Amgen to pay €12bn for psoriasis drug, clears the way for Celgene takeover
Amgen will buy Celgene's psoriasis drug Otezla for $13.4bn (€12bn) in cash, clearing the way for Bristol-Myers Squibb to proceed with its $74bn acquisition of Celgene by the end of the year.
Amgen, which announced the deal on Monday, is paying a hefty price for the drug, analysts and investors said. Still, Otezla will deliver growth for the company right away and its shares rose around 2pc in early trading.
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Bristol-Myers and Celgene's shares were both up around 3pc on the news.
Bristol-Myers said in June that it would sell Otezla to allay concerns raised by the Federal Trade Commission because of a competing treatment that it is developing. Analysts said at the time that they were expecting Otezla to sell for around $8bn to $10bn.
Bristol-Myers said in a statement that there was significant interest from multiple potential buyers from early on in the process.
Otezla brought in sales of $1.61bn last year and Amgen expects the drug's sales to grow at least in the low-double digits over the next five years.
Jeff Jonas, healthcare portfolio manager at Gabelli funds, said that a number of Amgen's current drugs face loss of patent protection and competition from biosimilar drugs, so the growth from Otezla would be welcome.
"This is an attractive product for them that fits more or less with their current portfolio," he said. "It's an approved product with a good safety profile, so there's not a lot of risk."
Still, he expressed some scepticism about Amgen's growth forecast for the drug, noting that new competitors, including Bristol-Myers' drug in development, are likely to eat into its market share.
Amgen said it expects the deal to produce tax benefits with a present cash value of $2.2 billion, reducing the actual deal total to $11.2bn.