Ceva takes vaccines off BI’s hands to clear way for $12.5B Sanofi asset swap

Pigs
Ceva Santé Animale is acquiring several vaccines for farm animals from Merial.

One of the priorities at France’s Ceva Santé Animale is to boost the company’s presence in the rapidly growing market for vaccines to prevent emerging diseases in livestock and pets. The company just took another step towards fulfilling that goal, announcing on Oct. 13 that it will pick up a portfolio of animal vaccines and drugs from Sanofi’s ($SNY) animal health unit, Merial, which is in the process of being acquired by Boehringer Ingelheim as part of a $12.5 billion asset swap.

The deal comes one week after Eli Lilly’s ($LLY) Elanco picked up BI’s dog and cat vaccines for $885 million. The financial terms of the sale to Ceva were not disclosed. The agreement is contingent upon the approval of the European Commission and other regulatory agencies, according to a press release.

As part of the deal, Ceva will receive nine products, including ex-U.S. sales of the pig vaccine Circovac and the equine osteoarthritis treatment Equioxx, as well as Progressis to prevent Porcine Reproductive and Respiratory Syndrome and Parvovax to prevent parvo in pigs. All related manufacturing processes and R&D will be transferred to Ceva, the companies said.

Ceva, No. 8 on Fierce’s list of the top 10 animal health companies of 2015, has been angling to move into the top 5 by 2020--and making several strategic moves to get there. It acquired fellow French vaccine maker Biovac and India’s Polchem, a leader in that country’s dairy and poultry industries. It is also boosting its presence in the U.S., investing $8 million in 2014 to expand its operations in Lenexa, KS. It is one of the companies that the USDA tapped last year to help build a stockpile of avian flu vaccines.

The Ceva purchase will also help clear the way towards regulatory approval of BI’s deal with Sanofi, in which it is receiving the company's animal health assets in return for its consumer health portfolio. In a recent interview with Pig Progress, BI Managing Director Joachim Hasenmaier said giving up the company’s over-the-counter drug segment was “a very tough decision,” but that ultimately he believes the addition of Merial will make BI a global leader in animal health.

Much of the gain will come from the companion animal side of the business, where BI has traditionally been a bottom-tier player. Acquiring Merial will bring in such big brands as the anti-parasite products for dogs Heartgard and NexGard. BI expects the deal will double its animal health sales to $4.2 billion a year.

There are also synergies in the food-animal side of the business, Hasenmaier said. For example, Merial has a bigger presence in the poultry market than BI does, but BI is more prominent in products for treating pigs. Both of them have been working on improving their cattle portfolios and “together we significantly strengthen” that effort, he said.

The deal will expand BI’s global footprint, which will allow the company to be more responsive to the needs of customers around the world, Hasenmaier added. “To build global hubs is part of our animal health strategy at BI, and this would be vastly accelerated through the acquisition of Merial. We already have a strong presence in the U.S.,” as well as in China, he said. Apart from our veterinary research centre in Hanover, we are missing this presence in Europe.” Merial will fill that hole, he said, and “perfectly complements that strategy of having the full value chain on a large scale in the U.S., Europe and China.”

- here’s the release
- read more from Hasenmaier at Pig Progress

Special Report: Top 10 Animal Health Companies of 2015 – Boehringer Ingelheim Vetmedica
Special Report: Top 10 Animal Health Companies of 2015 – Ceva Santé Animale

Related Articles:
Lilly picks up BI’s pet vaccines for $885M ahead of BI-Sanofi asset swap
Sanofi, Boehringer to create new animal health giant in $12.5B asset swap
Ceva builds on vaccine expertise with Biovac buy
Ceva vows an ‘extremely responsive’ approach to U.S. animal health market