Bristol-Myers Squibb ( BMY) is buying biotech firm Medarex ( MEDX) for $2.1 billion to bolster the U.S. drugmaker's drug pipeline and capability to produce biologic drugs.

The deal, announced Wednesday night, values Medarex at $16 a share, a 90% premium to the company's $8.40 a share closing price. A $2.4 billion purchase price, which Bristol-Myers will pay in cash, is offset by $300 million on Medarex's books.

Medarex specializes in the production of protein-based drugs made in living cells engineered to produce human antibodies. These so-called biologic drugs are different from the chemical-based drugs typically developed and marketed by large pharmaceutical companies.

Bristol-Myers and Medarex already were partners on one such drug, ipilimumab, currently in a phase III study of skin cancer patients.

"Medarex's technology platform, people and pipeline provide a strong complement to our company's biologics strategy, specifically in immuno-oncology," said Bristol-Myers CEO James Cornelius, in a statement.

Medarex hasn't successfully developed any drugs on its own yet, but three drugs it helped manufacture for partners have been approved recently -- Johnson & Johnson's ( JNJ) Simponi and Stelara and Novartis' ( NVS) Ilaris. Medarex receives royalties on the sale of these products.

The company has seven drugs of its own in current clinical trials and another three under development by partners.

Bristol-Myers' decision to acquire Medarex, a biotech drug development partner, comes a little less than a year after Bristol-Myers was outbid to acquire another partner, the biotech firm ImClone Systems.

Eli Lilly ( LLY) purchased ImClone, developer of the cancer drug Erbitux, for $6.5 billion -- a bid that trumped Bristol-Myer's $4.7 billion bid.

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