Amgen Inc. (AMGN), the world’s largest biotechnology company, agreed to provide anemia drug Epogen to dialysis-center operator DaVita Inc. (DVA) under a seven-year contract that may help stave off competition.
The deal requires Denver-based DaVita to use Epogen for at least 90 percent of its anemia medicines, according to a filing with the Securities and Exchange Commission. Christine Regan, a spokeswoman for Thousand Oaks, California-based Amgen, declined to provide financial details of the agreement, which expires at the end of 2018.
“Amgen’s incentive to sign such a deal might be to basically lock competitors out of a full third of the market,” Mark Schoenebaum, an analyst with ISI Group in New York, wrote in a note to clients today.
Affymax Inc. (AFFY) is developing experimental anemia drug Peginesatide, which may be available next year; Roche Holding AG (ROG) can sell anemia medicine Mircera in the U.S. in 2014; and cheaper generics might be available in 2015, as well, Schoenebaum said. The deal “could reduce pricing pressure” Amgen may face, he said.
Epogen sales will decline about 20 percent to $2 billion this year, according to the average estimate of eight analysts in a Bloomberg survey.
The “unprecedented” length of the DaVita agreement helps shore up long-term revenue estimates, Christopher Raymond, an equity analyst at Robert W. Baird & Co. in Chicago, said in a note to clients today.
Amgen fell 0.6 percent to $55.57 at the close in New York. The shares have gained 1.2 percent this year. DaVita gained 3 percent to $73.37.
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