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Bristol-Myers Squibb (BMY) Acquires Amylin (AMLN) for $5.3 Billion

By: , dated July 3rd, 2012

This week, the pharmaceutical industry consolidated further after Bristol-Myers Squibb (BMY: Charts, News) announced a $5.3 billion deal to acquire diabetes drug manufacturer Amylin Pharmaceuticals AMLN (AMLN: Charts, News). New York-based Bristol acquired San Diego, California-based Amylin for $31 per share, a 10% premium to its June 29 closing price. Bristol had made a previous attempt to acquire Amylin in February for $22 per share. Stock Analysis Rival drugmaker AstraZeneca (AZN: Charts, News) also announced that it will pay Bristol $3.4 billion to help develop Amylinâ s drug pipeline. In exchange, AstraZeneca will reap the benefits and share the risks of the joint venture. Bristol reportedly outbid AztraZeneca, Sanofi (SAN: Charts, News) and Merck (MRK: Charts, News) to gain control of Amylin. From the deal, Bristol gains Amylinâ s two U.S. approved diabetes drugs – a twice-daily injection medication called Byetta, and a longer-acting, once-a-week medication named Bydureon. Byetta notably generated $518 million in sales last year, while Bydureon, still new to the market, has been forecast to become a $2 billion product in the coming year. The acquisition of Amylin fills a noticeable void in Bristolâ s drug portfolio. This January, Bristolâ s own diabetes product, dapagliflozin, was rejected by the Food and Drug Administration. Diabetes has become a top priority for the major pharmaceutical players. With 346 million global patients, the World Health Organization estimates fatalities may double within the next two decades, making effective diabetes medication a high priority. Analysts believe that Bristol needs a new source of strong revenue after its top product of 2011, the blood-thinner Plavix, came under heavy generic competition in May. Plavix accounted for $7.1 billion of Bristolâ s annual sales last year. To shield itself from the threat of patent expirations – which wiped out an estimated $34 billion in annual sales across the pharmaceutical industry – Bristol has been on an acquisition spree this year, concluding five acquisitions worth over $1 billion each so far. In the previous two years, Bristol had only acquired three companies exceeding the billion dollar mark. Analysts believe that the losses across the industry due to the loss of patent protection will rise to $147 billion by 2015, which explains Bristolâ s urgency in acquiring new patents through costly takeovers. Seamus Fernandez, an analyst at Leerink Swann & Co., believes that this is only the beginning of industry consolidation. â

Leo Sun Leo Sun

is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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