Sanofi is a 'satisfactory' business with no urgent M&A needs, chairman says

Sanofi sign
Sanofi Chairman Serge Weinberg said this week that the French drug giant doesn’t absolutely need any new purchases, even though the company is scouting a few potential buys.

Sanofi Chairman Serge Weinberg says he likes what his company is achieving and that he doesn't think the drugmaker needs a major M&A deal to meet its goals. Coming at an annual meeting this week, his remarks echoed recent sentiment shared by CEO Olivier Brandicourt, but stand in contrast to last year's attempts at two major deals that Sanofi let slip through its fingers.

Serge Weinberg

While the drugmaker is looking at a few potential pickups, Sanofi has no “absolute necessity” to do a deal, Weinberg said at the company’s annual meeting this week, according to Reuters. Weinberg described Sanofi’s current business structure as “satisfactory.”

Weinberg’s comments come after Sanofi tried and failed to secure Medivation and reportedly Actelion over the last year, ultimately falling short to rivals Pfizer and Johnson & Johnson, respectively. Last summer, Sanofi took a hostile run at Medivation, a company that ended up selling to Pfizer for $14 billion. Then, early this year, Actelion sold to J&J for $30 billion.

Part of the problem with the Actelion deal talks, according to the biotech’s prospectus, was that Sanofi lowered its offer and altered terms after J&J walked away. Those factors, plus the “tenor and content” of the Sanofi meeting, raised “significant uncertainty” about a potential deal with the French pharma. Actelion reengaged J&J and the companies announced a deal about a month later.

Aside from those two pursuits, Sanofi has an interest in buying Boston biotech Flexion in a deal worth $1 billion, according to a source; nothing has come of that potential transaction since those talks were first reported in March.

RELATED: What's wrong with Sanofi's dealmaking approach? To hear Actelion tell it, plenty

What’s been pushing Sanofi to make a deal along the way? For one, its critical diabetes franchise has been struggling—along with other players in the field—as payers apply competitive pressure to get better pricing. Sanofi reported a 7.7% decline in diabetes sales during its most recent quarter.

However, other segments at the pharma firm such as vaccines and rare disease outfit Genzyme are turning in growth, and Sanofi posted an overall revenue increase of 3.5% in constant currencies and constant structure during the first quarter.

RELATED: Sanofi's not running pell-mell toward buyouts, CEO says, after reporting 'quiet' quarter

So, with his belief that things are more or less in order at the drugmaker, Weinberg said at the annual meeting that Sanofi will be “disciplined” as it scouts potential buys. Weinberg’s comments follow a similar sentiment shared by CEO Olivier Brandicourt late last month that Sanofi is “not in a hurry to do M&A.”

Still, on the same investor conference call, R&D head Elias Zerhouni said Sanofi sees "an opportunity in oncology to perhaps acquire some assets that will be complementary to our portfolio," pointing to the drugmaker's position in prostate and breast cancer.

One reason Sanofi has to be optimistic with its current offerings is Dupixent. Slated to be among the top launches of 2017, the Regeneron-partnered atopic dermatitis drug has turned in better-than-expected prescription growth rates in recent weeks.

RELATED: Just what Sanofi and Regeneron wanted: A Dupixent rollout so zippy, it's fueling bigger sales forecasts

Sanofi and Regeneron initially suffered a manufacturing delay with the anticipated blockbuster, but now the med is making headway in its launch. Leerink recently raised its Dupixent sales estimate to $320 million for this year, while Bernstein has predicted peak sales of $4 billion.