Sanofi's Brandicourt mulls pulling the plug on Merck JV: Bloomberg

Sanofi CEO Olivier Brandicourt

Back in 1994, Merck ($MRK) and Pasteur Merieux Connaught--now Sanofi Pasteur--teamed up on a joint venture to develop and market vaccines in Europe. Now, as Sanofi ($SNY) chief Olivier Brandicourt reorganizes the French pharma's operations in a cost-cutting bid, the 21-year-old partnership could be on the chopping block.

According to unidentified sources close to the situation, Brandicourt is reconsidering the Lyon, France-based JV because it lacks promise in its pipeline, Bloomberg reported. The JV, Sanofi Pasteur MSD, reported about $330 million in revenues for the first half of last year, according to Bloomberg. The company is the leading vaccines provider in Europe, delivering roughly 69 million doses each year to customers in 19 countries.

The two companies own equal stake in Sanofi Pasteur MSD, which markets in Europe the second- and third-best selling vaccines worldwide: Gardasil and Fluzone/Vaxigrip. The former was developed at Merck and the latter at Sanofi. Despite the success of these top sellers, sales have grown in only one of the past 7 quarters, according to Bloomberg.

Merck and Sanofi are both vaccine powerhouses: New Jersey-based Merck snagged the top vaccinemaker spot in 2014 with $6.25 billion in vaccine revenue and the French pharma came in close behind with $5.84 billion.

So while dissolving their union may not hit Merck and Sanofi as hard as it would a pair of companies with less robust vaccine offerings, an unidentified source quoted by Bloomberg commented that "unraveling the venture" would likely be a thorny business. Even though a split could see Merck losing the European rights to Sanofi's vaccines and vice versa, the companies are doing plenty on their own to continue competing on the world stage.

Sanofi is rolling out the world's first dengue vaccine, Dengvaxia, and on Tuesday launched its program to develop a vaccine against Zika virus. Merck licensed NewLink Genetics' ($NLNK) Ebola vaccine in 2014 and brought it to a novel Phase III "ring" study, in which the candidate posted 100% efficacy. It plans to submit the vaccine for regulatory approval in 2017.

Brandicourt came on board at Sanofi in April last year and pledged in November to cut €1.5 billion in costs. The pharma has been making workforce reductions since 2008, and the latest round of cuts, announced on Tuesday, tally more than 500. These latest cuts could affect jobs in manufacturing and vaccines.

- here's the Bloomberg article

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