|The Summit, NJ, campus--formerly Merck's and now Celgene's--Courtesy of the City of Summit|
Out with the old guard, in with the new. In another sign that Big Biotech is elbowing into the top levels of pharma, Celgene has agreed to buy Merck & Co.'s old campus in Summit, NJ, adding the sprawling 1.3-million-square-foot complex to its already growing operations in the city.
The real estate expansion is a physical manifestation of the growing numbers Celgene ($CELG) has been putting up in quarterly reports. The company's sales grew by 23% over the past 5 years to $7.7 billion in 2014, making it one of the fastest-growing pharmas in the Fortune 500. CEO Bob Hugin is eyeing $12 billion by 2018--and as of January, Celgene says it can hit $20 billion-plus by 2020.
Plus, Celgene needs a place to put the people working on its growing pipeline of in-development products, and the commercial infrastructure necessary to market its new meds and launch forthcoming ones. It's already adding 500,000 square feet to its Summit headquarters.
Merck ($MRK) said in 2013 that it would move out of the Summit complex, as part of a restructuring that also included thousands of layoffs. The campus includes office space, R&D labs and manufacturing space, according to a statement about the deal. Terms weren't disclosed, and Celgene isn't yet saying how it plans to use the space or when it hopes to start moving people in. The deal is expected to close in September.
Celgene's powerhouse blood cancer drug Revlimid is the company's current growth engine, with almost $5 billion in 2014 sales. The drug won yet another indication in February--for patients with newly diagnosed multiple myeloma--and that new use could double Revlimid sales within 5 years, analysts say, with much of that growth outside the U.S.
|Celgene CEO Bob Hugin|
Abraxane, approved for a range of cancers, is expected to step up, too, with $223 million in sales for the first quarter; Celgene is studying that drug alongside new cancer immunotherapies, which could fuel growth in a few years. The company's latest multiple myeloma treatment, Pomalyst, is also coming along, with $680 million in 2014 sales; Celgene has predicted $1.5 billion for the drug by 2017.
Meanwhile, Celgene is trying to get a hold in inflammatory disorders with its new pill Otezla, approved last year for psoriasis and psoriatic arthritis. It's a pill in a new class, PDE4 inhibitors. But that's an increasingly difficult market, with Novartis' ($NVS) new Cosentyx racking up solid clinical trial data, and other contenders from Eli Lilly ($LLY) and AstraZeneca ($AZN) moving closer to FDA approval. The drug brought in $60 million for the first quarter of 2015, and the company predicts $2 billion eventually; analysts are less certain about that. Bernstein's Geoffrey Porges, for one, predicts $800 million in sales by 2019, citing the "highly competitive category."
In any case, Summit leaders were happy to announce that they'd scored Celgene for the newly shuttered Merck campus. Celgene has been "a long-standing community partner, and we anticipate them making the most of an outstanding property," said Summit Mayor Ellen Dickson in a statement.
- read the City of Summit release
Special Report: The top 10 most expensive drugs of 2013 - Revlimid - Celgene