Pharmacy benefits manager and healthcare company CVS Health (NYSE:CVS) unveiled Cordavis, a wholly-owned subsidiary that will work with medicine manufacturers to commercialize and co-produce biosimilar products. This could impact AbbVie (NYSE:ABBV), as CVS plans to launch the biosimilar version of Humira, ABBV’s popular arthritis drug, at a price that’s over 80% cheaper than Humira.
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Biosimilar products are the “generic” versions of medications approved by the FDA and are nearly identical to their original counterparts. Let’s dig deeper.
Humira Sales to Decline
CVS Health plans to develop a portfolio of products that will offer broader access to biosimilars in the U.S. through Cordavis. The company said it intends to create more competition and drive down prices. Further, it expects the biosimilar market to grow to over $100 billion in the U.S. by 2029, offering massive growth opportunities.
The company said that Cordavis will work with Sandoz, a division of Novartis (NYSE:NVS), to commercialize a private-label biosimilar for Humira in the first quarter of 2024. Moreover, as stated earlier, the product’s price will be over 80% lower than Humira’s current price.
Investors should note that Humira is a key revenue driver for biopharmaceutical company AbbVie. The growing competition from biosimilars is taking a toll on Humira’s sales. For instance, Humira generated nearly $4 billion in sales in the second quarter of 2023, down 25.2% year-over-year. Humira’s net revenues were $3.45 billion in the U.S., reflecting a decrease of 26% due to biosimilar competition.
AbbVie already faces intense competition in the U.S. for Humira and expects to see further price erosion for the rest of the year, impacting Humira’s revenues. Meanwhile, the launch of CVS’ biosimilar product could further erode Humira sales.
Against this backdrop, let’s look at what Wall Street projects for AbbVie and CVS.
Is ABBV Stock a Buy, According to Analysts?
Owing to the near-term competitive headwinds from biosimilars in the U.S., analysts maintain a cautiously optimistic outlook for ABBV stock. It has garnered six Buy and four Hold recommendations for a Moderate Buy consensus rating. The average ABBV stock price target of $171.38 implies 16.52% upside potential.
Is CVS Stock a Buy, According to Analysts?
Despite lower COVID-related contributions, analysts are bullish on CVS stock due to improving sales and its focus on driving productivity. Biosimilars can aid the company further. With 12 Buy and three Hold recommendations, CVS stock sports a Strong Buy consensus rating. The average CVS stock price target of $93.31 implies 40.53% upside potential from current levels.
