Rumours have emerged that French pharmaceutical giant Sanofi-Aventis is in the early stages of planning a reported $20 billion acquisition with the potential target thought to be US-based.
Giles Somers, senior healthcare analyst at Datamonitor, comments: “Based on current market capitalizations and strategic fits, Datamonitor considers that in terms of prescription pharmaceutical companies, the unidentified target could be one of Biogen Idec, Allergan or Genzyme.
“Currently capitalized at $13.3 billion, allowing for a premium, an acquisition of Genzyme would likely end up somewhere in the region of $20 billion. Similarly, Biogen Idec has a market capitalization of $12.5 billion, while at $17.9 billion, Allergan would potentially require somewhat more than $20 billion.
“Sanofi-Aventis has completed numerous acquisitions over the past 2 years as part of a diversification strategy implemented since the appointment of CEO Chris Viehbacher in September 2008. To date, the majority of these acquisitions have taken place in the generics, consumer healthcare and vaccine sectors as the company looks to expand its presence in areas that both benefit from high-growth potential but are also insulated from the competitive threat of patent expiration and generic competition.
“If suggestions of an imminent $20 billion acquisition are true, however, this would signal a notable statement of intent by the company as it looks to re-shape the focus of its core prescription pharmaceuticals business, building on the major overhaul of the company's internal R&D pipeline last year.
Potential Targets:
Allergan represents a fit with Sanofi’s recent activity in the ophthalmology space, following the acquisition of Fovea and gene therapy deal with Oxford Biomedica. However, Datamonitor believes that the motivation behind these deals was the high unmet needs addressed by these companies’ treatments rather than a desire to build a wider presence in ophthalmology per se.
Biogen Idec would bring Sanofi-Aventis Avonex and Tysabri, leading treatments for multiple sclerosis. Sanofi co-promotes competing product Copaxone in the EU until 2012 when Teva will regain full rights. (US rights were returned to Teva in 2008.). Biogen Idec would also provide biologic capabilities, particularly in monoclonal antibodies.
Genzyme’s business is focused on specialized, niche disorders. The company’s share price has been knocked over the past year by manufacturing issues and as such providing an opportunity to acquire the company at a less demanding price. Datamonitor forecasts strong revenue growth for Genzyme at 11.1% CAGR 2009–15, compared to 3.5% for Allergan and a slight decline for Biogen Idec over that period. Genzyme, like Biogen Idec, offers a platform for further expansion into the biologics sector. Therefore, combining a good strategic fit with strong growth prospects and a depressed stock price, Genzyme can in some ways be seen as the most attractive target for Sanofi of the three companies discussed, price allowing.