Strategy

J&J Boosts Drug Roster With $30B Actelion Deal

The largest acquisition in J&J's history gives it access to Actelion's portfolio of high-margin treatments for rare diseases.
Matthew HellerJanuary 26, 2017
J&J Boosts Drug Roster With $30B Actelion Deal

In the largest deal in its history, Johnson & Johnson is boosting its roster of medicines for rare diseases by acquiring Swiss biotech company Actelion for $30 billion.

The $280-per-share transaction represents a 23% premium to Actelion’s closing price on Wednesday and is more than 80% above the Nov. 23 closing price before reports emerged that Europe’s biggest biotech company had attracted takeover interest.

As part of the largest European takeover in 13 years, Actelion will spin off its research and development unit into a standalone company to be based and listed in Switzerland, under the working title of R&D NewCo.

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J&J cited Actelion’s “innovative products for pulmonary arterial hypertension” in announcing Thursday that it was acquiring the company, beating out rivals such as French drugmaker Sanofi.

“Adding Actelion’s portfolio to our already strong Janssen Pharmaceuticals business is a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products,” J&J Chief Executive Alex Gorsky said in a news release. “We expect to leverage our established global presence and commercial strength to accelerate growth and patient access to these important therapies.”

As Reuters reports, J&J has been seeking to “diversify its drug portfolio as its biggest product, Remicade for arthritis, faces cheaper competition.” The company had reported disappointing fourth-quarter results earlier this week.

Actelion’s products include Opsumi and Uptravi for PAH and it is also developing a treatment for multiple sclerosis. Cardiologist Jean-Paul Clozel co-founded the company with his pediatrician wife Martine and friends in 1997.

“The newly created R&D company allows us to continue with our successful culture of innovation,” Clozel said Thursday.

A Zurich-based trader told Reuters that the price J&J is paying is “quite high at around 30 times price to estimated 2018 earnings. J&J is paying a lot and R&D is not even included, just a substantial minority stake.”

But the trader added that the deal “represents only 10 percent of [J&J’s] market capitalization and they are finally investing the cash they hold in Europe.”