Wednesday, April 16th5.7°C
17283
21469

AstraZeneca in $4.1 billion payout to take control of diabetes link with Bristol-Myers Squibb

LONDON - Anglo-Swedish drugmaker AstraZeneca PLC will buy out Bristol-Myers Squibb Co.'s stake in their partnership to develop and sell diabetes drugs in a deal worth $4.1 billion — seizing an opportunity to serve the projected explosion of patients suffering from the disease.

The package announced Thursday includes $2.7 billion to buy Bristol-Myers' 50 per cent share, as well as up to $1.4 billion in regulatory, launch and sales related payments. Bristol-Myers will also receive royalty payments based on net sales through 2025. Payments of up to $225 million may also be made after the transfer of certain assets and royalty payments.

"Together with Bristol-Myers Squibb we concluded that consolidating ownership of the diabetes portfolio would benefit both companies and allow us to better serve the needs of diabetic patients," said Pascal Soriot, chief executive officer of AstraZeneca. "Today's announcement reinforces AstraZeneca's long-term commitment to diabetes, a core strategic area for us and an important platform for returning AstraZeneca to growth."

AstraZeneca's share price rose 1.1 per cent in London to close at 35.99 pounds.

Despite the broadly positive response to the news, investors had a reminder of the uncertainties of the business. AstraZeneca said it would incur a $1.7 billion pretax charge connected to the diabetes drug Bydureon whose sales were below expectations. However, it remains confident in the drug's commercial future.

The buyout comes as AstraZeneca undergoes a major research and development re-organization to offset the expiration on patents for drugs like cholesterol medication, Crestor. The plan is meant to reduce costs and make research programs more productive amid big drops in revenue and net income last year.

Like other big pharmaceutical firms, AstraZeneca has faced the pinch from rising research costs, a surge in generic competition and the demands of government health programs to hold down spending.

But in diabetes, the company sees the possibility of as many as 550 million people being affected worldwide, particularly in emerging markets, where the company has a strong presence.

"Diabetes is rapidly becoming a global challenge of epidemic proportions," Soriot said.

Once the deal is completed, AstraZeneca will own rights for drugs such as Onglyza and Kombiglyze XR, which are used for type 2 diabetes. Type 2 diabetes accounts for the vast majority of diagnosed diabetes in adults.

It expects about 4,100 Bristol-Myers Squibb employees working on diabetes issues will eventually transition to AstraZeneca, though some will remain to support the transition.

Alex Arfaei, the pharmaceutical analyst for BMO Capital Markets in Toronto, described the deal as a boost to the profile of Bristol-Myers — and a sign of confidence in its cancer drugs.

"Bristol probably believes that it has a high opportunity cost and doesn't want to compete in the increasingly competitive diabetes market, which is mostly a primary care market requiring intensive promotion," he said.

He said the royalty structure of the deal offers is also a boost to Bristol-Myers.

"The deal allows Bristol to put more resources into cancer immunotherapy during the next 2-3 years, while it continues to get significant economics from the diabetes franchise," he said.

Bristol-Myers' share price was up 3 per cent at $54.19.

The Canadian Press


Read more Business News

21522


Recent Trending




Today's Market
S&P TSX14446.52+142.60
S&P CDNX997.975.87
DJIA16424.85162.29
Nasdaq4086.225+52.064
S&P 5001862.31+19.33
CDN Dollar0.9089+0.0012
Gold1299.80-3.2999
Oil104.04+0.28
Lumber326.50-2.30
Natural Gas4.556+0.026

 
Okanagan Companies
Pacific Safety0.105-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.22-0.05
Cantex0.045-0.005
Anavex Life Sciences0.375-0.005
Metalex Ventures0.0750.00
Russel Metals30.55+0.28
Copper Mountain Mining2.42+0.10
Colorado Resources0.2650.00
ReliaBrand Inc0.12-0.01
Sunrise Resources Ltd0.025-0.005
Mission Ready Services0.23-0.02

 
19691


20970

FEATURED Property
1610012546 1088 Sunset Drive
1 bedrooms 2 baths
$284,500
more details
image2image2image2
Click here to feature your property
Please wait... loading


Valuation fears grip markets

The Big Picture Valuation fears grip markets Growing concerns about the level of stock market valuations sparked a risk-off trade in global markets this week. Investors are worried that many companies...


Quick and nimble

Photo: ContributedFor many businesses this has been a tremendously difficult time since the 2008 crisis. Business fell off. Sales techniques that always worked, well… stopped working. Customers...


Keeping a clear focus on the future

Many times when we are gripped by fear it can be one of two mental challenges that we can learn to overcome. Photo: ContributedThe Fear is completely imaginary. In this situation there may be no fact...

_



21641

21604


Member of BC Press Council


21202