Sanofi-Aventis (NYSE: SNY) has plenty of potential competition in a bid for Genzyme (NASDAQ: GENZ). Big Pharma has been stepping up its interest in rare diseases, which Genzyme treats with several lucrative drugs. And there's not a major drugmaker out there that doesn't need new revenues to help offset impending generic competition for blockbuster meds.
Friday's news that Sanofi is in exploratory talks for a Genzyme buyout was followed by the revelation that GlaxoSmithKline has made a "casual" foray in the same direction. CEO Andrew Witty appeared to downplay his interest in a deal Genzyme's size--he emphasized to the French newspaper La Tribune that he's looking for "small targeted deals"--but as the Wall Street Journal points out, GSK has a unit dedicated to niche diseases and would have no trouble getting financing together.
Then there's Johnson & Johnson, analysts tell the WSJ. Swallowing a company as big as Genzyme would be a bit out of character for J&J, but it's not unprecedented. But why would J&J take on Genzyme's very public manufacturing troubles when it's in a quality-control pickle on its own at its McNeil Consumer Healthcare unit?
"The question is: who wants Genzyme the most?" UBS analyst Gbola Amusa tells Reuters. "Our view is that Sanofi is likely to emerge, simply because they are relatively deficient in biotech capabilities versus their peers, and they need to better globally diversify their R&D engine."
Whoever makes an offer for Genzyme, the bid couldn't be a bargain-basement price, sources tell the Journal. The company's stock has been deflated by its struggle to get manufacturing back on track and by continuing shortages of its key drugs. But Genzyme would only entertain a bid that "reflects a possible Genzyme turnaround," the sources say. Considering other, similar deals, the company could go for as much as $27 billion, analysts say. Whether Sanofi (or another bidder) agrees is another question.
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