US healthcare giant Johnson & Johnson has backed out of a deal to buy medical device maker Guidant, by electing not to raise its final $71 a share bid to match rival suitor Boston Scientific's offering of a whopping $80 per share, or $27.2 billion.
The move was widely expected by industry observers, with the final nail in the coffin perhaps being yesterday's revelation by Guidant that another 54,000 of its early-model pacemakers may have faults that could cause them to fail with 'serious health consequences.' This also lends further support to the view that the Guidant's purchase price is a little on the high side.
In other news, the group said its net profit rose 9% in the fourth quarter of 2005, although revenue declined for the first time in more than 20 years, dipping 1%.
Net income came in at to $2.2 billion, while sales dipped to $12.6 billion as J&J’s core pharmaceuticals division did worse than expected.
There was good news for the cardiovascular stent business, as J&J’s Cypher (sirolimus) drug-eluting stent overtook its arch rival Taxus (paclitaxel) from Boston Scientific, winning 51% of the market. In the third quarter, Boston Scientific’s product had a 55% market share.
Overall, the medical devices and diagnostics businesses achieved fourth-quarter sales of $4.8 billion in 2005, representing an increase over the prior year of 3.7%. Revenues at J&J’s Cordis unit, which makes the Cypher stent, rose 10% in the quarter to $1 billion. J&J did not disclose actual Cypher sales.
Pharmaceutical sales fell 6% in the quarter to $5.5 billion, with US sales were dented by more than 10%, as generic competition hit a number of products, including Duragesic (fentanyl transdermal system) for chronic pain, analgesic Ultracet (acetaminophen/tramadol hydrochloride), the antifungal Sporanox (itraconazole) and J&J’s hormonal contraceptive range.
J&J’s sales are expected to rise by 6% to 8% this year, according to chief financial officer Robert Darretta.
- Meanwhile, J&J has been cleared to complete its $518 million purchase of insulin pump company Animas in the USA by antitrust authorities. The transaction isdue to complete next month, subject to shareholder approval.