Abstract

     In 1985, Amgen was a fledgling biotechnology company just four years old. Faced with a dilemma common to many start-up biotechnology companies, the company had two promising drugs, Epogen® and Neupogen®, but was cash strapped and did not have nearly enough money to develop the two products. To make its financial situation worse, Amgen was burdened with the prospect of a costly patent battle with Genetics Institute over the commercialization of its Epogen product, a promising new recombinant protein product called erythropoietin alfa (EPO) useful for treating various forms of anemia. As a consequence of these pressures, Amgen did what many biotechnology companies faced with such prospects do: it forged a deal with Ortho Pharmaceutical, a subsidiary of Johnson & Johnson. In return for a much needed cash infusion of $10 million dollars, Amgen granted Ortho exclusive worldwide rights to sell EPO while retaining its own rights to sell EPO for the kidney dialysis market in the United States. Following the deal, Ortho launched its EPO product under the trademark Procrit® in the United States for the larger non-dialysis market and Amgen launched its Epogen product for the dialysis market. At the time, the deal was a lifesaver for Amgen, but it also deprived the company of approximately two-thirds of the market for its Epogen product.