Amgen to buy Celgene’s Otezla in $13.4bn deal

Amgen agreed to buy Celgene’s Otezla, a treatment for psoriasis and Behçet’s disease, for $13.4bn on Monday, allowing Bristol- Myers Squibb to push ahead with its mammoth $90bn takeover of Celgene.

The multibillion-dollar sale of Otezla is the latest in an industry that has seen a staggering amount of dealmaking this year, which kicked off in early January when Bristol-myers Squibb agreed to buy Celgene. As part of that deal, Bristol and Celgene said they expected to divest assets to win regulatory approval.

“This agreement represents an important step toward completing our pending merger with Celgene,” said Giovanni Caforio, chairman and chief executive of Bristol-myers.

Pharmaceutical and healthcare companies’ deal frenzy this year has been partly driven by

the desire to sell non-core assets or buy innovative medicines as their own drugs are close to losing patent protection. Major pharmaceutical groups are focusing on becoming one of the top three players in whatever category they operate.

So far this year, more than $700bn worth of transactions have been agreed in the pharmaceutical and healthcare sector, according to Refinitiv, including Abbvie’s decision to buy the maker of Botox, Allergan, for $63bn; Pfizer’s sale of its off-patent drug business to Mylan for $9.5bn; and Roche’s $4.8bn takeover of gene therapy company Spark Therapeutics. Bristol-myers’s acquisition of Celgene is the largest in the largest pharma deal so far this year.

Shares in Bristol- Myers Squibb jumped 4.2 percent to $48.52 in morning trading in New York, while Amgen stock rose 2.2 percent to $203.42.

Geoffrey Porges, an analyst at SVB Leerink, said the deal was positive for Bristol investors but “marginally negative” for Amgen shareholders because the price is higher than expected.

He also questioned whether the Federal Trade Commission would approve the deal, given Amgen already has a significant presence in the same disease area. But Amgen said it feels “confident” that it is an appropriate buyer, with the key drugs complimentary while not targeting overlapping patient populations.

Bristol- Myers also announced that it plans to buy back $7bn worth of shares, up from the previously planned $ 5bn share repurchase. The move follows strong business performance and encouraging clinical developments across the pipeline of its portfolios.

Under the terms of the agreement, Amgen will acquire Otezla and its related intellectual property, plus any other associated assets and liabilities. The deal will also affect Celgene employees who produce Otezla, who will transfer to Amgen.