Amgen plans to buy Horizon Therapeutics in $27.8B deal

In the final weeks of 2022, the year’s biggest health sector acquisition took place, analysts say.

Amgen announced Monday that the company plans to buy Horizon Therapeutics in a $27.8 billion deal. Amgen said the move would expand its offerings of drugs for patients suffering from rare diseases. Likewise, Amgen said it expects to be able to help Horizon’s drugs reach more markets globally.

Robert A. Bradway, chairman and chief executive officer of Amgen, cited Horizon’s successful drugs, including Tepezza, a treatment for thyroid eye disease, and Krystexxa, a medicine used to treat gout.

"The acquisition of Horizon is a compelling opportunity for Amgen and one that is consistent with our strategy of delivering long-term growth by providing innovative medicines that address the needs of patients who suffer from serious diseases,” Bradway said in a statement.

Salim Syed, an analyst for Mizuho Securities USA, told CNBC the deal would benefit Amgen in certain respects.

Amgen offers some inflammatory drugs, such as Otezla, a treatment for psoriasis, and Enbrel, an arthritis drug, but they are facing increased competition, Syed said. Some of Amgen’s top offerings will lose their patent protections in the next few years, Syed and other analysts noted.

William Blair analyst Matt Phipps told Reuters, “The offer clearly brings in a number of growing assets for Amgen.”

However, Phipps also noted that the deal comes with substantial debt.

Lisa Jarvis of Bloomberg wrote that the deal is “on the expensive side, but makes good strategic sense. Horizon will help fill significant revenue losses at Amgen in the coming years as key products lose patent protection.”

Tim Walbert, chairman, president and CEO of Horizon, said Amgen will get the most out of Horizon’s portfolio and get its products to more patients.

“We have accomplished a tremendous amount for patients, their families and our customers, and created significant value for shareholders,” Walbert said in a statement. “These accomplishments are all rooted in our employees' deep commitment, dedication and personal passion for those impacted by rare, autoimmune and severe inflammatory diseases. Amgen is aligned with that commitment and passion.”

Horizon had other suitors as well. The company said in November it was in talks with Amgen, Johnson & Johnson and Sanofi about a potential acquisition. However, Johnson & Johnson said earlier this month it wouldn’t be making an offer, Reuters reported, and Sanofi said Sunday it would not be making a bid for Horizon.

Amgen, based in California, said it would pay $116.50 for each share of Horizon, which is based in Ireland. Amgen said the offer represents a premium of 48% per share, based on the $78.76 closing prices before Horizon announced it was considering offers.

In the beginning of the month, Atrium Health and Advocate Aurora Health said they had completed their merger of the two hospital systems. With the deal, the consolidated company now known as Advocate Health boasts a combined $27 billion in annual revenue and operates 67 hospitals in six states. Analysts expect that deal could lead to other hospital mergers and acquisitions in the near future.

Other big mergers in healthcare this year include VillageMD, backed by Walgreens Boots Alliance, announcing its plans to buy Summit Health-CityMD in an $8.9 billion deal.

In September, CVS Health announced the $8 billion acquisition of Signify Health, a network of doctors providing care to patients at home. Amazon announced its planned $3.9 billion acquisition of One Medical, a primary care organization which offers its members in-person care and 24/7 virtual care, in July.