Sector News

Amgen takes 20.5% stake in BeiGene to sell cancer drugs in China

November 1, 2019
Life sciences

Amgen Inc said on Thursday it will take a 20.5% stake in BeiGene Ltd in a deal to expand the California-based biotechnology company’s presence in China, the world’s second largest pharmaceutical market.

Amgen said it will pay around $2.7 billion in cash, or $174.85 per BeiGene American depository share, for the stake in BeiGene, which will commercialize three Amgen cancer drugs in China. The two companies will also collaborate on development of Amgen’s oncology pipeline.

“China is going to become a significant opportunity for new revenue,” Jefferies analyst Michael Yee said in an emailed statement. “It makes a lot of sense to start building there early as Amgen has lots of products to commercialize there.”

Shares of BeiGene, based in Beijing and Cambridge, Massachusetts, were up 25% at $173.10 in after hours trading, while Amgen’s shares were flat at $213.25.

Amgen and BeiGene will share profits for at least five years on Xgeva, which prevents fractures caused by cancer that has spread to the bone, as well as blood cancer drugs Kyprolis and Blincyto.

Under the deal, two of those drugs will revert to Amgen – one after five years and one after seven years. BeiGene can retain one product and will receive royalties on sales in China for an additional five years on the other two.

“One of our key priorities over the past few years has been to build the business out globally,” Amgen Chief Financial Officer David Meline told Reuters. “This is really the remaining piece of that puzzle.”

He said the deal would modestly decrease Amgen’s earnings in 2020.

Meteoric annual growth at a high double-digits percentage rate in the Chinese pharmaceutical market vaulted it into second place behind only the United States. Since 2013, that growth rate has slowed significantly and is projected to decline to growth of 3% to 6% through 2023, according to Iqvia (IQV.N), which tracks pharmaceutical sales and global industry trends.

Still, western drugmakers such as AstraZeneca Plc (AZN.L) have profited from partnerships with local players in China, as well as from a recent softening in the country’s regulatory environment for pharmaceutical firms.

‘CLINICAL EXPERTISE’
BeiGene has a 700-person sales force and 600 employees in clinical development in China. The company sells in China drugs made by Celgene Corp (CELG.O), which is being acquired by Bristol-Myers Squibb Co (BMY.N).

The Amgen deal calls for BeiGene to contribute up to $1.25 billion to help develop 20 experimental cancer drugs in Amgen’s pipeline. BeiGene would be entitled to royalties on sales of these products outside of China, if approved, with the exception of AMG510, a promising drug under development for lung cancer and other solid tumor cancers.

“BeiGene’s clinical expertise was a major component of the deal,” Amgen research chief David Reese told Reuters. “They have clearly demonstrated that they can deliver on clinical trials to global standards.”

For each pipeline drug approved in China, BeiGene will assume commercial rights in China for seven years, including for AMG510. After that period, BeiGene will retain rights to up to six of those products in China, excluding AMG510.

Earlier this year, Amgen began selling Xgeva and cholesterol-fighter Repatha in China. Both are available for cash-paying customers, and Amgen plans to seek their placement on the country’s national reimbursement drug list, Chief Commercial Officer Murdo Gordon said.

Amgen said it plans to continue to commercialize its non-oncology product portfolio in China.

China last month expanded a pilot drug bulk-buying program, which was initiated last year, to the entire country in an attempt to negotiate lower prices from drug manufacturers.

Gordon acknowledged that inclusion on the program “usually has a price-lowering requirement.”

As part of the collaboration, Amgen will nominate one person to serve on BeiGene’s board.

The companies said the transaction has been approved by both boards and is expected to close in early 2020, subject to BeiGene shareholder approval.

By Deena Beasley

Source: Reuters

comments closed

Related News

March 24, 2024

Johnson Matthey to sell its Medical Devices business for $700 million

Life sciences

Johnson Matthey Plc (JM; London) announced that it has signed a definitive agreement to sell 100% of its Medical Device Components business (MDC) to Montagu Private Equity (Montagu) for cash consideration of US$700 million (£550 million) on a cash free debt free basis.

March 24, 2024

Lonza acquires biologics manufacturing plant in California from Roche

Life sciences

Lonza AG (Basel, Switzerland) announced it has signed an agreement to acquire the Genentech large-scale biologics manufacturing site in Vacaville, Calif. from Roche (Basel, Switzerland) for $1.2 billion. The acquisition will significantly increase Lonza’s large-scale biologics manufacturing capacity.

March 24, 2024

Roquette to acquire IFF Pharma Solutions to boost global excipient presence

Life sciences

Roquette plans to acquire International Flavors & Fragrances (IFF) Pharma Solutions for an enterprise value of up to €2.85 billion (US$3.09 billion). With the acquisition set to close in the first half of 2025, the plant-based ingredient and pharmaceutical excipients supplier aims to reinforce its position in the pharmaceutical industry.

How can we help you?

We're easy to reach