Sanofi's willingness to buy all of Elder makes it favored bidder

Sanofi's strategy in pursuing Elder Pharma is winner takes all, and that's what has put it ahead of competitors bidding for the Indian pharma company, a report says. 

Sanofi ($SNY) is the only one among contenders who has shown interest in all of Elder's branded offerings rather than specific brands. Now, the French drugmaker has emerged ahead of the pack, and an Elder buy would make it the latest in a series of Big Pharma companies to look to consumer health products to expand its reach in emerging markets.

While Sanofi has not commented, a report from The Economic Times says Sanofi is valuing the Mumbai-based company at Rs 2,500-2,700 crore ($419.2 million to $452.8 million). Its sources say that valuation has put it ahead of companies like GlaxoSmithKline ($GSK) and Pfizer ($PFE), who are looking to pick up only specific branded pieces of the company--such as Elder's Shelcal, a calcium supplement the ET says has a market share of 30-32%.

As the ET points out, Sanofi has been aggressive in trying to reach large populations in emerging markets like India to offset declining revenue from patent expirations. But specifically, this is the second company Sanofi has targeted for nonprescription products: Sanofi also acquired Universal Medicare in 2011. "The acquisition of Elder Pharma's brands fits into its over-the-counter strategy," an unnamed analyst told the Times.

Sanofi is not the only multinational who, already established in branded prescription drugs, is using that OTC strategy for emerging-market growth. GSK took a similar tack in India earlier this year, snatching up a 72.5% stake in its publicly traded consumer health subsidiary in India for a cool $900 million. Consumer health is a cornerstone of Glaxo's emerging markets strategy, which itself is key to the company's overall growth plans. In 2011, India contributed 19% growth to GSK consumer health sales, compared with stagnant consumer health sales in developed markets.

- read The Economic Times story