The news that AstraZeneca is buying Bristol-Myers Squibb's stake in the companies' diabetes partnership has gone down well with analysts.

The Anglo-Swedish drugmaker is forking out $2.7 billion upfront initially, and potential regulatory- and sales-based milestone payments of up to $1.4 billion. B-MS will also bank royalties based on net sales through 2025 and up to $225 million when certain assets are transferred.

The deal gives AstraZĀ±eneca full ownership of a portfolio including Onglyza (saxagliptin), Kombiglyze (saxagliptin/metformin) and Forxiga (dapagliflozin) as well as three treatments purchased through the acquisition last year of Amylin - Byetta (exenatide), Bydureon (extended-release exenatide) and Symlin (pramlintide). It also includes the lipodystrophy drug metreleptin which has just been reviewed fairly positively by a US Food and Drug Administration advisory committee.

Some 4,100 B-MS Squibb diabetes employees, including those at Amylin, will move to AstraZeneca which will also become responsible for the manufacturing and supply chain of the portfolio. The latter also noted that it would take a $1.7 billion pre-tax impairment charge following disappointing sales of Bydureon, but added that it still has "confidence in the commercial future" of the drug.

News of the sale comes as little surprise given that B-MS said in November that it was focusing on immuno-oncology and would discontinue drug discovery in diabetes, as well as in hepatitis C and neuroscience.

Savvas Neophytou, an analyst at Panmure Gordon said that given the price for acquiring Amylin in June 2012 ($3.5 billion for its 50% share), paying $2.7 billion for B-MS' share "seems a sensible deal to us". He added that "even with a staged earn-out which could rise to $1.6 billion, the price would appear to be good business particularly as it also includes full rights to Onglyza and dapagliflozin".

Tim Anderson at Sanford Bernstein issued a research note saying that B-MS may use the cash for an acquisition while for AstraZeneca, the diabetes drugs will help soften the blow of forthcoming patent expirations on therapies such as the stomach acid drug Nexium (esomeprazole) and the cholesterol blockbuster Crestor (rosuvastatin). Over at Jeffries, Jeffrey Holford said the deal was better value for B-MS than AZ, claiming that the JV "clearly was not working out" adding that competition in diabetes is fierce.