|Sanofi CEO Chris Viehbacher|
While other companies are hiving off large pieces of their operations to get fit and focused, Sanofi has decided just to clean out its closet. By selling off a number of older products, it can make room for the kind of bolt-on deals CEO Chris Viehbacher on Tuesday said interest him.
Sources tell Reuters that Sanofi ($SNY) has been working for several months with advisor Evercore Partners, which is out pitching a portfolio of Sanofi's "mature" drug products to generic drugmakers and specialty pharma companies. Those in the know told the news service that the drugs generate in the neighborhood of $3.7 billion in annual sales all together and Sanofi figures it can sell them for twice that.
During an earning call with reporters Tuesday, Viehbacher said he wasn't interested in getting into the kind of major asset swaps, sales and pickups that many of his peers are in the process of making, Bloomberg reported. He dodged questions about the fact that Sanofi's name has come up as a possible white-knight buyer for Allegan ($AGN), which is trying to elude a $45.7 billion buyout by slash-and-burn specialist Valeant Pharmaceuticals ($VRX).
"There's lots going on in the environment. That doesn't mean it changes our strategy on M&A," Viehbacher said (as quoted by Bloomberg).
Viehbacher's assessment of the market was a bit of an understatement given that Pfizer ($PFE) has a nearly $100 billion offer on the table for U.K. drugmaker AstraZeneca ($AZN), that Merck ($MRK) is selling its consumer health biz for what is expected to be about $14 billion and that Novartis ($NVS) just did a four-part deal with Eli Lilly ($LLY) and GlaxoSmithKline ($GSK). Novartis is picking up GSK's oncology assets for as much as $16 billion and the trade of its vaccine unit, and the two are combining their OTC operations. Separately, the Swiss drugmaker is selling its animal health business to Lilly for $5.4 billion.
Other drugmakers have also sold off some waning products to raise a bit of cash and to devote more attention to higher-margin products and operations that move the needle on stock price. Merck last year sold to South Africa's Aspen Pharmacare nearly a dozen older drugs that included everything from hormone replacement treatments Ovestin, Sustanon and Metrigen to the anticoagulant Orgaran, as well as contraceptives Gracial and Novial. It picked up about a $1 billion in the deal. GSK then found Aspen a willing buyer for its older thrombosis drug brands, Arixtra and Fraxiparine, as well as a plant in France, in a deal valued at about $1.1 billion.
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