Johnson & Johnson Makes a Play for This $19.9 Billion Swiss Biotech

Published: Nov 29, 2016

Johnson & Johnson Makes a Play for This $19.9 Billion Swiss Biotech November 28, 2016
By Mark Terry, Breaking News Staff

Johnson & Johnson has confirmed that it is in talks to acquire Swiss-based Actelion .

The talks are apparently very early. J&J has made an offer, and Actelion is working with an advisor to “explore options.” Analysts project that a deal could approach $20 billion. There is also a possibility that other companies may express an interest, including Novartis AG and Sanofi .

Actelion recently brought two new drugs on the market, both of which have the potential to become blockbusters over the next two or three years. About half of Actelion’s revenue comes from sales of Tracleer, to treat a form of high blood pressure that affects arteries in the lungs, pulmonary arterial hypertension (PAH). That drug is facing generic competition at the beginning of 2017.

The two new drugs are Opsumit and Uptravi. Opsumit is used to treat PAH, and is likely to replace Tracleer. Uptravi is also used to treat PAH.

Nonetheless, an Actelion acquisition by J&J puzzles some analysts. BloombergMarkets writes, “The move is an unusual one for J&J, which has grown its pharmaceutical sales 40 percent since 2010 almost entirely through in-house product development and licensing deals to become the health company’s biggest unit.”

Analysts with JP Morgan Cazenove, however, wrote in a note to clients, “With J&J having a market cap exceeding $300 billion, Actelion would clearly be an affordable asset for the company. Less clear to us is the logic of the timing, ahead of a likely favorable ex-U.S. cash repatriation window for U.S. corporates. We also see little in the way of obvious therapeutic overlap to allow synergies, beyond J&J’s interest in the Xarelto anti-coagulant which could have some modest overlaps with cardiologists prescribing PAH therapies.”

Although Actelion has been considered an acquisition target for some time, the company’s co-founder and chief executive officer, Jean-Paul Clozel, has repeatedly expressed the desire to stay independent. Some believe a more likely competing bid would come from Novartis, but an unnamed source told Reuters that Novartis wasn’t impressed with Actelion’s pipeline.

On the other hand, Eric Le Berrigaud, an analyst with Bryan Garnier & Co. in Paris, told BloombergMarkets that Sanofi would be a good option. “It fits really well with what Sanofi is looking for.”

J&J’s biggest drug is Remicade, for arthritis. In 2015, it generated $6.6 billion in sales, but it is facing competition from biosimilars. For example, Pfizer launched Inflectra, a biosimilar of Remicade, just last week, although the two companies are still fighting in court over patents.

In September, J&J acquired Abbott Laboratories ’ eye care business, Abbott Medical Optics, for about $4.3 billion. A year earlier it acquired Novira Therapeutics, which develops drugs against hepatitis B (HBV).

Actelion popped some at the news. Shares traded on Friday, November 24, for $156.30. They are currently trading for $192. Shares traded on February 8, 2016, for $122.50, and had a previous high of $173.60 on July 26.

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