Why the J&J Takeover of Actelion Looks Unlikely

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Johnson & Jonhson’s interest in taking over the Swiss biotech group Actelion has been confirmed, with the Wall Street Journal estimating that a total takeover price could top USD 20 billion. As Actelion is a market leader in some therapeutic areas such as pulmonary arterial hypertension (PAH), the acquisition could help safeguard J&J against losses from increased competition from other Big Pharma. Additionally, J&J’s wide medical expertise outside of PAH may move forward Actelion’s R&D in other therapeutic areas; creating a potential win-win for both organizations.

“I am convinced that we would be less innovative if we were integrated within another company.”

Jean-Paul Clozel, Actelion

However, when PharmaBoardroom spoke to Actelion co-founder and CEO Jean-Paul Clozel earlier this year, he was bullish on the benefits of an independent strategy, especially in terms of innovation. Clozel set up the company with his wife Martine in 1997, went public in 2000, and has grown it to achieve 2 billion Swiss Francs in revenue by 2015.  Clozel was firm on the positives of independence, stating clearly that “I am convinced that we would be less innovative if we were integrated within another company.” Going further, he explained that, “I do not see the value in [large-scale] acquisitions. It merely shifts value from one place to another, but does not create anything new. If you put together a company with 20,000 scientists together with another company with 20,000 scientists, you do not double the output. There are advantages for big companies in acquiring smaller ones, in terms of synergies and savings. But when it comes to innovation, it is my belief that two researchers will always have more ideas than one. With mega mergers, research groups frequently get merged as well, and the result is fewer ideas.”

Another potential spanner in the works of a potential takeover is Clozel’s scepticism towards the smaller company in any major merger or acquisition being able to retain their own unique company culture. He elucidates that Actelion’s culture is “based on both science and innovation. Patients are the focus, not the financial numbers,” but cautions that “the risky question of a big merger is whose culture to keep. Is it the culture of Sandoz or Ciba? When you rely on internal growth, it is far easier to foster and keep your culture.”

One ray of light for J&J’s hopes of a successful takeover could be Actelion’s stated interest in diversifying their portfolio. Clozel laments that “It is very difficult to continually innovate in the field of PAH at the same pace – hence our shift towards other therapeutic areas, including cardiovascular, CNS, immunology and anti-infectives.” J&J does not currently have a rare disease portfolio but is active in treatments for heart conditions, meaning a potential post-takeover pooling of resources and knowledge could speed up Actelion’s activities in these new areas.

Writer: Patrick Burton

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