Turkish injection

How Amgen's $700M for Mustafa Nevzat compares to other generic injectable plays

For the second April in a row, Amgen Inc. (NASDAQ:AMGN) has dipped into an emerging market via M&A. This time, it is buying Mustafa Nevzat Pharmaceuticals A.S. for a valuation that is 3.5x its 2011 revenue.

The cash deal values the Turkish generic injectable company at $700 million. Last year, Mustafa Nevzat had about $200 million in revenue. It has averaged double digit annual growth in local currency over the past five years.

The multiple Amgen is paying is on par with the 3.7x multiple that Valeant Pharmaceuticals International Inc. (TSX:VRX; NYSE:VRX) paid to buy Lithuanian dermatology and hospital injectable company Sanitas Group last May. Valeant spent $510.3 million, including cash and assumption of debt. Sanitas had LTL339.4 million ($138 million) in 2010 revenues.

Similarly, U.S. generic injectable company Sagent Pharmaceuticals Inc. (NASDAQ:SGNT) is trading at a 3.3x market cap to revenue multiple. Sagent had $152.4 million in 2011 net revenue and has a market cap of $507 million.

Amgen did not provide details on how the deal would affect its financial guidance.

Spokesperson Mary Klem said Amgen has had commercial operations in Turkey since 2010; previously, it used a distributor. The biotech markets two products in Turkey: Aranesp darbepoetin alfa for anemia and Mimpara cinacalcet (Sensipar) to treat secondary hyperparathyroidism in patients with chronic kidney disease (CKD) who are on dialysis. Amgen also has several products under regulatory review in Turkey.

Klem likened the Mustafa Nevzat deal to Amgen's acquisition of Bergamo last April, noting that each is profitable and has established local infrastructure that will enable the biotech "to build on our existing local business in an emerging market."

Amgen paid $215 million in cash for the Brazilian branded generics and biosimilar play, which had $80 million in 2010 gross revenues. The multiple for that deal was 2.7x.

Amgen added $3.70 to $71.64 last week, gaining $2.5 billion in market cap to $56.7 billion (see "Convergence").

The company reported FDA issued a complete response letter last week for an sBLA for Xgeva denosumab to treat men with castration-resistant prostate cancer at high risk of developing bone metastases (see B12).

The biotech also reported 1Q12 earnings (see EPS Watch, A20).

Sagent was up $0.05 to $8.17 on the week.


EPS watch
Company 1Q12 EPS est 1Q12 EPS actual Outcome Growth from 1Q11 4/27cls Wk chg % chg Mcap chg 4/27 Mcap
Alexion Pharmaceuticals Inc. (NASDAQ:ALXN) $0.39 $0.45 Beat by $0.06 55%

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