J&J could pay $17 billion for Actelion

Johnson & Johnson and Switzerland’s specialist pharma company Actelion have confirmed that they are in talks over a possible takeover.

Both companies confirmed in brief statements that press reports published last week were correct and that they are in discussions about a deal.

If the deal goes ahead, J&J will likely have to pay around $17 billion for Actelion, depending on how the companies choose to structure any takeover.

This would make it bigger than the year's most significant pharma M&A deal so far, Pfizer's $14 bn takeover of Medivation.

Actelion said that Johnson & Johnson made the first approach, while the US pharma said that “preliminary discussions” had begun over a “potential transaction”.

Both companies noted that there can be no certainty that deal will be reached.

The news sent Actelion’s shares soaring on the Swiss stock exchange. On Wednesday shares were as low as 151 Swiss francs ($150) – but at the time of writing are worth around 189 Swiss francs ($187).

This fits with J&J’s assertion at the beginning of this year that it is looking to spend around $18 billion on M&A – although the company had said earlier this year it preferred several smaller deals.

Alex Tarrant assistant editor at Dealreporter, told CNBC that the election of Donald Trump, and possible new tax rules that could make a deal like this more cost-effective, could have prompted J&J to make the move.

Actelion is Europe’s largest biotech group, and there have been rumours of a takeover for years.

However Actelion is in better shape than it has been for a while, due to the strong performance of its two next-generation pulmonary arterial hypertension drugs, Opsumit (macitentan) and Uptravi (selexipag).

These are coming on stream just in time to offset falling sales of Actelion’s older PAH drug, Tracleer (bosentan), which faces generic competition.

In a separate statement, J&J said it had filed its psoriasis drug, guselkumab, with the European Medicines Agency, following a US filing earlier this month.