had less than $20 bil­lion in an­nual rev­enues two decades ago is now push­ing $200 bil­lion. The com­pany has bur­rowed it­self into ev­ery cor­ner of health­care, but the heart of the op­er­a­tion re­mains its dis­tri­bu­tion cen­ters, a sys­tem that ri­vals Ama­zon’s in scope and in rev­enues. The com­pany’s slo­gan is: “It’s not just a pack­age, it’s a pa­tient.”

Of course, McKes­son is not just a lo­gis­tics com­pany. It’s also a tech­nol­ogy firm that uses ad­vanced health data and an­a­lyt­ics with the stated goal of mak­ing all kinds of health­care sys­tems—from those that get you pre­scrip­tions, to those that al­low you to pay your bill—more ef­fi­cient.

When McKes­son draws crit­i­cal no­tice, it’s usu­ally be­cause some­thing has gone wrong in Amer­i­can health, which means the ubiq­ui­tous McKes­son bears some piece of the blame.

The most re­cent ex­am­ple in­volves the opi­oid cri­sis. While the lion’s share of crit­i­cism has gone to drug man­u­fac­tures, doc­tors and phar­ma­cists, McKes­son and other dis­trib­u­tors have faced me­dia scru­tiny and gov­ern­ment fines for not ef­fec­tively track­ing sus­pi­ciously high orders of opi­oids to cer­tain parts of the coun­try.

But in to­day’s Cal­i­for­nia, McKes­son is mostly note­wor­thy among our rich­est com­pa­nies for sins it has not com­mit­ted.

McKes­son does not keep us glued to screens, and thus ig­nor­ing our loved ones. It does not spread hate and po­lar­iza­tion through so­cial me­dia. And it did not help the Rus­sians steal the 2016 pres­i­den­tial elec­tion.

McKes­son also hasn’t whined about the Cal­i­for­nia busi­ness cli­mate, or threat­ened to leave the state, or forced San Fran­cisco to give it mas­sive tax breaks, as Twit­ter did.

There’s some­thing to be said for a Cal­i­for­nia-based busi­ness that is old, bor­ing, and pre­dictably cor­po­rate in this, our era of dis­rup­tion.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.