Now that Bristol-Myers Squibb ($BMY) and AstraZeneca ($AZN) have teamed up to buy Amylin Pharmaceuticals ($AMLN), the question is this: Can their Big Pharma sales heft make Amylin's diabetes franchise pay off? Enough to justify the $7 billion outlay?
Here are the basics on the deal: Bristol-Myers will pay $31 per share, or about $5.3 billion. Debt assumption and a payoff to Amylin partner Eli Lilly ($LLY) adds another $1.7 billion. Then, when that buyout closes, AstraZeneca will pay Bristol-Myers $3.4 billion for beefing up their current diabetes-drug alliance.
Obviously, Astra and Bristol-Myers think Amylin is worth the price. Paying a 95% premium to Amylin's latest closing price is an investment in a market that's set to grow worldwide for decades. To the two companies, adding Amylin's products into their curent mix creates a spectrum of new-generation treatments. Drug cocktails? They'll have them.
Perhaps more importantly, they'll have more products to feed to an established sales force. Analysts have been saying that Amylin's Byetta and Bydureon could grow significantly, given bigger-and-better sales support. Bristol-Myers and AstraZeneca aim to provide.
So, there's an opportunity to build sales without building on significant costs. The word "synergies" is key to that effort. Amylin has a sales force in the U.S. of about 650 reps; no doubt some sales jobs will go. But they might not all come from Amylin's roster; in an analyst presentation, AstraZeneca promises to "[l]everage Amylin's presence with U.S. endocrinologists to benefit the current alliance portfolio." Presumably some of the reps with those relationships will have to stay.
Teaming up gives Bristol-Myers and AstraZeneca a weightier presence in diabetes. But competitive pressures will be significant. Novo Nordisk's Victoza and Sanofi's Lantus are big players, and are expected to remain so. Merck's ($MRK) Januvia/Janumet franchise, too; it's expected to top drug-sales charts by 2018, according to Evaluate Pharma.
- see the joint press release
- read the Financial Times story
- get more from The Wall Street Journal
- check out the Forbes piece
Bristol-Myers outbids Big Pharma pack and nabs Amylin for $5.3B
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