Merger and acquisition activity heated up in the healthcare sector Tuesday with drug maker Cephalon saying it will accelerate its entry into the European oncology market by acquiring privately held biopharmaceutical company Zeneus Holdings for about $360 million in cash.

Also on Tuesday, Johnson & Johnson said it will proceed with its $21.5-billion bid for device maker Guidant, despite Boston Scientific’s attempts to trump the offer with a higher $25-billion bid for Guidant (see BSX Bids $25B for Guidant).

And the board of directors of breast implant maker Inamed said Tuesday Botox-maker Allergan’s $3.2-billion bid for the company is superior to an initial offer made by acne treatment maker Medicis Pharmaceutical for more than $2.8 billion in March (see Allergan Bids $3.2B for Inamed).

In the Zeneus deal, Frazer, Pennsylvania-based Cephalon said it will acquire all outstanding shares of the Oxford, England-based biopharma firm.

Zeneus already has several commercialized products on the European market including Myocet, a cardio-protective chemotherapy agent used to treat late-stage breast cancer. Other products include Targretin, a treatment for cutaneous T-cell lymphoma, where certain cells of the lymph system become cancerous; and Abelcet, an anti-fungal treatment.

Zeneus also has 12 other marketed products and several investigational compounds in development.

“This agreement will significantly expand our product portfolio in Europe and is consistent with our strategy and recent transactions in the United States that create a platform from which we will grow our oncology business,” said Dr. Frank Baldino Jr., Cephalon’s CEO. “Zeneus Pharma is an excellent strategic fit for our company.”

Cephalon shares fell $0.24 to $50.65 in recent trading.

Cephalon expects the transaction to generate about $100 million in additional sales next year. The transaction is expected to close early 2006.

J&J Still Wants Guidant

Challenged by a higher rival bid, Johnson & Johnson said it still wants pacemaker and defibrillator maker Guidant.

On Monday, Boston Scientific bid $72 per share, or about $25 billion in cash and stock for Guidant, beating Johnson & Johnson’s bid for Guidant by 14 percent, or about $3 billion.

Boston Scientific’s bid adds another twist to an already troubled acquisition bid. J&J threatened to walk away from the Guidant deal in November because of concerns over product recalls (see J&J May Leave Guidant at Altar). J&J agreed in the following weeks to buy Guidant for $21.5 billion—15 percent below its original bid (see J&J Gets Guidant for $21.5B).

Despite the hard times, J&J said Tuesday it wants to move forward with the deal.

“We are committed to the long-term investment of resources that will be required to enable Guidant to pursue a full and complete recovery in the cardiac rhythm management category, to achieve and sustain leadership in drug-eluting stents, and to grow the business for the future,” said William C. Weldon, J&J’s CEO.

The company continues to believe that the acquisition as agreed to by the two companies “represents full and fair value,” said Mr. Weldon.

J&J did not indicate whether the company is planning to counter Boston Scientific’s bid.

J&J stock fell $0.51 to $60.54 in recent trading. Guidant shares were down $0.87 to $67.11. And Boston Scientific stock was up $0.05 to $26.40.

Inamed Board Favors Allergan

In the battle to consolidate the cosmetic treatment industry, board members of Inamed, which also makes cosmetic treatments, said Tuesday that Allergan’s acquisition bid outshines a previous offer made by Medicis Pharmaceutical.

Inamed’s board said the merger proposal from Allergan is fair to Inamed stockholders and constitutes a “Company Superior Proposal” when compared to the pending merger with Medicis.

In November, Allergan came in with an offer it said was $450 million above Medicis’ offer made in March (see Inamed Favors Allergan Bid).

However, Inamed said it was officially remaining neutral on the deal and would not make any recommendation to its stockholders, in part because Inamed is unable to enter into an agreement with Allergan until Inamed's merger agreement with Medicis is terminated.

Inamed shares rose $0.04 to $85.33 in recent trading. Allergan stock rose $1.16 to $104.94. And Medicis stock was up $0.65 to $34.32.