By Dana Mattioli and Jonathan D. Rockoff 

French drug giant Sanofi SA is in talks for a deal with Actelion Pharmaceuticals Ltd., according to people familiar with the matter. Meanwhile, Johnson & Johnson abandoned its pursuit of the Swiss drug company.

It's not clear what price Sanofi is discussing paying or what structure is envisioned, but people familiar with the matter have said a deal could value Actelion at as much as $30 billion.

J&J said earlier Tuesday it had bowed out of the bidding, a move people familiar with the matter attributed to its unwillingness to pay the price necessary to seal a deal for Actelion. After J&J's announcement, Actelion issued its own statement, saying it was "engaged in discussions with another party" without giving more detail. People familiar with the matter said the party is Sanofi, which recently lost a heated auction it kicked off, for cancer biotech Medivation Inc.

Actelion, which has been resistant to takeover overtures in the past, could ultimately decide to remain independent or strike a deal that falls short of a full takeover. Likewise, Sanofi could walk away if it also concludes that the price is too steep, especially now that it doesn't have competition.

Like J&J, Sanofi would be interested in adding Actelion's rare-disease drugs to an aging portfolio whose key products are losing patent protection. A lower-price copy of Sanofi's top-selling product, the insulin Lantus, is expected to go on sale in the U.S. this month.

To offset the losses, Paris-based Sanofi recently tried to buy Medivation, but rival Pfizer Inc. won the bidding in August, with a $14 billion offer.

Actelion specializes in treatments for a rare disorder known as pulmonary arterial hypertension. The Swiss drug company reported revenue of 2.1 billion Swiss francs ($2.1 billion) and a profit of 552 million Swiss francs last year. The company had a market value of more than $22 billion as of Tuesday's close, after surging in recent weeks on investor hopes for a deal.

Sanofi has a rare-disease business, the result of its 2011 acquisition of Genzyme.

J&J has said it has several drugs in the late stages of development with blockbuster-sales potential that could more than offset the revenues lost as the company's rheumatoid-arthritis therapy Remicade confronts a lower-price copy from Pfizer.

With a market value of more than $300 billion and about $40 billion in cash, J&J had the financial firepower to do a deal. But Chief Executive Alex Gorsky and Chief Financial Officer Dominic Caruso have said they would not overpay for acquisitions. J&J lost out in an auction of Pharmacyclics, a cancer-drug company that AbbVie Inc. ended up buying last year for $21 billion.

Unlike Pharmacyclics, Actelion was an imperfect fit for J&J, which doesn't have a franchise selling rare-disease drugs.

It isn't the first time lately that a bid to seal a big drug merger has fallen apart.

There have been more than $250 billion of health-care deals announced so far in 2016, according to Dealogic, down from a total of more than $500 billion in all of 2015.

Last year's tally would have been even greater if Pfizer's roughly $150 billion agreement to buy drugmaker Allergan PLC hadn't fallen apart amid resistance from the Obama administration. The deal was to be a so-called inversion, moving Pfizer abroad for tax purposes.

Indeed, resistance in Washington is one factor cited by deal makers for the drop in merger activity in 2016.

Write to Dana Mattioli at dana.mattioli@wsj.com and Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com

 

(END) Dow Jones Newswires

December 14, 2016 02:47 ET (07:47 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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