Cardinal Health, CVS team up for generic sourcing entity

Cardinal Health (CAH +4.1%) and CVS Caremark (CVS +1.9%) are teaming up to create the country's largest generic sourcing entity.

Ultimately, this is a joint venture that combines and leverages the companies' supply chain management capabilities in order to negotiate generic supply deals.

No physical assets are being contributed by either side and the initial term of the arrangement is 10 years.

CAH will make quarterly payments of $25M to CVS over the life on the arrangement in order to "reflect an equitable 50/50 JV."

The companies have also inked a three-year extension of their pharma distribution agreements. (PR)

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