* Proposes ex-Novartis veteran James Shannon as chairman
* Shannon says wants to keep all options open for company
* Elliott proposing six new board members at May 5 AGM
* Wants special investigation on approaches for Actelion
* Actelion shares up 0.1 percent, underperform sector index
(Adds comment by Actelion; updates share price)
By Katie Reid
ZURICH, March 17 (Reuters) - Activist hedge fund Elliott Advisors is tapping six pharma executives and M&A experts to stand for election to the Actelion board, stepping up pressure for major changes at Europe's biggest biotech firm.
The New York-based fund, Actelion's largest shareholder, has urged the Swiss group to consider putting itself up for sale after a spate of product setbacks last year.
Some analysts, however, were sceptical about the strength of Elliott's candidates and questioned its ability to force through a shake-up.
Elliott, Actelion's largest shareholder, wants former Novartis veteran James Shannon to take over from Robert Cawthorn as Actelion chairman at the Swiss biotech group's annual general meeting (AGM) on May 5.
Shannon told Reuters a sale of the company was not the only option, but Actelion needed to move away from its current "high-risk" strategy in order to secure value for shareholders and to create more job security for Actelion employees.
The hedge fund is also calling for Actelion founder and former Roche scientist Jean-Paul Clozel to step down from the board but remain as chief executive.
In addition to Shannon, Elliott has proposed Peter Allen, Anders Haerfstrand, Robert Hock, Elmar Schnee and Hans-Christian Semmler -- all figures with drug industry or investment banking experience -- as candidates to the board.
At 1353 GMT Actelion shares were up 0.1 percent at 48.63 francs, while the Stoxx 600 Europe healthcare sector index was up 1 percent.
"We do not see extraordinary experience or even any particularly appealing track record in the candidate directors proposed by Elliott," Helvea analyst Olav Zilian said.
"Either their experience is limited to smaller-sized companies or, those who have been employed at large pharmaceutical companies have a questionable track record."#
Shannon left Novartis in 2008 and was criticised by some analysts for failing to get blockbuster drug hopeful Galvus to market in the United States.
PRESSURE BUILDING
Pressure from Elliott, which owns nearly 6 percent of the $7 billion company, has been mounting ahead of Actelion's AGM -- but the company recently won support from another significant shareholder, Rudolf Maag, who holds 4.2 percent.
Maag and other big shareholder BB Biotech were not immediately available to comment on Elliott's proposals.
Actelion said in a statement its board of directors had taken note of the requests and would provide shareholders with the full list of agenda items and recommendations in due course.
Actelion, which has hired Goldman Sachs and Credit Suisse to advise it, is determined to stay independent, though some analysts say it could be the next pharma takeover target after Sanofi-Aventis's $20 billion-plus acquisition of Genzyme.
Elliott said it wants a special investigation to ascertain whether the board has received any approaches for the company since Jan. 1, 2010 and how the company dealt with them.
"We have been clear from the beginning that we have deep concerns about the company's current 'wait and see' strategy," Elliott said in a statement.
Clozel has built Actelion into a major force on the back of Tracleer, a $1.8 billion-a-year drug for a rare but deadly lung disorder.
Some investors are worried Actelion has not done enough to secure future revenue drivers, given the failure of other experimental medicines.
Actelion's next big hope is macitentan, which could reach the market in 2013 and may be a $1 billion-plus product.
Shannon said it would be wrong to exclude any options for the company.
"I do not believe a sale is the only option for the company," Shannon said, adding its strong cash position could allow it to go for an acquisition itself, while it could also buy in products or merge with another company. (Editing by Ben Hirschler and Alexander Smith)