Cantor Fitzgerald analyst Justin Kew attended the annual Pharmacy Benefit Management Institute’s Drug Benefit Conference in Las
Vegas earlier this week, and came away feeling his bullish take on Catamaran Corp. (TSX:CCT) was confirmed.
Kew says the growth of specialty drugs was a major theme of the conference. Specialty drugs, which are prescribed for chronic or complex health conditions, affect only a small percentage of society, but the cost of these treatments is so high that the category now represents a large proportion of growth in overall drug spending.
The problem is that specialty drugs can be difficult to manage because they are billed across both medical benefits and pharmacy plans, creating a situation in which data must be collected from both. Catamaran, says Kew, is well positioned to solve this tangle with its specialty pharma division, BriovaRx.
Another theme was the impact of the Affordable Care Act (ACA). On March 23, 2010, President Obama signed the ACA, which puts in place comprehensive health insurance reforms that have since been rolling out. Kew says Catamaran can capitalize on by serving the exchanges as well as the managed Medicaid and fee for service Medicaid markets, giving it a “wider catchers mitt” than traditional PBMs.
In a research update to clients this morning, Kew maintained his BUY rating and $68 one-year target on Catamaran.