CVS to buy specialty drug infusion business for $2.1 billion

Wed Nov 27, 2013 1:34pm EST
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(Reuters) - CVS Caremark Corp CVS.N will buy drug infusion services provider Coram LLC for $2.1 billion, allowing the company to bolster its pharmacy benefits management business by offering cost-effective delivery of specialty drugs.

Most pharma companies are increasingly focused on developing niche drugs for complex disorders as several mass market drugs lose patent protection.

Pharmacy benefit managers (PBMs) such as CVS, which administer prescription drug benefits for employers and health plans, can offer greater value to clients by diversifying their offerings.

CVS, which operates the No. 2 U.S. drugstore chain and the second-largest PBM business, said the acquisition would expand its services to include infusion therapy, which involves administering medication through a needle or catheter to patients too severe to be treated orally.

"The addition of Coram further increases the company's attractiveness to PBM customers seeking to control rising specialty (prescription) costs," Jefferies analysts wrote in a note.

Coram, owned by Blackstone Group (BX.N: Quote)-controlled Apria Healthcare Group Inc SKYACA.UL, provides infusion services primarily at patients' homes at a far lesser cost than if these were to be done at hospitals or physicians' offices, CVS said.

Such services will become increasingly important as providers look to manage the overall cost of care delivery, J.P. Morgan analyst Lisa Gill wrote in a note.

CVS, whose Caremark PBM unit competes with Express Scripts Holding Co (ESRX.O: Quote), said Coram would add $1.4 billion to revenues in the first year after the deal closes and 3 to 5 cents per share to CVS's adjusted earnings per share in 2015.

CVS expects the deal to close in the first quarter of 2014.   Continued...

A CVS pharmacy is seen in New York City July 28, 2010. REUTERS/Mike Segar