CVS Health launches new brand Cordavis to target $100 billion biosimilar market

CVS Health (CVS) on Wednesday announced the launch of a new business unit, Cordavis, to bring private label biosimilar drugs to market.

Prem Shah, EVP and chief pharmacy officer at CVS, told Yahoo Finance the move represents “one of the biggest opportunities” for reducing drug costs, and gives the healthcare giant a piece of what is projected to be a $100 billion market by 2029.

In the same way CVS and other retailers have privately branded generics — like store-brand acetaminophen on the same shelf as Tylenol (JNJKVUE) — the healthcare giant wants to build a portfolio of private label biosimilars under the Cordavis name.

The US Capitol is seen past a CVS Pharmacy delivery truck in Washington, DC, on February 23, 2023. - In March 2023, a shortage of pharmacists is forcing CVS and Walmart to reduce the hours of its pharmacies, as they close earlier in thousands of locations. (Photo by ANDREW CABALLERO-REYNOLDS / AFP) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)
The US Capitol is seen past a CVS Pharmacy delivery truck in Washington, D.C., on Feb. 23, 2023. (ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)

The company will not undertake any research and development of drugs, Shah said.

But CVS said the strategy is more than just slapping a label on a finished product.

“For products that Cordavis co-manufactures, Cordavis will be significantly participating in the manufacturing process with contracted manufacturers, including things like overseeing manufacturing and quality control processes, developing product labeling, and organizing logistics for the products, among other things,” a spokesperson told Yahoo Finance.

The ‘most value for customers’

“We have a strategy to go after the products where we believe we can create the most value for customers, and for the US marketplace where we can increase the competition, lower the cost, and get that cost to consumers, and get these products to consumers at lower prices,” Shah said.

The first product Cordvais will co-manufacture and commercialize is Sandoz’s (NVS) Hyrimoz — a biosimilar to AbbVie’s (ABBV) blockbuster rheumatoid arthritis drug Humira, which went off patent this year.

The Cordavis-branded Hyrimoz will list for 80% less than Humira’s price.

That’s similar to the prices rival OptumRx, a unit of UnitedHealth (UNH), announced last year.CVS Health Corporation (CVS)View quote detailsNYSE – Nasdaq Real Time Price (USD)66.41+0.01(+0.02%)As of 1:53PM EDT.Market open.Add to watchlist

JPMorgan analyst Lisa Gill said in a note Wednesday that the move is a volume-based transaction with only upside for CVS.

“CVS has committed to purchasing a certain amount of volume from Sandoz and management noted there are no additional capital commitments. CVS anticipates Cordavis will generate positive margins for commercializing the product, but it is too early to size the potential contribution,” Gill said.

OptumRx said its Sandoz-branded biosimilar Hyrimoz would list for 5% less than Humira, and the unbranded for 81% less than Humira, which has a list price of $6,922 per month for the injectable drug.

By comparison, Amgen’s (AMGN) biosimilar Amjevita lists for 55% less than Humira for the unbranded version and 5% less for the branded version.

Mark Cuban’s Cost Plus Drugs is dispensing Coherus’ Yusimry, another biosimilar for Humira, for about $570, plus fees, per month.

Specialty drugs in demand

Cordavis launched as a wholly owned subsidiary of CVS, and is targeting the costly specialty drug market — which accounted for 50% of drug spend in the US in 2021 despite being used by only 2% of the population.

Humira and its biosimilars fall into that category.

The drug industry has focused more of its efforts in recent years to target specialty drug launches. Those efforts, paired with a number of patent cliffs for blockbuster drugs held by big pharma companies, is providing a market ripe for competition.

“Over the next 10 years, we’re seeing this biosimllar competition come into the US marketplace, and we want to ensure adoption of these products,” Shah said.

But it’s also an area facing historic shortages as supply chain issues hamper product output.

Cancer drugs as well as diabetes drugs, like Novo Nordisk’s (NVO) Ozempic, have made it to the FDA’s drug shortage list this year. That’s why Shah said CVS intends to select products that can provide adequate supply.

“When we’re converting patients to these clinically complex equivalent [products] … we want to make sure we don’t run out of supply, and there [have] been supply issues with certain other products,” Shah said, which outlines why the company chose Sandoz’s biosimilar for its launch.

“Cordavis is a logical evolution for us and will help ensure sufficient supply of biosimilars in the US and support this market now and in the future, while ultimately improving health outcomes and reducing costs for consumers,” CVS CFO Shawn Guertin said Wednesday.

“Let’s be really clear. Our job is to drive the prices down as low as possible for our clients. That’s what we do as a company every single day.”

Follow Anjalee on Twitter @AnjKhem.

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