Bristol-Myers to buy diabetes drug maker for $5B

NEW YORK (AP) — Bristol-Myers Squibb Co. agreed to buy diabetes drug maker Amylin Pharmaceuticals for about $5 billion in cash, heating up the competition among drugmakers to develop diabetes treatments.

After the deal is complete, Bristol-Myers will enter into an alliance with British drugmaker AstraZeneca to develop and commercialize Amylin's diabetes drugs. AstraZeneca will pay Bristol-Myers $3.4 billion in cash, and the companies will share profits and losses.

The deal, announced Friday, comes just over a month after generic versions of Bristol-Myers Squibb's blockbuster blood thinner Plavix were approved. And Amylin recently ended a marketing deal with Eli Lilly, so both companies were looking for new opportunities.

Diabetes is a growing focus for drugmakers as more people are diagnosed with the disease, partly due to rising obesity levels. About 280 million people worldwide have diabetes, including 25.8 million in the U.S., according to the Centers for Disease Control and Prevention.

Bristol-Myers said it will pay $31 per share for Amylin in a cash tender offer. In March, media reports said Bristol-Myers offered $22 a share for the company, but neither company ever confirmed the offer.

At the time, activist investor Carl Icahn said Amylin should have told shareholders about the offer and pursued a sale. He sued the company to seek more time to nominate new board members but later dropped the lawsuit.

Including Amylin's debt and a payment to Amylin's former marketing partner Eli Lilly & Co., the deal is worth about $7 billion.

Bristol-Myers says the deal will hurt earnings in 2012 and 2013 by 3 cents per share.

Bristol-Myers biggest sellers include the oral diabetes treatment Onglyza, and the psychiatric drug Abilify. Bristol-Myers markets blood thinner Plavix through a partnership with French drugmaker Sanofi, and while Plavix is the second-best selling drug in the world, it lost U.S. patent protection in May.

Amylin makes the twice-a-day diabetes drug Byetta and a newer once-a-week version called Bydureon. Both drugs were marketed through a partnership with Eli Lilly and Co., but the companies announced in November that they were ending their partnership. Amylin said then it was looking for a new partner to help sell the drugs.

Amylin also makes the diabetes drug called Symlin.