CVS Just Made a Major New Announcement, But Should You Buy It?
On August 23, CVS Health (NYSE: CVS) made waves when it announced that it would be initiating a new subsidiary called Cordavis that will be devoted to commercializing biosimilar medications. Now, investors can look forward to the company posting a faster pace of recurring revenue growth as it brings copies of best-selling drugs to market over the coming years.
But does the launch of Cordavis make the stock a buy? Let's dive in and figure out the financial impacts to answer that question.
Biosimilar medicines are appealing to produce for a couple of reasons. First, they don't incur many research and development (R&D) expenses to commercialize in comparison to discovering and testing a drug from scratch. All that biosimilar manufacturers need to do is perform a couple of clinical trials to demonstrate that their products function just as well as the branded versions they're trying to copy. Second, biosimilars have a proven market as sales of the branded version make for a good estimation of demand. That minimizes the risk of a commercial flop.
Source Fool.com
