Mergers and acquisitions appear to be continuously reshaping the pharmaceuticals industry. One of the latest initiatives involved British drug maker AstraZeneca plc (ADR) (NYSE:AZN), which announced this May 28 that a definitive agreement has been reached for its acquisition of Princeton, NJ-based Omthera Pharmaceuticals Inc (NASDAQ:OMTH).
Notably, this development came just a month after Omthera’s IPO, a market debut that had the company’s share with an initial $8 per share tag price. Following the acquisition announcement, Omthera Pharmaceuticals Inc (NASDAQ:OMTH) shares more than doubled and now trade at around $13. Investors also appeared warm on AstraZeneca plc (ADR) (NYSE:AZN)’s impending acquisition, as the company’s shares advanced or 2.4% in pre-market.
Buy, sell, and collaborate
The Omthera purchase follows AstraZeneca plc (ADR) (NYSE:AZN)’s acquisition of the biotechnology company Ardea in June last year. This $1.26 billion deal, described as the biggest acquisition of AstraZeneca in five years, brought in to the company’s product portfolio the drug lesinurad, which is in the advanced Phase III of clinical trials for gout treatment.
In July last year, Bristol Myers Squibb Co. (NYSE:BMY) purchased from AstraZeneca plc (ADR) (NYSE:AZN) its San Diego, CA-based Amylin unit for about $5.3 billion. Bristol-Myers and AstraZeneca also agreed to jointly develop and commercialize the products of Amylin, which are primarily drugs for diabetes. The deal gave Bristol Myers Squibb Co. (NYSE:BMY) a robust pipeline to Amylin’s type-2 diabetes drugs. These include the first ever once-a-week therapy for patients with type 2 diabetes.
AstraZeneca’s initiatives are part of its market growth strategies which involve accelerating the company’s efforts to secure on-market or late-stage product licensing, acquisition, and opportunities at peer collaboration. The positive results from these recent efforts, however, have yet to show in the company’s bottom line as its EPS fell 31% to $0.81 during the first quarter, primarily because of growing competition from generics. Bristol Myers Squibb Co. (NYSE:BMY)’ first-quarter net earnings, likewise, declined to $0.37 a share from $0.64 a year earlier.
Nevertheless, the outlook appears brighter moving forward for both companies. In particular, Bristol-Myers is optimistic on the groundbreaking type-2 diabetes drugs that it is working with AstraZeneca plc (ADR) (NYSE:AZN) to bring to patients outside the U.S. Also encouraging is a recent analysis that a $10 billion to $35 billion incentive is in store for the pharmaceutical industry as a result of President Obama’s Affordable Care Act.