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Johnson & Johnson buys $1bn Elan stake

J&J will invest $1bn (£600m) in Elan and commit $500m to help fund development of the company's late-stage products for Alzheimer's

Johnson & Johnson(J&J) will invest $1bn (£600m) in the Irish-American company Elan and commit an additional $500m to help fund development of the company's late-stage products for Alzheimer's disease.

In return, the US healthcare products group will acquire an 18.4 per cent stake in the company and assume majority control of its two leading experimental Alzheimer's products, which are being developed in partnership with US giant Wyeth.

The deal ends months of uncertainty over Elan's financial stability and marks a vote of confidence in the development of a late-stage drug and vaccine for Alzheimer's which had been thrown into question by Pfizer's takeover of Wyeth.

Elan will hold a 49.9 per cent stake in the newly formed company. It will be entitled to a 49.9 per cent share of the profits and certain royalty payments if products developed under the Wyeth partnership reach market.  

Sheri McCoy, J&J worldwide chairman of pharmaceuticals said: "Alzheimer's disease is a significant unmet need in ageing populations globally. J&J's development capabilities, commercial experience and global reach will provide the foundation to accelerate the (Alzheimer's programme) and increase its potential for patients globally."

Shares in Elan have risen 40 per cent on the news. The deal is expected to close in the second half of the year.

6th July 2009

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