Sanofi, one of Europe’s largest drug companies, has found a home for an unwanted R&D facility in France. The company will pay Evotec, a German pharmaceutical services firm, $275 million over five years, including $45 million up front, to manage its small-molecule drug development site in Toulouse.
As part of the deal, first disclosed in December, Sanofi will transfer its team of 208 chemists and other researchers in Toulouse to Evotec. Sanofi will retain ownership of the Toulouse site, which in recent years the company has transformed into a biotech park. Evotec will take over Sanofi’s screening-compound library, combining it with its own to create a collection of about 1.7 million druglike compounds.
Evotec will be responsible for developing a portfolio of Sanofi’s oncology compounds. Sanofi retains the option of acquiring successful compounds or seeking a third party to develop them further. The researchers in Toulouse will also work for other Evotec drug discovery customers. Additionally, an undisclosed share of the $275 million will fund projects with academic institutions in France.
By off-loading the Toulouse R&D team to Evotec, Sanofi sidesteps its previous agreement with unions and the French government not to cut R&D staff at the site. The drug company’s goal in recent years has been to reduce payroll costs for small-molecule R&D in France while boosting its biologic drug activities. Today 72% of Sanofi’s R&D projects are in biologics.
“The deal with Evotec is an elegant way to satisfy all parties involved,” says Martin Hall, a senior life sciences analyst for London-based Hardman & Co. “Following the spate of consolidation at Sanofi over the past decade, the company has been left with far too many research and manufacturing sites around the world.” The annual price being paid to Evotec is probably less than half the cost of running the Toulouse site, Hall adds.
Toulouse is the second French site that Sanofi has stepped away from in recent years. In 2008 it sold sites in Porcheville, France, and Alnwick, England, to New Jersey-based Covance in a 10-year outsourcing deal worth up to $2.2 billion.