CVS Expands Biosimilar Production with Discount Humira
CVS Health has partnered with Sandoz, a drugmaker, to develop a nearly identical version of the popular arthritis treatment Humira. This biosimilar drug will be sold at a price 80% lower than the brand-name drug. The move is part of CVS's new venture to secure and co-produce biosimilar drugs, which are generic versions of complex gene or protein-based therapies known as biologics.
Prem Shah, CVS Health EVP and Chief of Pharmacy, emphasized the company's commitment to ensuring a durable supply of high-quality biosimilar products at a significantly lower price than the original drug. CVS is already a major player in sourcing generic drugs through its joint venture with Cardinal Health, called Red Oak. However, the company aims to strengthen its position in the growing biosimilars market, projected to reach $100 billion in the next six years.
To support its biosimilar production efforts, CVS is launching a subsidiary called Cordavis. This new entity will specialize in securing the supply of biosimilar drugs and will invest in Sandoz, the generic manufacturing unit of Novartis Pharmaceuticals. Sandoz, currently a unit of Novartis, is expected to become an independent publicly traded firm later this year.
CVS has not disclosed the investment size for the new biosimilar, branded as Hyromiz. However, the company pledges that Cordavis Hyromiz will have a list price more than 80% lower than the current list price of Humira, manufactured by AbbVie. The launch of Cordavis and the availability of Hyromiz are anticipated in the first quarter of 2024. Amgen's Amjevita, the first FDA-approved biosimilar for Humira, was introduced in January, and eight more biosimilars, including Hyromiz, are expected to enter the market within the next year.
While demand for Amgen's biologic appears to be growing, securing coverage from health insurers has been challenging. The entry of biosimilar competitors has prompted changes in payer behavior, particularly in terms of pharmacy benefits. AbbVie reported over $4 billion in Humira sales in its most recent quarter and continues to be offered on health insurer plans alongside the new biosimilars.
Despite recent news of Blue Shield of California dropping CVS as its pharmacy benefits manager, analysts like John Ransom of Raymond James believe that the impact on CVS shares was exaggerated. The threat from emerging competitors may not be as significant, especially in the current biosimilar market for drugs like Humira. Ransom highlights that CVS has advantages such as rebates from AbbVie or discounts from competing biosimilar manufacturers. In contrast, Mark Cuban's Cost Plus Drug Company lacks the scale and shelf space to compete effectively in the generic drug market.
In conclusion, CVS's partnership with Sandoz to produce a discounted version of Humira showcases the company's commitment to expanding its presence in the biosimilars market. By offering more affordable alternatives, CVS aims to provide a durable supply of high-quality biosimilar drugs. While challenges exist, such as securing coverage from insurers, CVS's strategic moves position the company for success in the evolving pharmaceutical landscape.
Implications for New Businesses
CVS Health's strategic move to expand its biosimilar production with a discounted version of Humira presents important implications for new businesses, particularly those operating in the pharmaceutical industry.
Embracing the Biosimilar Market
The growing biosimilar market, projected to reach $100 billion in the next six years, offers significant opportunities for new businesses. CVS's partnership with Sandoz underscores the potential for collaborations in developing affordable alternatives to complex biologic drugs.
However, the journey is not without challenges. As seen with Amgen's biologic, securing coverage from health insurers can be difficult. New businesses must navigate these challenges and adapt their strategies to succeed in this evolving landscape.
In conclusion, CVS's expansion into biosimilar production provides a roadmap for new businesses. It showcases the potential of the biosimilar market and highlights the importance of strategic partnerships in drug development. While challenges exist, they are not insurmountable. New businesses can learn from CVS's strategy and leverage opportunities in the growing biosimilar market. This is a clear reminder that in the world of pharmaceuticals, innovation, collaboration, and adaptability are key to success.