Summary
Amgen Inc. announced a significant development concerning its key product, EPOGEN (Epoetin alfa), through its subsidiary Amgen USA Inc. On November 15, 2011, the company entered into a seven-year Sourcing and Supply Agreement with DaVita Inc., a major dialysis provider. This agreement, effective January 1, 2012, will govern the supply of EPOGEN to meet at least 90% of DaVita's U.S. and Puerto Rico needs for erythropoiesis stimulating agents in dialysis services, replacing an existing agreement set to expire at the end of 2011. This new agreement is crucial as it solidifies a long-term supply commitment for a core Amgen product with a significant customer. It includes provisions for discount pricing and rebates, which are subject to certain conditions related to future pricing and data submission by DaVita. The structured pricing and rebate mechanisms suggest a strategic effort by Amgen to maintain market share and manage revenue predictability for EPOGEN, while DaVita secures its supply needs. Investors should note the seven-year duration and the renewal of a critical supply chain relationship.
Key Highlights
- 1Amgen USA Inc. (a subsidiary) entered into a seven-year Sourcing and Supply Agreement with DaVita Inc.
- 2The agreement covers the supply of EPOGEN (Epoetin alfa) for dialysis services in the U.S. and Puerto Rico.
- 3The agreement commences on January 1, 2012, and extends through December 31, 2018.
- 4Amgen will supply at least 90% of DaVita's requirements for erythropoiesis stimulating agents.
- 5The agreement replaces a prior Dialysis Organization Agreement expiring on December 31, 2011.
- 6The new agreement includes provisions for discount pricing and rebates on EPOGEN.
- 7Rebate amounts are subject to certain conditions, including future pricing and DaVita's data submission.