Strong early sales of Actelion's pulmonary artery hypertension drug Uptravi have drawn the attention of Johnson & Johnson (J&J).
Talks about a possible takeover were confirmed ahead of the weekend, with the two drugmakers issuing short statements indicating that talks were ongoing but a transaction may or may not take place.
Buying Actelion would give J&J a portfolio of drugs for PAH, a disorder that causes the artery walls in the lungs to stiffen and raise blood pressure. That isn't an area of focus for J&J at the moment, and investors are asking questions about the rationale for the deal, as buying Actelion would likely be expensive with little room for cost-cutting.
Actelion's top-selling product Tracleer (bosentan) has already lost patent protection in some markets and saw sales slide 15% in the first nine months of the year to CHF 790m ($782m). However, follow-up Opsumit (macitentan), which launched in 2013, is still very much in the growth phase – rising 68% to CHF 596m in the first nine months – while new launch Uptravi (selexipag) added another CHF 160m to the pot.
Uptravi's launch has been described as "outstanding" by Actelion's chief executive Jean-Paul Clozel, while analysts at Credit Suisse predict annual sales will approach $1bn by 2020. Meanwhile, Opsumit has plenty of room to grow with sales expected to reach $1.1bn in that year, they suggest.
Buying Actelion could give J&J some near-term growth products to boost its sales as it faces biosimilar competition to blockbuster immunology therapy Remicade (infliximab), which generated $6.6bn in sales last year. Pfizer has said it intends to launch its Inflectra biosimilar in the US this month, while copycat versions of the drug have already claimed 30-40% of the brand's market in Europe.
J&J could also provide resources to bring forward Actelion's well-regarded pipeline of drugs that extends outside its core focus of PAH, including multiple sclerosis candidate ponesimod and cadazolid for Clostridium difficile-associated diarrhoea.
J&J has not been a figure in large pharma M&A in recent years, and the bulk of its deals over the last decade have been small, sub-$1bn transactions.
That may now be changing, as it was rumoured to have been in the running for Pharmacyclics – eventually bought by AbbVie for $21bn – and said earlier this year it was open to deals of any size. Chief executive Alex Gorsky said it had looked at various acquisitions in 2015 but had been put off by excessively high valuations on assets.
Meanwhile, Actelion has remained fiercely independent throughout its 30-year history, reportedly turning down a takeover attempt by Shire last year. There is now speculation that news of J&J's interest could bring rival bidders to the table, perhaps Novartis.