South Korea's Hanmi signs $4.2B diabetes deal

South Korea-based Hanmi Pharmaceutical has signed a deal with French pharma giant Sanofi ($SNY) to license its GLP-1 diabetes treatments as Sanofi attempts to revive its diabetes division, according to a report by Reuters.

Hanmi will receive €400 million ($434 million) upfront and up to €3.5 billion in development and sales milestones as well as double-digit royalties on net sales, Reuters reported.

Sanofi in return gets an exclusive worldwide license to develop and commercialize the GLP-1 diabetes treatments. Hanmi retains an exclusive option to co-commercialize the drugs in South Korea and China, Reuters reported.

Sanofi is making a "sizeable bet," Reuters said, because its diabetes business is struggling. The company unveiled a 5-year strategic plan today to turn its business around after it shook investors when it said revenues at the division would keep falling until 2018 because of growing competition, especially in the United States, Reuters reported.

Sanofi CEO Olivier Brandicourt

Chief Executive Olivier Brandicourt told reporters that he was considering acquisitions and licensing deals, but did not specifically relate those to the diabetes division.

Reuters reported that the deal shows how South Korea is growing as a force to be reckoned with in pharmaceutical research, citing a recent study by Research and Markets that it said called the country "one of the leaders in research and development in the Asia Pacific region thanks to the strong involvement of both the public and private sectors."

Reuters also reported that the deal will have Sanofi squaring off in the long-acting area against Denmark's Novo Nordisk ($NVO) and Eli Lilly ($LLY) and could also hurt Denmark's Zealand Pharma, which already has a deal in the short-acting sector with Sanofi.

- here's the story from Reuters