News of the talks comes two weeks after Actavis pulled out of talks to merge with rival Canadian generics maker Valeant Pharmaceuticals over concerns about the price, and the speed at which a deal was taking shape. The talks with Warner Chilcott are reported to be ‘at an early stage’ and could therefore still break down, but if successful, would allow Actavis to branch out into brand-name women’s health, gastroenterology, urology and dermatology, primarily in North America. The deal could also reduce Actavis’ tax bill, with the Irish company having a lower tax rate.

Warner Chilcott, valued at about US$3.8 billion, tried to sell itself in 2012 to Germany-based pharma giant Bayer, so its a willing target for Actavis.

Warner Chilcott’s products include oral contraceptives Ovcon 35 (norethindrone/ethinyl estradiol) and Estrostep FE (norethindrone/ethinyl estradiol), and acne treatment Doryx (doxycycline hyclate). The company reported first-quarter revenue of US$593 million on 10 May 2013, a 13% drop from a year earlier, after halting trade shipments of its colitis drug Asacol (mesalamine) in the US to focus marketing efforts on its delayed-release version of mesalamine, Delzicol, which was approved by FDA in February 2013. FDA approved Warner Chilcott's new oestrogen/progestin-based oral contraceptive in May 2013. The drug, which does not yet have a name, is expected to be launched in early August 2013.

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