Omthera Pharmaceuticals Inc (OMTH), Elan Corporation, plc (ADR) (ELN), Onyx Pharmaceuticals, Inc. (ONXX): 3 Big Biotech Buyouts of 2013

Acquisition No. 1: Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX)
In August, Amgen, Inc. (NASDAQ:AMGN) acquired Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) for $9.7 billion to bolster its oncology program. The deal will also help make up revenue lost from increasing generic competition to Aranesp, Epogen, and Neupogen in the next several years, which could amount to billions in lost revenue for Amgen over the next decade.

The acquisition centers on Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX)’s multiple myeloma drug Kyprolis, which is approved for patients who have had at least two prior therapies. Onyx is currently seeking to expand approval to patients who have had just one prior therapy — a much larger market. Sales of Kyprolis hit $125 million in the first half of 2013, but analysts can see peak sales reaching more than $2 billion per year in the next decade, which would make it well worth the money for Amgen. Think about it: At peak sales, Amgen’s nearly $10 billion investment would yield more than 20% per year. I’ll go out on a limb and say the company wasn’t getting that by just sitting on a pile of cash.

Foolish bottom line
One of the biggest advantages with acquisitions in the biotech industry is the ability to maximize the potential of new products. Investors have to think that larger companies such as AstraZeneca plc (ADR) (NYSE:AZN) and Amgen can guide Epanova and Kyprolis to more successful futures than the smaller, less-experienced companies that developed them. Moreover, these deals will change the landscape of the industry by rearranging product portfolios, drawing new lines in the sand between competitors, and eventually (that’s the hope, anyway) adding to free cash flow — opening up future growth opportunities.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio or his CAPS page, or follow him on Twitter, @BlacknGoldFool, to keep up with his writing on energy, bioprocessing, and biotechnology.The Motley Fool has no position in any of the stocks mentioned. 

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