Amgen expands footprint
May 2011
by David Hutton  |  Email the author

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THOUSAND OAKS, Calif.—Amgen Inc. recently announced that it is expanding its operations in Brazil, acquiring Bergamo, a cancer drug company, for $215 million and regaining the rights to market some of its own products in Brazil.
 
The moves provide "an attractive entry into the Brazilian market," Amgen CEO Kevin Sharer said in a statement.
 
According to Richard Davies, Amgen's vice president and regional general manager, the company's push into Brazil makes good business sense.
 
"Brazil is among the top 10 pharmaceutical markets in the world, and in recent years has been growing at a rate of about 12 percent per year," he says. "It is expected to be the world's fifth largest pharmaceutical market by 2015."
 
Davies notes that in its 95-year history, Bergamo has invested in research and technology to develop solutions in oncology, dermatology and reproductive health.
 
"Together with the existing research and development operations of Amgen Brazil, the newly expanded entity will continue to find solutions and make medicines available to patients in Brazil who suffer from grievous illnesses," he says.
 
With the biotechnology business in Brazil essentially in its early stages of development, Davies says Amgen realizes the potential for future growth.
 
"Amgen's acquisition of Bergamo—along with the recent move to regain the rights to certain Amgen products from a Brazilian distributor, Mantecorp (now a subsidiary of Hypermarcas)—enables Amgen to further expand its footprint in this important growth market and build on our existing R&D activities in the country," he says. "Through these two agreements, Amgen has immediate access to the market, in-country capability and a firm foundation from which to further build our business, enabling us to further our mission of serving patients with serious illnesses."
 
Bergamo is a leading supplier of medicines to the hospital sector in Brazil with capabilities in oncology medicines and has manufacturing facilities in Sao Paulo. Bergamo had gross revenues of $80 million in 2010 and has been growing at an annual rate of 19 percent since 2007.
 
According to Davies, Amgen is retaining Bergamo's staff, and under Amgen's ownership, Bergamo will continue to manufacture and market products in the Bergamo portfolio in Brazil.
 
"At this time, although owned by Amgen, we expect that Bergamo will continue to operate as Bergamo indefinitely and will continue to sell Bergamo products under the Bergamo name," he adds. "Amgen plans to sell its medicines in Brazil under the Amgen name."  
 
Now part of the Asia and Latin America region within Amgen, which is led by Davies, Bergamo's management will continue to oversee the Bergamo operations on an interim basis while Amgen searches for a general manager who will oversee the business. The new general manager will report to Davies.
 
The focus on Brazil is part of a wider international expansion strategy for Amgen as it becomes more like large pharmaceutical companies, which are looking to reap more sales from Brazil and other emerging markets.
 
Robert A. Bradway, Amgen's president and COO, says the company's plans for continued international expansion are expected to result in more than $1 billion in annual sales from existing products in new and emerging markets by 2015.
 
Pressure is also mounting on the biotechnology company to initiate a dividend, which would also bring it more in line with drugmakers. To that end, Amgen announced in April it will declare its first quarterly dividend with its second quarter 2011 earnings results. The deals may be the tip of the iceberg for Amgen.
 
"We expect Amgen to continue to be acquisitive and see similar transactions," Deutsche Bank analyst Robyn Karnauskas writes in a research note.
 
Over the past five years, Amgen has announced acquisitions worth a combined $1.6 billion. The largest was its $425 million purchase of BioVex Group Inc. in January.
 
According to Davies, Brazil isn't the only market on Amgen's radar.
 
"We are planning to launch robust commercial operations in China, Mexico, Turkey, Korea, Russia and other large and rapidly growing markets," he says.
 
That effort also led to Amgen entering into an agreement in principle with Hypermarcas to reacquire the rights in Brazil to several of Amgen 's innovative medicines, two of which are already approved in Brazil, Vectibix (panitumumab) and Mimpara (cinacalcet) and a third, romiplostim, (registered as Nplate in the United States), a treatment for the blood disorder ITP, which is currently under review by ANVISA, the regulatory authority in Brazil.
 
"Regaining the rights to certain Amgen products in Brazil, together with acquiring Bergamo, a profitable company with an established local infrastructure, provides us a cost-effective entry into the Brazil market, enabling us to further our mission of serving patients," Davies explains.
Code: E051106

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