Sanofi reportedly jumps into $12B race for Merck's consumer unit

Sanofi CEO Chris Viehbacher

Sanofi CEO Chris Viehbacher may be reconsidering his November plans to spend just €1 billion to €2 billion per year on acquisitions. Rumor has it the drug giant is eyeing a bid for Merck's ($MRK) OTC unit, which could sell for up to $12 billion.

As unnamed sources told Bloomberg, Sanofi ($SNY) has joined a group of suitors the likes of Novartis ($NVS), Bayer and Reckitt Benckiser, with final bids due next week. For the French drugmaker, the deal would bolster a consumer unit that has more than doubled its sales from €1.42 billion ($1.93 billion) in 2008 to €3.004 billion ($4.15 billion) in 2013.

"OTC assets are highly desirable for market incumbents as almost no additional infrastructure is required," Barclays analysts wrote in a note seen by the news service. The Merck unit "from a geographic perspective would be a good fit" for Sanofi because 70% of its revenue comes from the U.S., they said. It would also augment Sanofi's allergy business. Nearly a quarter of the Merck unit's revenue comes from over-the-counter Claritin sales, and among Sanofi's top consumer products are the Allegra allergy pill and Nasacort AQ nasal spray.

But it's far from a done deal for Viehbacher and company, with Reckitt leading the pack of bidders, Bloomberg reports. The British company has long been reviewing options for its pharma unit, which is lagging thanks to generic competition for its flagship drug, the heroin addiction treatment Suboxone. Analysts have suggested Reckitt could channel funds raised through a pharma sale or spinoff into beefing up its consumer health offerings.

Then there's Bayer, whose plans to pad its consumer health business through bolt-on deals yielded the February pickup of China's Dihon Pharmaceutical Group. Novartis, too, has been rumored to be in the mix, contemplating a swap of its animal health and vaccines businesses for Merck's consumer health segment. But just as Merck's consumer unit drew bidding interest from other Big Pharma players, the Swiss company's animal health business has reportedly sparked interest from Bayer and Eli Lilly ($LLY).

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