Transcripts

CVS To Buy Caremark Rx

SUSIE GHARIB: It's an almost $21 billion drug deal. CVS, the nation's largest drugstore chain, said today it's buying Caremark Rx, one of the nation's biggest pharmacy benefit managers. The combined company will become a huge player in pharmacy services. That could change the landscape of the prescription drug business. CVS now runs 6,200 stores in 43 states. Caremark manages drug benefits for more than 2,000 health plans. The companies say combing forces in a merger of equals could realize $400 million in operating savings the first year alone by increasing purchasing scale and efficiency. Analysts say it's a good opportunity for both companies.

MARK HUSSON, RETAIL ANALYST, HSBC:Drugstore retailing is gettingmore difficult. And I think this is just a sign that CVS is looking for other avenues other than just drugstore retailing to grow its business. And Caremark is a large pharmacy benefit management company and has a very important mail order business. Mail order has been growing a lot faster than retail. And this gives CVS access to that mail order piece of the puzzle.

GHARIB: CVS had been a client of HSBC over the past year. Now CVS and other retail pharmacies have been under pressure lately since Wal-Mart began selling some generic drugs for just $4 for a month supply.