Will This Fish Oil Deal Affect Amarin?

Amarin's (Nasdaq: AMRN  )  new triglyceride-lowering drug Vascepa may or may not be a blockbuster when it hits the market. Vascepa's active ingredients are derived from omega-3 fatty acids found in fish oils, as are the active ingredients in Lovaza. This drug, which is sold by pharma giant GlaxoSmithKline (NYSE: GSK  ) , generated more than $900 million in sales last year and will be Vascepa's biggest competition.

Recently, one of Amarin's suppliers -- German chemical company BASF (NASDAQOTH:BASFY) -- announced its intention to acquire a company called Pronova BioPharma, which actually produces Lovaza for GlaxoSmithKline.

In the following video, health care analysts Max Macaluso and Brenton Flynn discuss this deal and its potential impact on investors.

The biotech space can make or break investors overnight, and while Amarin might not disappear into thin air,  the Vascepa's success is key to the company's future success or failure. The company has huge potential, but don't invest a dollar before reading everything you need to know about Amarin. You can start now with top Fool.com analyst Max Macaluso's premium research report. Click here now to keep reading.


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  • Report this Comment On November 26, 2012, at 6:17 PM, prismane wrote:

    Pronova Biopharma doesn't have the capability to make Vascepa's API which is >96% pure EPA omega-3.

    What is VERY VERY interesting however is BASF not only acquired Pronova Biopharma (Lovaza producer) but also this year acquired a privately owned fatty acid production company called Equateq (Vascepa producer).

    Equateq signed a long term contract last year to supply Amarin with >96% EPA omega-3 for production of Vascepa. BASF now controls a good chunk of all pharma grade fish oil that ends up on the market.

    My speculation though is the gross margin for >96% EPA production (Vascepa) is a great deal higher than the gross margin for 47% EPA / 38% DHA production (Lovaza). Equateq has the patents to produce >96% EPA and Pronova Biopharma has the facilities to make A LOT of it.

    BASF realizes most profit if Equateq acquisition can be integrated into Pronova acquisition over the long term. This could be BASF betting big on the success of Vascepa and the phasing out of Lovaza while making a ton of money on both during the process. Its unlikely a move by BASF to keep Lovaza in a dominant position by controlling a major Vascepa producer since Amarin does have other major suppliers whereas GSK is pretty much locked in with Pronova Biopharma for Lovaza production.

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