UPDATE 3-Amgen signs DaVita, Fresenius anemia drug deals
* Contracts include discount pricing and rebates
* Potential competition to Epogen looms
* Amgen shares close down less than 1 pct
By Deena Beasley
Nov 18 (Reuters) - Amgen Inc , aiming to secure future sales of its flagship anemia drug Epogen as potential competition emerges, has reached new supply contracts with the two largest operators of U.S. kidney dialysis clinics.
The biotechnology company said in a regulatory filing on Friday it signed a seven-year contract to provide DaVita Inc with at least 90 percent of the clinic operator's anemia drug needs.
Amgen also entered into a "multi-year" agreement, starting in January, to supply Epogen on a "nonexclusive" basis to Fresenius Medical Care , according to Amgen spokeswomen Christine Regan.
Fresenius has a U.S. dialysis market share of around 33 percent, while DaVita's share is about 26 percent.
Both contracts include discounts and rebates.
"Amgen has effectively locked in two-thirds of its Epogen customer base with these DaVita and Fresenius contracts," Stifel Nicolaus analyst Maged Shenouda said in a research note, adding that the deals are likely structured to give bigger discounts based on volume and competitor pricing.
Epogen sales, which totaled $2.52 billion in 2010, have waned in recent years due to safety concerns. But Amgen still holds a virtual monopoly on the market for drugs used to boost red blood cell levels in kidney dialysis patients.
That could change as generic, or "biosimilar," versions of such erythropoiesis-stimulating agents reach the market and competitors such as Roche Holding AG start selling similar drugs.
Another potential rival is Affymax Inc , which is seeking U.S. regulatory approval for its experimental drug, peginesatide, as a treatment of anemia in kidney dialysis patients.
A panel of expert advisers to the U.S. Food and Drug Administration is set to review the drug, developed by Affymax and Takeda Pharmaceutical Co Ltd , on Dec. 7, with a final decision from the agency expected by March 27.
Should it win approval, Affymax is expected to price its product below Epogen.
The Medicare federal health insurance program began this year to reimburse dialysis clinics based on a fixed amount for each patient, rather than the previous method of simply marking up from costs -- which critics argued led to overuse of drugs, including Epogen.
Medicare, which traditionally covers elderly and disabled Americans, provides coverage for all those with end stage renal disease under a decades-old law.
"Amgen might have agreed to match or partially match competitors' epo pricing on the logic that taking (DaVita) out of the pricing picture would help preserve a far higher price," ISI Group analyst Mark Schoenebaum said in research note.
RBC Capital Markets analyst Michael Yee expects Amgen's sales of Epogen to fall 16 percent in 2012 and 11 percent in 2013.
The supply deals do not involve Amgen's second-generation anemia drug, Aranesp, which generated $2.49 billion in sales last year.
Shares of Amgen, based in Thousand Oaks, California, fell 0.6 percent to close at $55.57 on Friday in Nasdaq trading.
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