After a second offer, Amgen, Inc. (NASDAQ:AMGN) and Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX), a maker of drugs to fight cancer among other diseases, are in agreement on the offer price. The acquisition of Onyx is going to cost Amgen about $10 billion, or $125 per share. Now that the acquisition is locked stocked and barreled, in the health care industry this acquisition is the newest out of many, particularly since drug makers are looking to add to their offerings.
If you look at the biotechnology companies by sales, Amgen is the world’s largest, with $17.3 billion in revenue in 2012. However, its most prosperous products are now exhausted and various products are selling at a slower pace, or even in descent.
Competition is becoming fierce for Amgen, Inc. (NASDAQ:AMGN)’s products, particularly in Europe where companies are producing near generic copies, called biosimilars. In addition, the opposition is supposed to roll over into the United States over the next several years. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), one of those rivals that is supposed to announce a near generic copy of its Neupogen later this year. Neupogen is a drug for patients who undergo chemotherapy; the drug is supposed to repress infections.
This acquisition of Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) is the first large-scale acquisition struck by Amgen’s chief exec Robert Bradway, who came aboard in May 2012. In June of this year, Amgen set in motion its pursuit for Onyx, by making a voluntary bid of $120 per share, which at that time was around 38% higher than the stock price. However, Onyx reprimanded the attempt and authorized Centerview Partners, an investment bank, to explore bids for its company. Since Amgen’s attempt and Centerview’s hunt for bids, there has been a large number of biotech companies expressing interest, including Novartis and Pfizer.
Cancer drugs are Onyx’s primary captivating force, in 2012, two of its drugs were approved. Its most valuable drug is Kyprolis — finally approved in July 2012 and outright owned by Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) — which treats multiple myeloma. In a few years, many analysts foresee $2 billion in annual sales generated for Kyprolis, contributing immense momentum to the growth of Onyx. In 2012, Onyx reported revenue of $362.2 million, with a majority of the proceeds coming from drugs it splits with Bayer AG.
Amgen, Inc. (NASDAQ:AMGN) decided to reduce its rumored bid of $130 per share to $125 per share when a dispute between it and Onyx arose. An abrupt setback in the deliberations manifested when Amgen ordered the release of more clinical trial data on Kyprolis. Amgen’s bid of $125 per share was compellingly higher than its opening pitch and far outweighs any bewilderment of a prolonged sales process.
