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Sanofi-Aventis Readies Bid For Genzyme

Pharmaceuticals: Takeover would give French giant a portfolio of drugs for rare diseases

by Lisa M. Jarvis
August 9, 2010 | APPEARED IN VOLUME 88, ISSUE 32

Speculation is reaching a frenzied level that the French pharmaceutical giant Sanofi-Aventis is pursuing the acquisition of Genzyme. According to media reports, Sanofi has sent a letter to the Massachusetts-based biotech firm offering to buy it for $69.00 per share, or roughly $18.4 billion.

The letter kicks off what are expected to be protracted negotiations between the companies. Most analysts think a deal will eventually be sealed for a price per share in the mid-$70 range, or around $20 billion.

Genzyme makes for an attractive target. Despite a healthy portfolio of drugs for rare diseases, the firm has seen its value sink because of manufacturing problems at its site in Allston, Mass. The deficiencies have caused shortages of two products, Fabrazyme for Fabry disease and Cerezyme for Gaucher disease, and led the U.S government to fine the company $175 million (C&EN, May 31, page 33).

Some analysts think Genzyme is in no rush to be acquired during this troubled period. "Our sense is that Genzyme's management is not overly interested in selling at this point and would rather wait until they fix the manufacturing problems in 2011," Citigroup analyst Mark Dainty told investors in a recent report. But Cowen & Co. analyst Philip Nadeau notes that Genzyme's frustrated shareholders and activist management board could push the firm to accept the offer.

An acquisition would cap a buying spree by Sanofi, which in the past year has increased its focus on external opportunities while cutting back on its own R&D. Since June, Sanofi has signed development deals with Metabolex, for a type 2diabetes drug; Regulus, for microRNA-based drugs; Ascenta Therapeutics, for small molecules that block protein-protein interactions; and Vivalis, for monoclonal antibodies that fight infectious disease. It also acquired TargeGen, which develops small-molecule kinase inhibitors.

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