CVS Health will keep biosimilar subsidiary Cordavis under its umbrella, after the company announced plans to split off its pharmacy chain from its health business.
On 4 November, CVS Health – the largest US healthcare conglomerate and the world’s second largest healthcare company – revealed plans to separate into two, publicly traded entities. The company had a market capitalisation of around $117bn before a selloff in its shares following the announcement wiped nearly $15bn off its market value.
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The first will be a healthcare solutions company, comprising health networks and insurance service providers Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health. The other will house its sprawling chain of 9,000 retail pharmacies, along with mail pharmacy, MinuteClinic, and the Health100 technology services business.
The former will be called CVS Health on an interim basis, while the latter will be named CVS Pharmacy. The split is expected to complete by the first half of 2028.
The plans for Cordavis were not revealed in the announcement. A CVS spokesperson confirmed to Pharmaceutical Technology that the unit will remain with the CVS Health company moving forward.
CVS Health established Cordavis in August 2023, aiming to capitalise on the pharma industry’s patent cliff, which was just beginning at the time. Through its model, Cordavis works with biosimilar manufacturers in the US, with parent company CVS relying on its extensive pharmacy network to facilitate access.
“Biosimilars represent one of the biggest opportunities for reducing drug costs for employers and consumers,” the company said in a statement when launching the subsidiary.
There has been a lack of public announcements from the subsidiary since its launch, though it currently markets five biosimilars according to its website. Most notable is ordavis Hyrimoz (adalimumab-adaz), a biosimilar to AbbVie’s Humira. In January 2024, CVS Caremark, the pharmacy benefits management subsidiary of CVS Health, dropped Humira from its list of covered drugs, instead offering biosimilars.
The CVS split follows an increase in scrutiny over the company’s dominant position in the US medical landscape. Lawmakers and politicians have argued that the firm’s dual role as both as retail drugstore chain and pharmacy benefits manager (PBM) have driven the costs up for certain prescription medicines. The creation of Cordavis was therefore significant, given a key aim of the subsidiary is to broaden access to cheaper drugs.
Biosimilars is just one strategic avenue that CVS undertook as its empire spread to nearly all sectors within American healthcare. CVS’ first store opened in 1963, with a string of business expansions via deals and mergers since. The highest profile of these was the $69bn combination with health insurance company Aetna in 2018. While growth expectations have not met investor expectations, other healthcare giants such as UnitedHealth had followed the CVS model of a vertically integrated insurer and pharmacy business.
CVS Health’s CEO David Joyner said in an earnings call: “We are doing [this plan] because we actually have healthy balance sheets with appropriate capital allocation opportunities and momentum in each of the businesses. I feel really good about the timing. I feel really good about the decision, and I feel equally as important about the team that is going allow us to execute against this plan.”
