Bristol-Myers Squibb Co, which failed to get US approval for a new diabetes treatment in January, will pay US$5.3 billion for Amylin Pharmaceuticals Inc, the maker of two drugs on the market for the disease.
The purchase comes a month after Bristol’s top seller, the blood-thinner Plavix with US$7.1 billion in sales last year, began facing generic competition. Next year, the New York-based company loses patent protection on its US$1.6 billion HIV drug, Sustiva.
Under the agreement announced on Saturday, Bristol-Myers will pay US$31 a share in cash, a 10 percent premium to Friday’s closing price for San Diego-based Amylin. At the same time, AstraZeneca PLC, based in London, will pay Bristol US$3.4 billion to help develop Amylin’s drug portfolio, the companies said.
It “looks a bit rich in terms of the price paid and it’s a trend in the sector, where biotech companies are commanding significant premiums, higher than they would have commanded in previous years because the pharmaceutical sector is being forced down this road,” said Navid Malik, an analyst with Cenkos Securities PLC in London.
The pharmaceutical industry lost patent protection on products valued at US$34 billion in annual sales last year, and revenue at risk from generics will rise to US$147 billion by 2015.
The diabetes market has become a key target for drugmakers as a result of rising obesity rates and the aging of the Baby Boom generation. About 346 million people globally have diabetes, and the number of deaths from the chronic disease may double from 2005 to 2030, according to the WHO.
AstraZeneca, Paris-based Sanofi and Merck & Co, of Whitehouse Station, New Jersey, also made offers during a bidding process, people with knowledge of the process had said.
Amylin ended a marketing deal with Indianapolis-based Eli Lilly & Co in November last year, and has been seeking a partner to sell Bydureon, a version of its diabetes drug Byetta, outside the US. The San Diego-based company began to seek acquisition suitors after rejecting a US$22-a-share offer from Bristol in February, people familiar with the matter said earlier this year.
For Bristol, the purchase is the largest of 19 since 2007, when it began a so-called string of pearls acquisition strategy designed to revitalize the company in the face of patent losses and produce a more diverse stable of products.
Bristol-Myers’s own experimental diabetes product, dapagliflozin, also called Forxiga, failed to win US marketing approval in January, when the Food and Drug Administration asked for more data to assess risks and benefits for the treatment, being developed with AstraZeneca. It is awaiting approval in Europe, and may be cleared later in the US.
The boards of Bristol-Myers and Amylin endorsed the deal, according to Saturday’s statement. Including Amylin’s debt and a payment owed to Eli Lilly & Co of about US$1.7 billion, the deal is valued at about US$7 billion.
“We are pleased to be able to strengthen the portfolio we have built to help patients with diabetes by building on the success Amylin has had with its GLP-1 franchise,” Bristol-Myers chief executive officer Lamberto Andreotti said.