CHEMICAL & ENGINEERING
NEWS OF THE WEEK DECEMBER 24, 2001 - EDITED BY J A N I C E LONG & STEPHEN M. TRZASKA
BUSINESS
AMGEN TO BUY RIVAL IMMUNEX Deal worth $16 billion continues consolidation trend in biotech industry
A
MGEN, THE WORLD S LARGEST
biotechnology firm, will buy biopharmaceutical rival Immunex, based in Seattle, for about $16 billion in cash and stock. The transaction is by far the largest yet in the biotech sector and combines two of the fastest growing biotech companies. Up to this point, Amgen, of Thousand Oaks, Calif, has pre ferred to make small acquisitions and focus internally on its own line of drugs. Analysts say this strategic departure reflects the desire of Kevin Sharer, who was named CEO last year, to put his mark on the company The Amgen-Immunex deal comes on the heels of—and
MONEYMAKER Amgen manufactures Epogen in this 450,000-sq-ft facility in Longmont, Colo.
dwarfs—aflurryof acquisitions in biopharmaceuticals. Earlier this month, Millennium Phar maceuticals bought Cor Thera peutics for $2.0 billion, Medlmmune acquired Aviron for $1.5 billion, Cephalon bought Group Lafon for $450 million, and OSI took over Gilead Sciences' can cer business for $200 million. Some observers question the price that Amgen is paying— $16 billion for a company whose 2001 revenues are estimated to be $1 billion. "It looks like a gi ant swallowing up a midsize biotech with a similar profile," says Roger Shamel, president of Lexington, Mass.-based Con sulting Resources. "Why there would be that much of a premi-
BULLISH
Pfizer Predicts Earnings Growth
P
fizer will achieve earnings-per-share growth of 27% in 2001, excluding merger-related costs and some other one time items, Chairman and CEO Hank McKinnelltolda meet ing of security ana lysts last week. Furthermore, McKinnellsaid, "over the next three years, we project industry-
leading earnings growth. We are confi dent of our ability to support a strong and expanding product portfolio." The com pany is projecting 20% growth in 2002 and has targeted 15% or better earnings-per-share growth in 2003 and 2004. Pfizer's rev enues for 2001 are projected to reach $26 billion.
In contrast, Merck recently told analysts that earnings per
McKinnell
share in 2002 would be unchanged from 2001, and BristolMyers Squibb fore cast a decline in 2002 earnings per share. At the meeting, Pfizer executives noted that the com pany has 162 R&D programs, including 94 new molecular entities. Pfizer plans to file 15 new-drug applications with regulatory authori ties by the end of 2006.-WILLIAM STORCK
um is hard for me to justify." Amgen expects its sales to jump from just over $4.0 billion in 2001 to $5.5 billion in 2002. The enlarged company will have a market capitalization of about $72 billion. In comparison, the next largest biotech firm is Genentech, with a market cap of $28 billion. Amgen brings to the deal a "very powerful lineup" of drug products, says Sharer. "Every product has a very long patent life—a decade-plus in the U.S." For the future, the company is building on the foundation laid by Epogen, its highly successful anemia drug, and Neupogen, used to reduce infection in che motherapy patients. Amgen has relied heavily on Epogen and Neupogen to gener ate most of its sales—a combined $3 billion last year. Amgen has al so recently received FDA ap proval for Aranesp, a successor to Epogen for which it expects sim ilar success. Amgen will add Immunex's blockbuster rheumatoid arthri tis drug Enbrel—projected to sell $755 million this year—to its of ferings. "Enbrel is a product with a pipeline," Sharer says. The drug is expected to be efficacious for other conditions, including pso riatic arthritis and psoriasis — both large markets. Immunex's sales of Enbrel have been hampered by its ca pacity, which has not been able to keep up with demand since the drug's introduction. "Amgen's manufacturing capabilities can help ensure Enbrel's success," says Sharer. American Home Products owns 41% of Immunex and has agreed to the transaction, after which it will own 8% of the new company A significant portion of the profits from Enbrel go to Α Η Ρ . —KAREN WATKINS
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