MONEYMAKER Amgen manufactures Epogen in this 450,000-sq-ft facility in Longmont, Colo. PHOTO BY V. RICHARD HARO/WIREPIX

Up to this point, Amgen, of Thousand Oaks, Calif., has preferred to make small acquisitions and focus internally on its own line of drugs. Analysts say this strategic departure reflects the desire of Kevin Sharer, who was named CEO last year, to put his mark on the company.

The Amgen-Immunex deal comes on the heels of--and dwarfs--a flurry of acquisitions in biopharmaceuticals. Earlier this month, Millennium Pharmaceuticals bought Cor Therapeutics for $2.0 billion, MedImmune acquired Aviron for $1.5 billion, Cephalon bought Group Lafon for $450 million, and OSI took over Gilead Sciences' cancer business for $200 million.

Some observers question the price that Amgen is paying--$16 billion for a company whose 2001 revenues are estimated to be $1 billion. "It looks like a giant swallowing up a midsize biotech with a similar profile," says Roger Shamel, president of Lexington, Mass.-based Consulting Resources. "Why there would be that much of a premium is hard for me to justify."

Amgen expects its sales to jump from just over $4.0 billion in 2001 to $5.5 billion in 2002. The enlarged company will have a market capitalization of about $72 billion. In comparison, the next largest biotech firm is Genentech, with a market cap of $28 billion.

Amgen brings to the deal a "very powerful lineup" of drug products, says Sharer. "Every product has a very long patent life--a decade-plus in the U.S." For the future, the company is building on the foundation laid by Epogen, its highly successful anemia drug, and Neupogen, used to reduce infection in che-motherapy patients.

Amgen has relied heavily on Epogen and Neupogen to generate most of its sales--a combined $3 billion last year. Amgen has also recently received FDA approval for Aranesp, a successor to Epogen for which it expects similar success.

Amgen will add Immunex's blockbuster rheumatoid arthritis drug Enbrel--projected to sell $755 million this year--to its offerings. "Enbrel is a product with a pipeline," Sharer says. The drug is expected to be efficacious for other conditions, including psoriatic arthritis and psoriasis--both large markets.

Immunex's sales of Enbrel have been hampered by its capacity, which has not been able to keep up with demand since the drug's introduction. "Amgen's manufacturing capabilities can help ensure Enbrel's success," says Sharer.

American Home Products owns 41% of Immunex and has agreed to the transaction, after which it will own 8% of the new company. A significant portion of the profits from Enbrel go to AHP.

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