Pharmaceutical firm Johnson & Johnson is attempting to pull out of a £1.3 billion blockbuster drug partnership with Schering-Plough following the announcement of buyout plans.
Schering-Plough is being sold to one of the world’s largest drug makers, Merck & Co, in a deal worth £26.65 billion.
Johnson & Johnson (J&J) has now notified Merck that it plans to seek arbitration on whether it can pull out of the arrangement over the arthritis treatment Remicade. J&J and Schering-Plough currently split the £1.3 billion revenue from the drug.
Merck and Schering-Plough have structured their deal as a reverse merger, allowing Schering-Plough to remain as a surviving entity and avoid triggering terms in J&J’s deal with Schering that allow it to pull out of the Remicade venture and take all its revenue if control of Schering changes hands.
Under the existing deal, Schering-Plough has rights to sell the drug overseas. The joint venture also includes the arthritis drug golimumab, approved by the US Food and Drug Administration in April.
Analyst Steve Brozak, of WBB Securities, said: “We know J&J wants something, and we know that Merck and Schering-Plough are going to defend. The question is what will be the ultimate agreement.”
Copyright Press Association 2009