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Johnson & Johnson, New Brunswick, NJ, has entered into an agreement with Centocor Inc., Malvern, PA, under which the two companies will merge.
In a deal expected to be completed in the fourth quarter of 1999, Johnson & Johnson, New Brunswick, NJ, has entered into an agreement with Centocor Inc., Malvern, PA, under which the two companies will merge in a stock-for-stock exchange valued at $4.9 billion.
"Centocor is an excellent fit with Johnson & Johnson, with major products in cardiology and gastrointestinals that are poised for immediate growth through our network," said Johnson & Johnson board chairman Ralph S. Larsen. "Centocor has products in development in therapeutic categories that include cancer, autoimmune diseases and cardiology, and it will be an important strategic addition to our worldwide pharmaceutical business."
Larsen said that Centocor will retain its name and management and will be a free-standing Johnson & Johnson company.
According to David P. Holveck, CEO of Centocor, the deal will benefit both companies on a variety of levels. "This transaction will bring important benefits to both companies' product lines and development programs, and [it] serves the best interests of our shareholders, employees and customers," Holveck said. "It will enable our shareholders to realize good value for their Centocor holdings and continued growth through ownership in shares of Johnson & Johnson. Employees will benefit from increased resources to achieve even greater scientific and commercial successes. Our customers will benefit from an advanced ability to bring therapeutic products to patients with vascular autoimmune diseases and cancer."
Holveck will have continued responsibility for Centocor, a Johnson & Johnson company, with the title of company group chairman.
Currently, Centocor copromotes several of its products with other pharmaceutical companies. For example, Indianapolis-based Eli Lilly and Co. has worldwide marketing rights, excluding Japan, for Centocor's anti-platelet agent, ReoProÂ® (abciximab) and Schering-Plough Corp., Madison, NJ, has much of the worldwide marketing rights to Remicadeâ¢ (infliximab), Centocor's treatment for Crohn's disease. According to Christopher Allman, manager of corporate public relations for Centocor, these promotional agreements will be unaffected by the merger. "Johnson & Johnson has said that they will honor our agreements with our partners, so we don't anticipate any changes to those contracts," Allman said. "We've been copromoting with Lilly for two years, and I believe the initial contract is for five. So certainly at the end of five years we would review that, the same way we would regardless of whether Johnson & Johnson is involved."
As for Centocor's sales force of 500, Allman sees only positive benefits for them because of the merger, noting that, if anything, there would be an increase in the number of sales reps detailing Centocor products, not a reduction in Centocor's sales force. "Having a parent company like Johnson & Johnson means that we'll have a lot more resources than what we currently have," said Allman. "For example, Janssen, which is a Johnson & Johnson company, is already established in gastroenterology through some of its products so it would seem that there would be some synergies between those reps and what we're doing for Crohn's disease. There could be some new synergies there with our new parent." PR