's drug markets (O'Reilly 61).
In June 1993, Merck agreed to sell its Calgon Water Management business for cash to English China Clays. This represents a move out of the water management business for Merck and may indicate that the company is returning to its core business of pharmaceuticals. In July of 1993, the company signed an agreement with Medco Containment Service to purchase Medco.
Medco is a $6 billion company and the leading American mail order marketer of prescription drugs. The move was considered by analysts to be initially dilutive in that the company will have to put aside short-term profits in order to realize the deal. However, drug companies are better than most American companies at considering the long-term effects of their strategies because of the long development cycle for their products. In the case of the acquisition of Medco, Merck is likely to consider that it will strengthen the company's position in the expanding managed care market and offer other competitive advantages through Medco's distribution system.
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