The latest U.S. Consumer Price Index showed prices 3.4% higher in July than a year earlier, well above the Federal Reserve’s 2% target. Energy prices jumped 14.7%, electricity rose 4.2%, and food increased 3%. Producer prices remained 4.7% higher year over year. The Congressional Budget Office has specifically concluded that the Trump administration’s policies have contributed to current inflationary pressure.
But rather than debate why inflation is worsening, the focus here is on how to position a portfolio to benefit from “Trumpflation.” Beyond bonds, gold, and energy stocks, pharmaceutical distributors McKesson (NYSE: MCK) and Cencora (NYSE: COR) have unique contractual mechanisms that can turn drug price increases into gains.
McKesson is not a drug manufacturer. It moves enormous quantities of pharmaceuticals from manufacturers to pharmacies, hospitals, and healthcare providers. Some of its distribution agreements contain inflation-based compensation provisions. When manufacturers raise prices, inventory purchased at older, lower prices can later be sold at new, higher prices, generating additional profit. McKesson has explicitly warned that a reduction in the frequency or magnitude of manufacturer price increases could squeeze gross margins. In other words, certain types of inflation are not necessarily a headwind for the company.
For fiscal 2026, McKesson reported revenue of $403.4 billion, up 12% from the prior year, while adjusted earnings per share rose 18% to $39.11. Its North American pharmaceutical business alone generated $336.7 billion in revenue. In the first quarter of fiscal 2027, revenue rose another 8% to $105.4 billion, and adjusted EPS climbed 20% to $9.93. Management subsequently raised full-year adjusted EPS guidance to a range of $44.20 to $45.00.
Cencora offers a similar way to benefit from rising drug prices. Some of its distribution agreements include price-appreciation provisions that allow the company to earn additional gross profit when manufacturers increase drug prices. The exact economics vary by contract, but Cencora has acknowledged that slower or less frequent manufacturer price increases can hurt results. That means while inflation narrows margins for many businesses, certain types of drug price inflation can work in Cencora’s favor.
Cencora moves hundreds of billions of dollars’ worth of pharmaceuticals every year and posted revenue of $321.3 billion in fiscal 2025. Across such a vast distribution network, even modest price increases can provide a revenue tailwind, and certain manufacturer price increases can also improve gross profit. In its latest reported quarter, Cencora generated $78.4 billion in revenue, up 3.8%, while adjusted EPS increased 7.5% to $4.75. Management raised full-year adjusted EPS guidance to $17.65 to $17.90 and expects adjusted operating income to rise 12% to 14%.
Neither stock is a pure inflation hedge. Wages, transportation costs, and other expenses can still compress margins. Drug pricing regulation may pressure pharmaceutical economics, generic drug deflation could work against distributors, and tariffs could raise operating and medical product costs. But that is exactly what makes McKesson and Cencora interesting. Both companies process hundreds of billions of dollars in annual pharmaceutical sales, are delivering solid earnings growth, and operate business models that can absorb higher drug prices and, in certain circumstances, benefit from them.
If Trumpflation persists, investors do not necessarily need to own commodities or gold for protection. Sometimes the better opportunity is owning companies that get paid while prices move higher.
