|Actelion CEO Jean-Paul Clozel|
In the wake of AbbVie's ($ABBV) $55 billion purchase of Ireland's Shire ($SHPG), which should slash the company's tax rate by more than a third, analysts are abuzz over which foreign company will be next on Big Pharma's buy list. Among the targets: Switzerland-based Actelion ($ATLN). Besides offering the overseas address, Actelion has a hot new drug to treat pulmonary arterial hypertension (PAH) and more in the pipeline.
But Actelion CEO Jean-Paul Clozel will have none of it. Clozel has been pooh-poohing takeover talk for months, and now he says he has more evidence that the company can stay independent: blowout results for the first half of 2014. Actelion's first-half sales grew 17% year-over-year to 993 million Swiss francs ($1.1 billion), and core earnings hit 233 million francs ($258.5 million), handily beating analyst estimates of 171 million.
Clozel says Actelion's investors aren't interested in a big takeover. "Actelion--having a reasonable size, a culture of innovation and science--has the best chance to grow in a healthy way as an independent company and this benefits the shareholders," he told Reuters.
Most of the company's strong first-half performance stemmed from U.S. price hikes on Tracleer, its older PAH drug, along with lower-than-expected Medicaid rebates on the drug. What's more, Actelion's Tracleer follow-up, Opsumit, had a mighty strong launch, delivering sales in the first half of 53 million Swiss francs ($58.8 million). Tracleer loses its patent exclusivity next year.
Actelion execs are so confident in Opsumit that they raised the company's full-year outlook, saying they now expect core earnings growth in the mid-teens, beating their earlier forecast of single-digit growth. "We are really very confident that Opsumit is not only going to be replacing but also topping Tracleer," Clozel told Reuters.
It's no wonder Actelion is on top of everyone's list of M&A targets. In addition to the potential upside from Opsumit, the company continues to surprise investors with positive results from its late-stage trials of another PAH drug, selexipag. Last month, the company said the drug reduced the risk of morbidity or mortality by 39% over placebo during the latest trial, surprising everyone, including Clozel. Actelion's shares gained 15% on the Swiss exchange, reaching a high not seen since the company's 2000 IPO.
Actelion may be getting too big for any U.S. company to benefit from a tax inversion by buying it, analysts tell Reuters. And Switzerland is reforming its tax laws, which could also deter potential U.S. suitors. But what about the European pharmas? Hobart Capital Markets trader Justin Haque tells Reuters he has a whole list of companies that might benefit from buying the Swiss high-flyer. "Actelion is the answer to AstraZeneca's chronic pipeline shortage, GlaxoSmithKline's need for expansion and would be an easy morsel for Roche or Novartis to digest," he said.