* Contracts include discount pricing and rebates
* Potential competition to Epogen looms
* Amgen shares close down less than 1 pct
By Deena Beasley
Nov 18 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
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
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,
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
The supply deals do not involve Amgen's second-generation
anemia drug, Aranesp, which generated $2.49 billion in sales
Shares of Amgen, based in Thousand Oaks, California, fell
0.6 percent to close at $55.57 on Friday in Nasdaq trading.