Johnson & Johnson to buy Guidant for $25.4bn

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On the 15 December 2004, Johnson & Johnson announced an agreement to buy Guidant for $25.4 billion.This deal will give Johnson & Johnson a key foothold in cardiac rhythm management with Guidant’s range of defibrillators and pacemakers; Guidant being the number two player in this field only behind the global leader, Medtronic.

The transaction will also strengthen Johnson & Johnson’s position in the multibillion-dollar market for coronary and peripheral stents. Johnson & Johnson’s Cordis company and Guidant are currently competitors in the stent business, but it is planned that they will now become part of a newly created cardiovascular device unit within Johnson & Johnson. According to the companies, the newly created franchise will be named Guidant while the Cordis name will be retained for select businesses.

Currently Cordis have to pay significant royalties to Guidant for the access to monorail technology. Cordis launched CYPHER, the first drug (sirolimus) eluting stent, but has faced a war on two fronts since Boston Scientific gained FDA approval for TAXUS, which is a paclitaxel-eluting stent.

Guidant is a major player in the bare metal coronary stent market but clearance for Guidant to sell its drug-eluting stents in the United States is not expected before 2007. Guidant and Cordis have been working together already as Guidant signed an agreement this year to market CYPHER in the United States while it develops its own drug-eluting stent. Guidant recently strengthened its position in peripheral stents when it became the first company cleared to gain FDA approval to sell carotid stents.

The agreement still requires the approval of Guidant’s shareholders.

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