Johnson & Johnson suspends plans of buying Takeda Pharmaceutical’s TachoSil

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Apr 11, 2020
Updated: Apr 28, 2020
  • J&J and Takeda Pharmaceutical mutually cancel the TachoSil deal on regulatory concerns.
  • Johnson & Johnson is the manufacturer of the only other U.S approved fibrin sealant patch.
  • EU regulators had also raised anti-competitive concerns regarding the deal in late March.

Johnson & Johnson (NYSE:JNJ) suspended its plans of buying Takeda Pharmaceutical’s TachoSil on Friday. The American multinational corporation cited regulatory concerns for abandoning the deal.

Takeda Pharmaceutical is the largest drug manufacturer in Japan. Takeda had revealed in May 2019 that J&J’s subsidiary, Ethicon, wishes to buy its surgical patch that is used to control bleeding for £320 million.

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Johnson & Johnson’s representative was reported commenting on Friday:

“Ethicon and Takeda have mutually decided to terminate the TachoSil transaction, agreeing that it was the right decision given the regulators’ concerns.”

FTC Raised Anti-competition Concerns Regarding The Deal

Chairman Joseph Simons of the Federal Trade Commission (FTC) released a statement earlier on Friday highlighting regulatory concerns regarding the J&J-Takeda deal. Simons said that the regulatory issues stem from the fact that J&J is the manufacturer of the only other fibrin sealant patch that is approved for use in the United States. J&J’s patch is available in the U.S by the name of Evarrest and is widely used during surgeries to control bleeding.

According to Simons’ email:

“Staff had significant concerns about the likely anticompetitive effects and had recommended that the Commission block the transaction. Now that the deal has been abandoned, patients and surgeons will continue to benefit from competition.”

The deal was also under scrutiny when the antitrust regulators of the European Union launched a full-scale investigation in the last week of March citing similar concerns. The EU antitrust regulators said that high development costs can be expected to raise unnecessary challenges for competitors in entering the market.   

J&J’s Performance In The Stock Market

Johnson & Johnson opened the new year in the stock market at £117 per share. As Coronavirus cases rose sharply in the United States in March pushing the government into expanding lockdowns and restricting people to their homes, the stock dropped as low as £89.50 per share on March 23rd.

The American pharmaceutical company has, however, posted significant recovery in the past 3 weeks. At £113.47 per share, J&J is currently less than 4% down in the stock market year to date. In 2019, the stock had recorded an annual gain of around 15%.

At the time of writing, Johnson & Johnson has a market cap of £299 billion and a price to earnings ratio of 25.07.

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