Just a few weeks into 2025 and we got our first major merger news courtesy of Johnson & Johnson (NYSE: JNJ), which has made a $14.6 billion bid for Intra-Cellular Therapies (NASDAQ: ITCI).
Intra-Cellular is developing treatments for central nervous system disorders like depression, bipolar disorder, schizophrenia, generalized anxiety, and Parkinson’s disease.
Caplyta, its main drug, is a pill already approved for schizophrenia and bipolar depression and proposed for major depressive disorder, as well. The treatment generated $464 million in sales in 2023.
J&J will also acquire Intra-Cellular’s clinical pipeline, which includes several medications being tested for Parkinson’s disease, pain, opioid addiction, and mood disorders.
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What's Driving J&J's Intra-Cellular Acquisition
The move will help J&J mitigate lost revenue from other drugs in its portfolio as patents expire and competition increases.
For example, Stelara — which treats moderate to severe inflammatory conditions like plaque psoriasis, psoriatic arthritis, Crohn's disease, and ulcerative colitis — generated $11 billion in sales 2023. But many of its key patents expired that same year and the drug now faces increased competition from clones and generic brands.
The company will face a similar crisis in 2029, when Darzalex — blockbuster antibody treatment for rare blood cancers — comes off patent. That could cost the company as much as $17 billion in revenue.
J&J has been leaning on acquisitions to compensate for these patent cliffs, which is typical for an industry where M&A activity is rampant.
2024 deals included the $1.7 billion acquisition of V-Wave, which develops heart failure treatment, and the acquisition of Shockwave Medical for $13.1 billion. Those have helped boost the company’s medical device sales.
J&J also acquired Yellow Jersey for $1.25 billion and Proteologix for $850 million. These acquisitions expanded the company’s portfolio with treatments for eczema and immune-mediated diseases, respectively.
Still, on the whole, M&A activity in the pharmaceutical and biotech sector has hit a bit of a lull of late.
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The industry bore witness to 30 takeovers last year totaling $45 billion — down significantly from $84 billion in 2023.
Notably, 2023 was highlighted by Pfizer’s $43 billion takeover of Seagen. There was nothing on that scale in 2024, as last year’s biggest deal was Novo Holdings’ $16.5 billion buyout of Catalent.
Going forward, we may not see any massive $40 billion deals on par with that 2023 Pfizer acquisition, but mid-range deals like the one J&J struck in the range of $10 billion–$20 billion could proliferate.
The early sense is that regulatory obstruction will ease under President Trump’s administration.
Trump has nominated Andrew Ferguson to head up the FTC. Ferguson will likely be less of an interventionist than his predecessor, Lina Khan, who took a hawkish stance on drugmakers and heavily scrutinized health care-related M&A activity.
Things might also ease up at the FDA just as J&J works to secure the agency’s approval for its monoclonal antibody — nipocalimab — and its Alzheimer’s treatment, posdinemab.
Nipocalimab was developed by Momenta Pharmaceuticals, which J&J acquired back in 2020. It could be another billion-dollar blockbuster treatment if it’s approved.
A more accommodative regulatory environment and shrewd dealmaking could help J&J turn its fortunes around, as the stock has slumped 10% over the past year.
And the same is true for the entire biopharma industry.
Fight on,
Jason Simpkins
Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more...
In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor's page.
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