Johnson & Johnson Plans $20 Billion Acquisition of Actelion, Europe's Largest Biopharmaceutical Company
VCBeat (WeChat ID: vcbeat) has recently confirmed that Johnson & Johnson plans to acquire Actelion, a biopharmaceutical company headquartered in Switzerland. As the largest biopharmaceutical company in Europe, Actelion currently has a market capitalization of nearly $20 billion. According to Reuters, the acquisition could help strengthen Johnson & Johnson’s drug research and development capabilities and diversify its pharmaceutical portfolio.
Currently, Johnson & Johnson’s flagship product, Remicade, is facing competition from more affordable alternatives offered by Pfizer. Remicade, an autoimmune disease treatment, generated $4.5 billion in U.S. sales last year. Pfizer has announced plans to begin selling its biosimilar, Inflectra, in the United States starting this month.
Actelion’s focus on developing drugs for rare diseases is highly attractive to Johnson & Johnson, as therapies in this sector generally face limited pricing pressure. Although rare diseases are not a core business priority for Johnson & Johnson,Actelion’s best-selling drugs can complement Johnson & Johnson’s cardiovascular portfolio, and the acquisition of Actelion will help Johnson & Johnson rapidly offset its lost sales.
Actelion reported sales of CHF 1.785 billion ($1.8 billion) in the first nine months of this year. Actelion’s macitentan (Opsumit) and Uptravi are both indicated for the treatment of life-threatening conditions caused by pulmonary arterial hypertension. Analysts project that combined sales of these two drugs will exceed $4.6 billion by 2020, significantly surpassing this year’s expected sales of $1.4 billion.
Actelion, founded in 1997, has seen its valuation rise steadily since its initial public offering in 2000. Last year, the company reported revenue of CHF 2.05 billion and a profit of CHF 551.9 million. Currently, Actelion’s valuation may exceed USD 20 billion. Following its listing on the SIX Swiss Exchange last Friday, Actelion’s share price rose by nearly 17% to CHF 182.50 (USD 184.03). Analysts at Bank of America Merrill Lynch believe that the highest takeover bid for Actelion could reach CHF 220 (USD 217) per share, while analysts at Bryan Garnier estimate that the maximum acquisition offer would need to hit CHF 250 (USD 246).
Currently, Johnson & Johnson’s market capitalization exceeds $300 billion, with nearly $40 billion in overseas cash.Johnson & Johnson’s largest deal to date was the $21 billion acquisition of trauma device manufacturer Synthes in 2011. This September, Johnson & Johnson also acquired Abbott’s eye care business for $4.3 billion.
In addition to Johnson & Johnson, reports suggest that Swiss pharmaceutical company Novartis AG is also a likely contender to acquire Actelion; however, other sources have revealed that the company is not particularly interested in Actelion’s R&D pipeline. Novartis declined to comment on the matter.