EU antitrust regulators launch an investigation into Johnson & Johnson’s acquisition of Takeda’s TachoSil

EU antitrust regulators launch an investigation into Johnson & Johnson’s acquisition of Takeda’s TachoSil
Written by:
Wajeeh Khan
25th March, 18:11
Updated: 25th March, 18:13
  • EU antitrust regulators launch an investigation into Johnson & Johnson’s acquisition of Takeda’s TachoSil.
  • EU regulators are concerned that the acquisition may reduce choice and increase prices for consumers.
  • Vestager announced a deadline of August 10th for the Commission to reach a verdict.

Takeda Pharmaceutical sold TachoSil (surgical patch product) to Johnson & Johnson (NYSE:JNJ) in May 2019. The largest Japanese drug manufacturer had announced a £339.28 million deal with J&J’s subsidiary, Ethicon. On Wednesday, however, the European Union antitrust regulators expressed concerns that the deal is expected to hurt competition.

Ethicon Inc. earned the stature of a separate company in 1949 under the umbrella of J&J. The subsidiary enabled Johnson & Johnson to expand its product line and enter the market of wound closure devices and surgical sutures.

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EU Regulators Say Acquisition May Reduce Choice And Increase Prices For Consumers

The EU regulators said that the acquisition may reduce choice and increase prices for consumers and launched a full-scale investigation into the deal.

As per the finding of the preliminary investigation, the European Commission added, its concern stems from TachoSil’s stature of the market leader in Europe. Ethicon is also a prominent name that manufactures similar surgical patches that are distributed in different markets. In Europe, however, the J&J subsidiary doesn’t make such dual patches.  

The EU regulators also said on Wednesday that the high development cost is likely to make it unnecessarily challenging for the competitors to enter the European market. Margrethe Vestager, the European Competition Commissioner, was reported quoting on Wednesday:

“In this concentrated space, we need to carefully assess whether the proposed merger would lead to reduced choice for surgeons and patients, to higher prices for our health services, or to slower development of alternative solutions to manage problematic bleeding.”

Vestager also announced a deadline of August 10th for the Commission to reach a verdict.

Johnson & Johnson’s Performance In The Stock Market

The news didn’t cast a strong impact on Johnson & Johnson’s stock. At the time of writing, J&J is exchanging hands at £102.37 in the stock market that translates to a little under 15% decline in 2020 so far.

Its performance in 2019, on the contrary, was reported fairly upbeat with an annual gain of around 15%. The stock opened at £107.70 per share in January 2019 and closed the year significantly higher at £122.50 in December. Johnson & Johnson currently has a market cap of £270 billion with a price to earnings ratio of 21.51.

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