Drug giant pays £20bn for biotech
Following nine months of negotiations, Sanofi-Aventis finally agreed a $20bn price tag for US biotech group Genzyme, in the second-biggest deal in biotech history.
French pharma giant Sanofi-Aventis is buying US biotech group Genzyme, the world's top manufacturer of medicines for rare genetic disorders. After nine months of negotiations, the firms settled on a price tag of $20bn, a 48% premium to Genzyme's pre-bid price. Sanofi will make additional cash payments to Genzyme if the latter hits certain drug development targets. The deal is the second-biggest in biotech history.
What the commentators said
Sanofi, like all drug majors, is facing a decline in revenue as patents on its major sellers expire. Last week it warned sales would fall 10% this year. Genzyme generated sales of $4.5bn in 2009. That's enough to replace around a third of the sales Sanofi is likely to lose over the next three years owing to generic competition, said Reuters.com. Plus the market for rare diseases is growing fast.
Genzyme's share price had fallen amid manufacturing problems. But biotech drugs, unlike traditional pharma's, are hard for generic manufacturers to copy. Still, the price tag is "rich", says pharma industry blog Invivo. Genzyme's products are "mature and facing competition from upstarts" capitalising on the manufacturing missteps. It will be some time before we know whether this is a good deal not just for Genzyme but for Sanofi too.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
SAN €51.50; 12m change -6%
GENZ $74.30; 12m change 33%
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
How to invest in nuclear power
We need nuclear power to go green, says Dominic Frisby. But there is a better option than huge power stations
By Dominic Frisby Published
-
Chase slashes its easy-access savings rate – is it time to switch?
The Chase easy-access savings account has proved popular with savers thanks to its competitive rate and bonus deals. But, as the rate has dropped, has it lost its charm?
By Katie Williams Published