|Sanofi CEO Christopher Viehbacher|
Sanofi ($SNY) missed expectations for the quarter, with revenue and net income short of analyst expectations. "Another weak quarter," Sanford C. Bernstein's Tim Anderson noted after the numbers came out. But that didn't send CEO Christopher Viehbacher into second-guessing mode. It certainly didn't inspire a sharp longing for the newly fashionable megadeal.
That's the story for now, anyway. During a call with reporters today, Viehbacher acknowledged pharma's resurgent penchant for big M&A. "What's interesting is that after a long period it seems megadeals are back on the table," he said. But even though analysts see Sanofi as a potential white knight for AstraZeneca--or for Allergan ($AGN)--the French drugmaker isn't looking for a chance to participate, Viehbacher said. Though "there's lots going on" in the megamerger milieu, he said, "that doesn't mean it changes our strategy on M&A."
As for taking on the role of white knight to snatch U.K. drugmaker AstraZeneca ($AZN) out of Pfizer's reach? "There are particular factors in the Pfizer-AstraZeneca one that wouldn't necessarily translate to the rest of the industry," Viehbacher said. Pfizer's ($PFE) tax-saving strategy, for instance.
Viehbacher has been focusing on bolt-on deals since he took the reins at Sanofi in 2008. And he's made a string of them, from the Czech generics maker Zentiva to the Brazilian drugmaker Medley to the U.S.-based consumer health specialist Chattem. He came closest to mega in 2011 with the Genzyme buyout, but at $20 billion, that's not nearly in the neighborhood of Pfizer's $100 billion offer for AstraZeneca.
Though Sanofi's first-quarter revenue slipped by 2.6% on currency effects and vaccine-supply problems--to €7.84 billion, or $10.8 billion--Viehbacher says he'll stick to bolt-on deals and organic growth. Diabetes sales mushroomed by 13.2%, and consumer health and rare disease products delivered double-digit growth, too, he pointed out. To be exact, Genzyme sales jumped by 22%, partly because its Fabrazyme treatment for Fabry disease stole market share from Shire's ($SHPG) Replagal in Europe. Emerging markets sales grew to €2.59 billion, a bigger tally than its U.S. sales for the period.
Plus, Sanofi is on track to hit its full-year earnings target, Viehbacher said. The French drugmaker is shooting for earnings growth of 4% to 7%, ex-currency effects. And as the Financial Times points out, that's Sanofi's first growth forecast in four years.
Sanofi has plenty of work to do to make that happen. Some of its newer drugs, such as the multiple sclerosis pill Aubagio, have tough competition. Zaltrap, the colon cancer treatment developed with Regeneron ($REGN), has faltered from the start, partly become of a pricing brouhaha that forced early discounts. Viehbacher says its pipeline is seeing some recent success--he pointed to positive dengue vaccine results, for one thing--but getting candidates to market and ramping them up will take time, assuming the approvals come in as planned.
Viehbacher figures bolt-on deals will continue to be the best way to use M&A to build up Sanofi's operations. He's still looking for buys to fit the company's growth platforms, namely diabetes, consumer health, vaccines and emerging markets--but only if the numbers make sense.
"Because we believe we have critical mass in these areas, we don't feel we need to pay any price to acquire further businesses," he said. "Just because an asset becomes available doesn't mean you can acquire it at a price that really adds value."
- see the Sanofi release
- get more from the Financial Times (reg. req.)
Special Reports: Top 10 pharma companies by 2013 revenue - Sanofi | Top 10 drugmakers in emerging markets - Sanofi