Exec Reveals Sanofi is Hunting for M&As to Boost Diabetes Biz

Published: Apr 20, 2017

Exec Reveals Sanofi is Hunting for M&As to Boost Diabetes Biz April 20, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Paris-based Sanofi has been on the losing end of two big acquisitions in the last year—Pfizer ’s takeover of Medivation , and Johnson & Johnson ’s buy of Swiss-based Actelion . There have been recent rumors that Sanofi was in talks to buy Burlington, Mass.-based Flexion Therapeutics , although at the moment nothing seems to be coming of it.

But today, Reuters reported that Sanofi is definitely considering an acquisition in the blood glucose testing device market. At a Frankfurt, Germany media event, Stefan Oelrich, the company’s head of diabetes, said, “Yes, there may be assets for sale that come out. We are looking at this but I cannot tell you positively that we are going to go for this.”

Reuters notes that earlier this year J&J said it was reviewing its strategic options, and selling some of its diabetes care businesses was one of the options.

The diabetes market in general is taking a battering, largely due to pricing pressure in the United States. Oelrich said that Sanofi’s diabetes revenue was expected to decrease by 4 to 8 percent annually from 2015 to 2018. Pushing harder into the device business, as opposed to the insulin business, could be a way to bolster that franchise area.

Sanofi’s best-selling diabetes product is Lantus, a long-acting form of insulin. It makes up 17 percent of the group sales in 2016. Lantus lost patent protection in the U.S., and some of its pipeline has not lived up to expectations, including a failed partnership with MannKind Corporation for Afrezza, an inhaled form of insulin. In addition, its next-generation cholesterol drug, Praluent, hasn’t gained as much traction in the market as hoped.

In December 2016, Sanofi announced that as part of its realignment of its U.S. diabetes and cardiovascular business, it was laying off approximately 20 percent of its U.S. staff from that business unit.

The company’s Diabetes and Cardiovascular unit sales dropped 2.5 percent globally during the third quarter of 201 6, with its diabetes franchise down 1.5 percent.

Around the same time, Novo Nordisk , a major Sanofi competitor in the diabetes space, announced plans to lay off 1,000 workers late last year as well.

On March 15, 2017, Roche Diabetes Care announced plans to lay off 157 staffers as part of the restructuring of its U.S. Commercial Operations. As recently as February 1, Reuters had reported that Roche had plans to expand its diabetes business, which brings in around $2 billion annually. Roche stated that the cuts allowed them to remain competitive in the diabetes care market.

Although the U.S. diabetes market is slowing, the Asian market is growing. Recent sales in Asia grew by 16 percent, driven primarily by China. Roland Diggelmann, head of Roche’s Diagnostics division, told Reuters in February that about 100 million Chinese were possibly diabetic, and only a small percentage of them had been diagnosed.

The hints made by Reuters’ report today that Sanofi might be interested in J&J’s diabetes assets, were mentioned about Roche, as well, although Diggelmann said that regulators probably wouldn’t allow it, and that Roche’s interest was minimal because they overlap with the company’s existing portfolio.

Sanofi also has a relationship with Google/Alphabet’s Verily Life Sciences. In September 2016, they launched Onduo, a joint venture. Based in Kendall Square, Cambridge, Mass.., Onduo’s focus is on a comprehensive diabetes management platform. It was to leverage Verily’s experience in miniaturized electronics, analytics and consumer software development with Sanofi’s clinical expertise in diabetes.

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