Financial Times

Johnson & Johnson in $30bn swoop on Actelion to plug looming revenue hole

by David Crow & Ralph Atkins, Financial Times 

January 27, 2017 | 10:51 am
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Johnson & Johnson unveiled the biggest deal in its 130-year history as the world’s largest healthcare company sought to revive its flagging pharmaceuticals division with a $30bn take­over of Swiss drugmaker Actelion.

The acquisition ends a long quest by Alex Gorsky, J&J chief executive, to boost growth at the company’s drugmaking unit, and comes after months of on-off negotiations with Actelion, which was a reluctant seller.

If completed, the deal would be one of the largest in the pharmaceuticals sector since 2015.

It could presage a period of intense consolidation among drugmakers if US Republicans press ahead with plans to allow companies to repatriate more than $100bn of offshore cash at a discounted tax rate.

Mr Gorsky has spent years hunting for a deal to plug an impending fall in revenues from J&J’s top-selling medicine, arthritis treatment Remicade, which generated more than $7bn last year. Remicade, one of the world’s top-10 grossing drugs, has been a cash cow since it was launched in 1998, but it is set to lose share after rivals launched cheaper “biosimilar” versions.

J&J is offering Actelion’s shareholders $30bn in cash. It has also agreed a complex deal that will result in the Swiss company’s experimental medicines being hived off into a separate Zurich-listed company.

J&J consented to the unusual structure to convince Jean-Paul Clozel, Actelion chief executive and founder, to part with the company.

Mr Clozel, who will head the new Swiss company, demanded he keep control of Actelion’s research labs and its early-stage experimental medicines in exchange for consenting to the sale, which hands J&J a string of lucrative drugs for a relatively rare and deadly type of high blood pressure.

For Mr Clozel, the deal at $280 per share caps two decades during which he built Actelion into one of the world’s top biotech companies. It hands him a payout of roughly $1.5bn for his stake of 5 per cent. He disclosed he had been approached by J&J a year ago. “I said I was not interested . . . but they really tried to convince me.” The agreed structure was “unique” in the sector, he said, adding: “I think it will be a model for this type of acquisition.”


by David Crow & Ralph Atkins, Financial Times 

January 27, 2017 | 10:51 am
  |     |     |   Start Conversation

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