Compared with multinational rivals such as Novartis, Roche and AstraZeneca, Amgen didn’t have a strong oncology presence in China. That situation has ended with the official launch of a strategic partnership with BeiGene.

Announced in late October, the deal saw Amgen pay $2.7 billion to take a 20.5% stake in BeiGene. In return, the rising Chinese biotech will market Amgen’s oncology products Xgeva, Kyprolis and Blincyto in its home country. And the two will work together on the global development of 20 Amgen oncology pipeline products.

Analysts figured it was a decent price. “[W]e think paying $3 billion for access to a robust commercial infrastructure that will help Amgen deepen its presence in China is reasonable,” Cantor Fitzgerald analyst Alethia Young wrote in an investor note back then.

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“When hearing how expansive BeiGene's presence is in China,” Young added, “we think this is something that would take many years, and perhaps more capital than this deal, for Amgen to build alone.”

Piper Jaffray’s Christopher Raymond at that time also called the arrangement “an efficient way” for Amgen to gain access to China’s oncology market.

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BeiGene rose to the commercial stage in 2017 by acquiring Celgene’s Chinese operations and domestic rights to cancer drugs Revlimid, Abraxane and Vidaza. In a testament to BeiGene’s commercial ability, sales from those three products jumped 78% year over year in the first nine months of 2019 to hit $165.7 million.

One reason for the leap? BeiGene more than tripled the size of its Chinese commercial team from about 200 employees at the beginning of 2018 to about 900 now.

Given BeiGene’s successful track record with blood cancer drugs Revlimid and Vidaza, the new deal is “likely to result in significantly higher sales of Kyprolis than Amgen would otherwise have anticipated,” SVB Leerink analyst Geoffrey Porges said in November. Xgeva, which is approved for skeletal-related events in cancer patients, “will also be effectively and efficiently promoted as part of this myeloma product line,” he said.

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And the Chinese company’s oncology experience is only growing. In November, it won an FDA nod for BTK inhibitor Brukinsa to treat mantle cell lymphoma. And it just nabbed a Chinese go-ahead for its PD-1 inhibitor tislelizumab in classical Hodgkin lymphoma.

On the R&D side, Amgen will leverage BeiGene’s development know-how to generate clinical data from China to help advance 20 pipeline cancer drugs around the world. In return for BeiGene's forking over up to $1.25 billion in global R&D costs, Amgen is granting its partner commercial rights in China for seven years after launch. BeiGene’s assumption of some costs “should provide some relief to Amgen’s R&D expense trajectory,” Piper Jaffray’s Raymond noted.

For BeiGene, the $2.7 billion equity investment “removes any immediate financing overhang, and perhaps more importantly, provides validation and confidence in BeiGene’s differentiated clinical and commercial infrastructure in China,” SVB Leerink’s Andrew Berens said in November. Overall, “this deal further affirms the increasing importance of China in the global biopharmaceutical arena,” he said.