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Pharma Pharma Pharma Pharma Pharma Chameleon

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What's going on?

American pharmacy and healthcare company CVS Health reported better-than-expected quarterly sales and profit on Tuesday – showing investors that the soon-to-be even bigger company is still bright-eyed and bushy-tailed.

What does this mean?

CVS had higher sales of prescription drugs largely to thank for profit shooting up 8% versus a year before. The company, which runs about 10,000 pharmacies across the US and Brazil, also benefited from increased sales of beauty products, as well as a tax bill down a tidy $268 million.

CVS agreed to buy health insurance company Aetna for $69 billion in the biggest deal of 2017. That’s finally gotten the go-ahead from regulators (tweet this); with a bit of luck, the estimated $750 million in cost savings should start cooking on gas just in time for Thanksgiving.

Why should I care?

For markets: CVS gets Primed.

After all this good news, CVS’s stock clucked up 5% on Tuesday. Investors probably felt more confident in the company’s ability to do battle with king-of-everything Amazon – which announced its own foray into healthcare in June with the purchase of online pharmacy Pillpack. CVS is currently trialing a membership program (akin to Amazon’s Prime), in which it’s offering free delivery on most prescriptions and online purchases for a monthly subscription fee half that of Amazon’s. Let the battle rage!

The bigger picture: Eli Lilly lowers its cholesterol.

US pharmaceutical company Eli Lilly also reported better-than-expected earnings on Tuesday, thanks to healthy sales of some of its new drugs. The $120 billion company is in the middle of a turnaround that seems to be going pretty swimmingly, but its stock didn’t respond well to the news. Investors are likely waiting to see how the US midterm elections pan out to figure out whether proposed cuts to the prices companies can charge for medicines will get over the line (lower drug prices would mean less profit for pharma companies like Lilly).

Originally posted as part of the Finimize daily email.

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