November 8, 2013 6:31 pm

Bristol-Myers Squibb could realise $6bn from diabetes franchise

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Bristol-Myers Squibb could generate up to $6bn from the sale of its diabetes franchise, according to an analyst’s projection sparked by the US drug group’s plans to scale back research into the disease.

Andrew Baum, pharmaceutical analyst at Citi, valued at $4-6bn the non-US business in the BMS diabetes joint venture with AstraZeneca, which includes the two pharmaceutical groups’ purchase of Amylin in 2012.

His calculations were triggered by comments from BMS late on Thursday that it was scaling back discovery work on diabetes, as well as hepatitis C and neuroscience, in order to focus on speciality therapies including HIV, oncology and immuno-science.

The move comes after a series of setbacks in the joint venture, with relatively slow growth in sales for its injectable diabetes treatments Byetta and Bydureon, and rejection last year by US regulators of Forxiga, another medicine for the condition jointly developed by the two companies.

It mirrors similar efforts to refocus and cut costs in research by rival large pharmaceutical companies, including GlaxoSmithKline, Pfizer, Novartis, AstraZeneca and Merck.

Shire this week announced it was restructuring its operations including cutting research staff at its historic Basingstoke centre in the UK.

Mr Baum predicted that AstraZeneca would be “a likely buyer”, given both its existing partnership with BMS and its need to seek new sources of revenue as patents on existing products expire.

He wrote in a research note: “Given the competitive pricing dynamics within the diabetes market, we would see any such restructuring as an incremental positive dependent on valuation and subsequent use of funds.”

He rated BMS a “buy” and one of his favourite recommendations in the US, while saying he preferred Roche, Novartis and Bayer as European stocks over AstraZeneca.

Francis Cuss, BMS chief scientific officer, said in a statement: “We have decided to shift R&D toward a more speciality biopharma model that focuses on the areas of significant unmet medical need, driving near-term growth through our current late-stage portfolio and on ensuring the long-term growth of the company by evolving the disease areas and drug platforms on which we concentrate our research efforts.”

AstraZeneca paid BMS $3.7bn to take a 50 per cent stake in Amylin in 2012, building on an existing marketing partnership for diabetes drugs. The arrangement includes joint global sale and marketing, and an equal share of any profits and losses. BMS conducts all manufacturing and sells to its partner at cost.

In 2012, AstraZeneca reported collaboration revenues of $128m, cost of sales of $36m and other costs, excluding amortisation, of $133m. It booked $323m in sales from Onglyza, $74m from Byetta and $37m from Bydureon.

AstraZeneca refused to comment on any possible deal.

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