MILAN, Ill. -- Eagle Food Centers here has signed an expanded three-year supply agreement with McKesson Corp., San Francisco, for its pharmaceuticals and a portion of its over-the-counter health care products.
Eagle and McKesson had a limited agreement through the Independent Pharmacy Cooperative, a Madison, Wis.-based buying group, said Paul Hoffman, the chain's pharmacy director. The new deal, he noted, allows Eagle to work directly with the distributor and gives the retailer more buying clout.
"We really needed to get into a chain-type situation," Hoffman said, adding that his contact at McKesson is now a regional vice president instead of a field representative.
McKesson said it expects the new agreement to yield more than $25 million in revenues over the term of the contract. According to the distributor, the previous arrangement generated annual revenues of $6 million.
Hoffman said McKesson's pharmacy-management computer software systems were a major incentive in Eagle's decision to expand the relationship.
These programs include OmniLink, which is designed to improve pharmacies' managed-care compliance by giving on-line reimbursement information at the point of dispensing; ProfitLink, which maintains data about the best-selling drugs in a given geographic area; and Chain Host, which helps multistore retailers coordinate their operations.
"The total package McKesson has to offer for pharmacy management is unique," Hoffman said. "It makes it much easier to manage."
The new contract calls for Eagle to receive only about 8% of its OTC products through McKesson, mostly "things not in the average grocery store mix," Hoffman said. "Naldecon [a line of cough/cold remedies] is a good example." The rest of Eagle's OTCs are to come from its own warehouse.
The chain operates 91 units under the Eagle Food Centers, Eagle Country Markets, Eagle Country Warehouse and BOGO's Food and Deals banners in Illinois, Iowa and Indiana. There are 17 Eagle pharmacies.