Actavis and Warner Chilcott have announced that they are engaged in preliminary discussions regarding a possible merger.

The companies confirmed that talks are being held in response to media speculation which spread after Bloomberg broke the story. The agency cited a person familiar with the process as saying that a bid by Actavis for Ireland-based Warner Chilcott would lower the former's tax burden and help it expand in women’s health.

Actavis and Warner Chilcott issued similar statements stressing that the discussions are at a preliminary stage. The talks come just a couple of weeks after merger talks between Actavis and Canada's Valeant Pharmaceuticals International reportedly broke down but this latest deal looks more likely to succeed, given that a year ago, Warner Chilcott said it was exploring a range of strategic alternatives, including a sale.

Warner Chilcott sales down

News of the talks came hours after Warner Chilcott unveiled first-quarter results which show that net income was flat at $113 million, while revenues fell 13% to $593 million.

Sales of the osteoporosis drug Actonel (risedronate) slid 24% to $111 million, hit by generics in western Europe and Canada and the overall decline in the US oral bisphosphonate market". The ulcerative colitis treatment Asacol (mesalamine) fell 27% to $204 million as Warner Chilcott shifts its marketing push to Delzicol, a new mesalamine product for UC which was approved by the US Food and Drug Administration in February.

The bladder treatment Enablex (darifenacin) slipped 5% to $42 million and sales of the antibiotic Doryx (doxycycline) fell 37% to $19 million, hit by generics in the USA. As for Warner Chicott's contraceptives, Loestrin 24 Fe (norethindrone and ethinyl estradiol) decreased 4% to $93 million, while sales of Lo Loestrin FE soared 86% to $52 million. Estrace (estradiol) for the treatment of menopausal symptoms, brought in $513 million, up 1%.

Earlier this week, the FDA approved Warner Chilcott's new oestrogen/progestin-based oral contraceptive. The product, which does not currently have a name, is expected to be launched in early August.