Turning toward Turkey

THOUSAND OAKS, Calif.—Biotech giant Amgen is gearing up foranother growth spurt with its latest transaction. The company has announced anagreement with Istanbul, Turkey-based Mustafa Nevzat Pharmaceuticals (MN) bywhich Amgen will acquire 95.6 percent of shares in MN for $700 million in cash.Both companies' boards of directors have approved the transaction.

MN has a history in Turkey of nearly 90 years, serving asthe leading pharmaceuticals supplier for the hospital sector in the country aswell as a major supplier of injectable medicines. MN also boasts a rapidlygrowing export business, bringing in revenues of approximately $200 million in2011, and over the last five years it has seen average growth at double-digitrates in local currency. According to its website, MN was also the firstTurkish company to receive U.S. Food and Drug Administration approval to sellproducts in the United States.

"This transaction represents an attractive opportunity forMN, its employees and customers," Levent Selamoglu, general manager and CEO ofMN, said in a press release. "The combination of MN and Amgen creates aninnovation leader in Turkey with unique capabilities and scope to expandregionally and in other attractive high-growth markets. Amgen's focus andresources will also ensure continued investment in Turkey."

MN will bolster Amgen's presence in the area, supplementingthe company's existing Istanbul facility, an affiliate that was established in2010 and currently markets two products. The focus on Turkey and thesurrounding region is part of the company's ongoing international expansionstrategy. Mary Klem, director of corporate communications at Amgen, says thecompany believes "the dynamics of the market in Turkey and the surroundingregion provide considerable opportunity." Other current international marketsof interest for the company, she adds, include Brazil, Mexico, Russia, Chinaand Japan.

"This transaction is consistent with Amgen's strategy ofexpansion in key, fast-growing emerging markets to reach more patients with ourmedicines. Amgen is committed to launching new products globally and investingin the pipeline to expand our footprint," says Klem. "The planned acquisitionof MN, together with three other important acquisitions that Amgen has closedsince 2011, enables the company to deliver against its strategic goals. Thisacquisition positions Amgen to benefit as the biologic market develops in thisregion."

MN declined to be interviewed regarding the transaction.

Once the acquisition is complete, MN will be run as astandalone business in Turkey, Klem says, and the company "will determine,together with MN management, how to best integrate the enterprises."

Zacks Investment Research noted that the acquisition fits inwith Amgen's goal of having a presence in 75 countries by the year 2015 (Amgencurrently maintains a presence in roughly 54 to 56 countries). Zacks added thatit currently has a Neutral recommendation on the company, noting, "althoughfirst quarter results were well above expectations, it remains to be seenwhether the performance is sustainable."

The acquisition of MN follows two other large acquisitionsfor Amgen so far this year, and is the second largest in terms of price. Amgenannounced the signing of a definitive merger agreement with Micromet in Januaryunder which Amgen would acquire the biotech company for approximately $1.16billion in a transaction approved by both companies' boards of directors. Theacquisition gained Amgen a larger presence in Europe, given Micromet's researchand development center in Munich, as well as Micromet's Bispecific T cellEngager (BiTE) antibody for the treatment of acute lymphoblastic leukemia.Amgen completed its tender offer on March 7.

The company also acquired privately held KAIPharmaceuticals, a South San Francisco-based biotechnology company, for $315million in April. KAI Pharmaceuticals will become a wholly owned subsidiaryfollowing completion of the transaction.

"Amgen is dedicated to making our innovative medicinesavailable to patients in major markets around the world," Robert A. Bradway,president and CEO of Amgen, said in a press release. "Together with MN's staffand management team, we plan to grow our business with high-quality andinnovative medicines in Turkey and the surrounding region."

The transaction is subjection to customary closingconditions, including regulatory approvals.