Johnson & Johnson (J&J New Brunswick, NJ) announced last week that it was in “advanced negotiations” for a potential public offer for the Dutch biopharmaceutical company Crucell (Leiden, The Netherlands). Although not yet making a formal bid, J&J said it would consider an offer of EUR 24.75 ($32.49) per share for Crucell in an all-cash transaction of approximately EUR 1.75 billion ($2.30 billion) to acquire all the shares of Crucell that it does not already own. J&J now holds a 17.9% stake in the company. If the deal proceeds as planned, the move would enable J&J to develop a vaccine business, something the company is seeking to build within its biopharmaceutical capabilities.

In making the announcement, J&J said in that “Crucell’s strength in the manufacture, discovery, and commercialization of vaccines would create a strong platform for Johnson & Johnson.” Crucell is focused on the research, development, production, and marketing of vaccines, proteins, and antibodies. In 2009, Crucell distributed more than 115 million doses of vaccine, which now largely go to the developing world, and which includes Quinvaxem, an important vaccine in the company’s revenue position. Quinvaxem is a pediatric combination vaccine against five childhood diseases (diphtheria, tetanus, pertussis, hepatitis B, and Haemophilus influenzae type B (hib)). In August 2009, Crucell announced contracts worth $300 million through 2010–2012 for Quinvaxem, which were in addition to the $500 million in contracts obtained by the company during 2007-2009, according to a Crucell press release.

Other vaccines in Crucell’s portfolio include a vaccine against hepatitis B, a virosome-adjuvanted influenza vaccine, an oral anti-typhoid vaccine, an oral cholera vaccine, and an aluminum-free hepatitis A vaccine. Crucell’s main vaccine technologies include cell-culture, recombinant live adenovirus vector-based, virosome, recombinant Paramyxovirus (i.e., recombinant measles vectors), and an expression system based on Hansenula polymorpha technology. The company’s cell-culture-based technology, PER.C6,  is also used in the production of proteins and monoclonal antibodies. DSM Biologics has co-exclusive rights with Crucell to license the PER.C6 human cell line as a production platform for recombinant proteins and monoclonal antibodies. Crucell also licenses the PER.C6 technology to J&J and other biopharmaceutical companies.

J&J’s intention to develop a vaccine business illustrates once again the changing market dynamics for biopharmaceuticals overall and for vaccines specifically. J&J is already positioned in biologics through its biopharmaceutical subsidiary, Centocor Ortho Biotech, but with its interest in Crucell, J&J wants to build its position in vaccines. Vaccines have historically been viewed as a commoditized business, but their value has shifted because of the substantial funding they’ve received from organizations such as the Bill and Melinda Gates Foundation. Although vaccines still represent a relatively small part of the overall pharmaceutical market, they represent a part of the growth strategy for certain pharmaceutical majors such as sanofi-aventis, GlaxoSmithKline, Novartis, Pfizer (through its recent acquisition of Wyeth), and Merck & Co. In an investor-relations presentation on vaccines in December 2009, sanofi aventis estimated the vaccine market at EUR 15 billion ($21 billion) in 2008 and projected that the market would reach EUR 23 billion ($32 billion) by 2013. When you consider that the global pharmaceutical market as a whole was estimated at $837 billion in 2009, according to IMS, vaccines are still a niche business, but one that potentially represents significant growth for select drug companies.

So we will see how the Crucell–J&J deal evolves. In early 2009, Crucell was in talks over a possible Wyeth takeover, but these discussions were discontinued following Wyeth’s decision to be acquired by Pfizer. Will J&J prove a more faithful suitor?