Amgen’s Clever $2.7 Billion Investment in Chinese Biotech Firm BeiGene

California-based biotech firm, Amgen announced that it's investing $2.7 billion in BeiGene taking a 20.5% stake in the Chinese company.

Amgen, which has yet to establish a strong oncology presence in China, compared to its multinational rivals including Roche, Novartis, and AstraZeneca, now looks to BioGene to help increase its footprint in the growing pharmaceutical market.

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Together with Biogene, Amgen is set to commercialize its cancer drugs to be sold on the Chinese market as well as develop 20 oncology pipeline products to be sold in China and elsewhere.

As roughly 4 million people are diagnosed with cancer every year, Amgen has expanded its global presence from around 50 to 100 countries since 2011.

BeiGene is a key player in the Chinese biotech arena, having raised $903 million through a Hong Kong listing last year while simultaneously building a 600-person clinical development group. The fundraising has equipped BeiGene to serve as a bridge for Western companies that want to access the Chinese cancer market, which is potentially very lucrative but difficult to infiltrate as a foreign entity.

Analysts have also greenlit the move. “[W]e think paying $3 billion for access to a robust commercial infrastructure that will help Amgen deepen its presence in China is reasonable,” Cantor Fitzgerald analyst Alethia Young wrote in an investor note. “When hearing how expansive BeiGene's presence is in China we think this is something that would take many years, and perhaps more capital than this deal, for Amgen to build alone.”

Murdo Gordon, Amgen’s executive vice president for global commercial operations reiterated that the “focus now is ensuring novel therapies that address a high unmet medical need are approved as quickly as in the West or other parts of Asia.”

This deal comes in spite of President Donald Trump pressuring US firms to restrict investments in China as the ongoing trade war continues. John Oyler, chairman and CEO of BeiGene, commented on these trade talks, saying that it’s “just focused on trying to fight cancer.”

Goldman Sachs is acting as the financial advisor to Amgen, while Latham & Watkins is serving as a legal advisor. Morgan Stanley is acting as exclusive financial advisor to BeiGene.