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J&J in Talks to Buy Crucell | Expert Analyst Comment

28 Sep 2010, by Informa Insights

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Johnson & Johnson is in advanced negotiations to buy Dutch biotechnology company Crucell NV for €1.75 billion ($2.29 billion), the two companies said today. Giles Somers, senior healthcare analyst at Datamonitor comments:

“So, one more big Pharma enters the vaccines space – following the example of Pfizer (through the acquisition of Wyeth) and AZ (through the acquisition of MedImmune). Strategically, J&J has already made a number of acquisitions in infectious diseases, so the fit is very good.

“In times of the approaching patent cliff and increasing genericisation, vaccines are increasingly regarded as a key revenue generator for Big Pharma, as they are generics-proof. Blockbuster products such as Wyeth’s (now Pfizer’s) Prevnar or Merck & Co’s Gardasil, as well as the huge pandemic flu vaccine windfalls during the H1N1 pandemic have sparked a new commercial interest in this sector and encouraged companies without previous experience in vaccines to enter this market. Datamonitor estimates that the vaccines market approximately tripled over the past 5 years.

“However, since the sector is a very oligopolistic industry that follows rules very different to those for other pharmaceuticals, expertise will be key for these new players in order to compete with the established vaccine companies like GSK, Sanofi Pasteur or Merck; hence the value of this deal to J&J.

“Furthermore, backed by J&J’s global sales and marketing capabilities, Crucell could compete more effectively with the Big Pharma players already in the vaccines space.

“The acquisition talks come approximately a year after J&J signed an early-stage collaboration agreement with Crucell and also bought a 17.9% stake in the company. J&J paid an equivalent of €20.67 per share for the stake, reducing the likelihood of Crucell being acquired by another competitor. Wyeth, for example, had been in negotiations to buy the company in 2009.

“Interestingly, a 3-years standstill agreement meant that J&J could not raise its interest in the company without Crucell’s consent, preventing a hostile takeover. However, it now appears that the companies are close to agreeing a deal for the remainder of the company. Under the terms of the negotiations, J&J would pay EUR24.75 cash per share, representing almost a 20% premium to the earlier purchase.”

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