Observers are suggesting that the USA’s Salix Pharmaceuticals could become a takeover target after the country’s regulators gave the thumbs-up to the antibiotic Xifaxan for a disorder caused by chronic liver failure.

The US Food and Drug Administration has granted marketing approval for Xifaxan (rifaximin) tablets for reduction in the risk of overt hepatic encephalopathy (HE) recurrence in patients aged 18 or older. The disorder occurs frequently in patients with cirrhosis as a result of end–stage liver disease and there are more than 600,000 cases of cirrhosis in the USA, making it the third most common cause of death, after heart disease and cancer, in people aged 45–65.

Xifaxan has been granted orphan drug status by the FDA for HE and is already approved as a treatment for travellers' diarrhoea. Salix says that it will start shipping the product to wholesalers in early May and complete the training of its 160–member sales force soon after.

Analysts believe that this new indication could push sales of Xifaxan up to the $1 billion mark (full-year 2009 sales came in at $117.9 million) and many have suggested that an acquisition of the company could be on the horizon. Corey Davis at Jefferies & Co issued a research note saying that Salix has “proved it has the credibility to execute an on-time FDA approval, adding that “attention will quickly turn to the late-stage trial data for Xifaxan in irritable bowel syndrome, a much larger commercial opportunity”.