Execs still mulling CVS-Caremark fallout

By Lewis Krauskopf

NEW YORK (Reuters) - Investors last week jeered U.S. drug store chain CVS Corp.'s (CVS.N: Quote, Profile, Research, Stock Buzz) move to buy pharmacy benefit manager Caremark Rx Inc. CMX.N for nearly $21 billion.

But health-care executives are holding off on their reviews.

Top officials told the Reuters Health Summit they are still trying to understand the deal, which valued Caremark with no premium to its share price. Some said the deal could spawn imitators -- and that their companies may stand to prosper from a CVS-Caremark combination.

"Usually when there are big moves, other companies look at the move and either try to repeat it or react to it," said George Barrett, a top North American executive at Teva Pharmaceuticals Industries Ltd. (TEVA.O: Quote, Profile, Research, Stock Buzz), the world's largest generic drug maker.

"These are the kinds of things that tend to cause ripple effects," Barrett said. "Maybe what everybody is going to do is to watch this for a while."

CVS stock fell 7.5 percent on November 1, when it announced the deal, while Caremark shares fell 2.2 percent. The news also dragged down shares of rivals in both industries.

Traditional pharmacies such as CVS face pressure from mail-order operations, while a move by Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research, Stock Buzz) into low-price generics has spooked investors of both retail pharmacies and benefit managers.

But Richard Clark, the CEO of drugmaker Merck & Co. (MRK.N: Quote, Profile, Research, Stock Buzz) who ran rival benefit manager Medco Health Solutions Inc. (MHS.N: Quote, Profile, Research, Stock Buzz) when it was a Merck unit, said he did not think the deal was done out of weakness.  Continued...