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27 Jan 2017

Johnson & Johnson to Acquire Actelion in $30 Billion Deal

Johnson & Johnson will acquire the Swiss biotech firm Actelion at $30 billion.

  • Acquiring Company: Johnson & Johnson
  • Acquired Company: Actelion 
  • Deal Value: $30 billion

Why this deal?

  • Access to Actelion’s drugs, which all treat life-threatening pulmonary arterial hypertension and bring in about $2 billion in annual revenue, will make J&J a leader in treating the disease and help it expand beyond autoimmune, heart and cancer drugs. Actelion pioneered the treatment of pulmonary arterial hypertension, or PAH, in 2001 with the introduction of Tracleer, and still dominates the $5 billion global market. The newer drugs, Opsumit, Uptravi and Veletri, offer novel approaches that treat the entire spectrum of PAH, a form of hypertension in the blood vessels that run through the lungs and an alternative to Tracleer, which has lost patent protection and faces challenges from copycat drugs.
  • Pharmaceuticals is now J&J’s biggest business unit as in last couple of years consumer division and medical devices revenue were dropped. 

Deal Value – 

With the $30 billion purchase of Actelion Ltd., funded with cash parked overseas, the world’s largest health-care company gets a leader in medicines for a rare type of high blood pressure, fulfilling its goal of gaining a new drug category at a time its own medicine sales are slowing down. J&J was ready to pay the price: the deal is expensive compared with recent industry takeovers such as Pfizer Inc.’s acquisition of Medivation Inc. and AbbVie Inc.’s purchase of Pharmacyclics Inc.

 

J&J is paying more than 20 times Actelion’s estimated 2020 earnings per share, more than double what AbbVie spent on its cancer biotech.  J&J holds about $42 billion in cash overseas, and the deal will significantly reduce that amount. Repatriating all of its funds to the U.S. could have tax implications, the drugmaker said last year.

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