Amgen strikes the year’s biggest healthcare deal as drugmakers splurge on rare treatments to boost sales
Double dose of profits… Healthcare giants are shelling out big bucks to bolster their drug portfolios. Yesterday, biotech behemoth Amgen signed a deal to buy Horizon Therapeutics for $27.8B — in this year’s biggest healthcare merger. Horizon specializes in rare-disease treatments, and its new thyroid eye disease drug, Tepezza, helped double revenue last year. Over the past month, Tepezza’s success had fueled takeover bids from pharma titans like Sanofi and Johnson & Johnson.
- High risk: Amgen plans to pay $116.50/share as part of the deal — a nearly 20% premium from the stock’s pre-merger-announcement price.
- High reward: Horizon thinks Tepezza could haul in $4B+ in sales if it’s approved outside the US. It could also help Amgen offset lost revenue from its biggest drugs, whose patents are about to expire.
Billion-dollar buying spree… Pharma companies frequently look for new sources of revenue to make up for lost patent protection on blockbuster drugs (patents typically last 20 years). While deal making has slowed this year, some healthcare heavyweights have used the broader sell-off to snatch up smaller drugmakers at a “discount.” Just this year: J&J struck a $16.6B deal to buy heart-device maker Abiomed; Pfizer agreed to buy Global Blood Therapeutics for $5.4B; and Merck acquired blood-cancer biotech Imago BioSciences for over $1.3B.
Rare treatments command high prices… Of the 7K known rare diseases, 95% have no approved treatment. Rare treatments may have a smaller addressable market, but they can lead to a treatment monopoly that can lure higher payouts from insurance companies — and patients.