October 6, 2014
By Mark Terry, BioSpace.com Breaking News Staff
Paris-based Sanofi is staying mum about internal discussions regarding a potential sale of a $7.9 billion portfolio of established drugs, although rumors are flying. A Bloomberg article today indicated that the company’s managers are still discussing what to do about a project dubbed Phoenix to unload assets that include four factories, two distribution centers and hundreds of employees.
The internal debate apparently revolves around whether to sell, carve out or develop a joint venture with a portfolio of about 200 mature drugs. Included in the portfolio are blood thinner Plavix, antibiotic Pyostacine and epilepsy medication Depakine. The roster of drugs account for annual sales of approximately 2.1 billion euros, but due to decreased healthcare budgets in Europe, lower drug prices in general, and undoubtedly some patent expirations, analysts project those sales will drop by 40 percent in the next ten years.
In May of 2014 a 25-page internal Sanofi document was leaked by the CGT union, which described the Phoenix project. According to the document, the project has the goal of minimizing the company’s exposure to price cuts, decrease Sanofi’s European manufacturing costs and open up cash for other uses. The document suggested that the cuts would affect about 2,600 employees in Europe, mostly in France, Spain, Italy and Germany.
Unnamed sources indicate that a number of private-equity firms have expressed interest in the Sanofi portfolio, according to a Bloomberg News report in July. The companies cited were KKR & Co., Blackstone Group LP and TPG Capital Management LP. Sanofi has also discussed the issue with Mylan, Inc. , Abbott Laboratories , and Warburg Pincus LLC. However, recent indications are that talks regarding the portfolio sale have stalled.
Sanofi would not be the only pharmaceutical company looking to unload mature products. AstraZeneca , GlaxoSmithKline and Merck have all made moves that thinned out their portfolios, looking to replace them with newer, higher-margin therapeutics. In September IGI Laboratories, Inc., based in Buena, N.J., acquired the regulatory rights and records for 18 drugs from AstraZeneca. In April Novartis announced a series of deals to buy much of GlaxoSmithKline’s cancer drugs, while selling its vaccine division to GSK. Mylan is acquiring Abbott’s generic drug business to expand its markets in Europe, Japan and Canada.
Analysts suspect Sanofi might have problems pulling off a single large transaction to unload the entire portfolio. However, it’s possible Sanofi CEO Chris Viehbacher will be able to negotiate several deals, selling off assets separately.
