CVS, Cardinal Health Form Joint Venture

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Dec. 10 (Bloomberg) -- ISI Senior Managing Director Ross Muken discusses CVS and Cardinal Health forming the largest U.S. generic drug sourcing operation. Muken owns no stock in either company and speaks on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)


Explain why it makes sense.

There has been a huge shift over the last few years, looking to lower the cost of pharmaceuticals.

Putting these parties together, you will create the largest buyer of drugs in the u.s. from a generic basis.

They can derive savings for that.

Some of it they will keep from a profit perspective.

That means for you or i, cheaper drugs.

How much do you think this deal is worth to these companies?

It will help cvs even more.

It will add about five cents per share annually.

I think it will be quite a bit more than that.

They can drive almost a half billion of savings over time given the size of their generic purchasing efforts.

Let's say it is something in the area of $.20 to cardinal health.

It is probably six percent -- 6%, 7%. similar accretion, but clearly something that will be beneficial to both parties.

What we have seen is the major wholesalers have tried to strike deals like this, starting last year with walgreens.

They now have a three-pronged deal.

Trying to do something similar in europe.

This is a little bit simpler.

This is an attempted acquisition at this point.

Walgreens, amerisource, that triumvirate is more complicated.

This is simple.

Straight 50-50 jv.

It should be clear how the financial benefits get derived from it.

We think it will be something that will be pretty additive to their growth rates in 2015 and beyond.

They made this analyst day.

What were the takeaways?

Like there has been a huge shift in cardinal the last few years.

They are trying to solve the issues the health-care system is having.

They are looking for drugs in the specialty category.

They are driving savings.

They are doing a lot of preferred products and medical, moving into china.

A lot of irons in the fire.

George barrett, who runs it, is thoughtful as a ceo.

A positive day for cardinal health.

Thank you so much for joining

This text has been automatically generated. It may not be 100% accurate.


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