Advent, near deal to buy Sanofi's Zentiva, lays out big goals for generics business

Sanofi Pasteur HQ
Sanofi is in exclusive talks to sell Zentiva to Advent International. (Sanofi/Vincent Moncorgé)

The sources were right: Only one day after numerous media reports stated Sanofi was nearing a deal with Advent International to sell its copycat drug unit Zentiva, the companies acknowledged that they are in exclusive negotiations. And Advent said it has big plans for the European generics business.

In a proposed €1.9 billion ($2.35 billion) deal, Sanofi would offload its Zentiva unit to buyout firm Advent International. The private equity outfit said it will invest in the company and create a "new, independent European generics leader," according to a release

The sides hope to finish the deal by the end of the year, noting that it's contingent on finishing definitive agreements and regulatory approvals.

While Sanofi CEO Olivier Brandicourt said in a statement that Zentiva has "demonstrated its potential for growth," he said the best path forward for the business is with Advent. Brandicourt has been working to reshape Sanofi for years after coming on board in 2015. 

Advent has done a series of deals in the drug business, including specialty pharma buyouts in Latin America and generics deals on both sides of the Atlantic. Back in 2003, it took Terapia, Romania's largest independent generics maker, from public to private and invested in Argentina's Fada Pharma prior to that. It has since exited both companies via sale, with Terapia going to Ranbaxy Labs in 2006.

RELATED: Another one's gone: Torrent drops out of Sanofi generics auction over price, report says

"We have long been attracted to the generics pharmaceutical sector as it enables more people to access high quality treatments by lowering their cost. We believe that Zentiva is a great platform, full of talented people, who we can invest behind to build a new, independent, European generics leader,” Advent healthcare executive Tom Allen said in a Tuesday statement.

For Sanofi's part, the French drugmaker started talked about selling Zentiva back in 2015, but Brandicourt made other moves first after taking the helm. He offloaded Sanofi's animal health business Merial in 2016 through an asset swap with Boehringer Ingelheim, getting BI's consumer health assets in return. 

RELATED: With private equity bidders lined up, Sanofi's EU generics could go for up to $2.4B: Reuters

Part of the refocusing effort also includes a pipeline and rare disease expansion. Sanofi purchased nanobody biotech Ablynx this year for $4.8 billion and hemophilia-focused Bioverativ for $11.6 billion. Brandicourt said the acquisitions "dramatically reshape our portfolio in specialty care" and boost the company's R&D presence.   

The Zentiva auction process attracted buyers including Indian and Chinese drugmakers and other private equity firms, according to reports. Along the way, India's Torrent and PE firm Nordic Capital reportedly bowed out due to price.  

Zentiva operates in 50 countries and sells drugs in disease areas including cardiovascular, central nervous system, gastrointestinal and metabolic disorders. It brought in €760 million last year, a 4.9% decrease from 2016. 

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