Bristol-Myers Pays $7 Billion For Diabetes Drug Maker: Good Deal?

Bristol-Myers Squibb (BMY) is, with AstraZeneca (AZN), buying Amylin Pharmaceuticals (AMLN) for $5 billion, or $7 billion if you include debt and a payment due to Eli Lilly (LLY). The buyers beat out Sanofi (SNY) and Merck (MRK), reports Bloomberg.

That’s a big bet on Amylin’s primary product: diabetes drugs. The premise is solid. More people are getting fat, so more people will be getting diabetes, joining the 345 million people worldwide who are estimated to already have it.

And $7 billion could be a pretty good price considering how much time and money it takes to bring a drug to market. Forbes ran a list back in February that showed that between 1997 and 2011, Bristol-Myers Squibb spent an average $4 billion developing each of its 11 new drugs. AstraZeneca spent an average $12 billion.

With Amylin, the companies get not one but three products: an injection called Byetta, another called Symlin, and a weekly diabetes treatment called Bydureon. Bristol-Myers also gets to skip over 18 or so years of lab time. Amylin formed in 1987, and it didn’t start earning revenues, from Byetta and Symlin, until 2005.

So this big bet? It could prove pretty phat.

BMY Chart

BMY data by YCharts

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