Biotech leader Amgen agreed Monday to buy Immunex for $16 billion in cash and stock, a record deal for the industry that could force other biotechs to combine or else.
By buying the third-biggest biotech firm, Amgen adds a profitable arthritis drug to its already impressive lineup, making it a bigger threat to other biotechs and to traditional drug firms with larger, but aging, product lines.
"We're looking at a monster biotech company," says Paul Abel, portfolio manager of the Kinetics Medical fund.
Antitrust issues could be a concern because the two would have a dominant share of drugs that boost white blood cells. But Immunex plans to divest its drug, Leukine, Amgen spokeswoman Rebecca Hamm says.

MedImmune agreed Dec. 3 to acquire Aviron for $1.3 billion, to obtain its influenza treatment.
Cephalon also said on Dec. 3 it was paying $450 million for France's Group Lafon, which has a late-stage product thought to treat narcolepsy.
Millennium Pharmaceuticals agreed Dec. 6 to buy Cor Therapeutics for $2 billion. This merger is the textbook example of what investors should expect, analysts say. Money-losing Millennium gets access to actual products being sold, including Cor's treatment for acute coronary syndrome.
"Having a drug in your hand is how you make your business model understandable," says Tom Dietz, analyst at Pacific Growth.
The list of biotech buyout candidates is a long one. But Stefan Loren of Legg Mason says likely targets include Vertex Pharmaceuticals, Biogen and Gilead Sciences. Vertex is researching treatments for viral diseases. Biogen sells a product that treats multiple sclerosis. Gilead Sciences is researching treatments for infectious diseases.
So far, traditional drug firms have shown little interest in buying biotechs. They are reluctant to use their shares to buy richly valued biotechs and so prefer joint ventures, Loren says.
But biotechs are still ripe to be bought by peers. "A lot of biotech companies are one-hit wonders," Loren says. That means they have to buy new products to grow, he says.