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Sanofi, Boehringer Swap Animal Health And Consumer Health Units

Pharmaceuticals: Asset exchange will create leading positions in tough markets

by Lisa M. Jarvis
December 15, 2015 | A version of this story appeared in Volume 93, Issue 49

Credit: Sanofi
Sanofi’s animal health business will go to Boehringer.
A picture of a dog.
Credit: Sanofi
Sanofi’s animal health business will go to Boehringer.

In a multi-billion-dollar deal engineered to gain scale in competitive markets, Sanofi and Boehringer Ingelheim are swapping their animal health and consumer health care units.

Sanofi’s Merial animal health business, which is being valued at $12.4 billion, will go to Boehringer. At the same time, Boehringer’s consumer health care business, valued at $7.3 billion, will go to Sanofi. Boehringer will make up the difference in values in cash.

The addition of Boehringer’s consumer unit will make Sanofi the world’s top over-the-counter drug firm, with annual sales of roughly $5.6 billion. Last year, Sanofi’s consumer unit brought in about $3.6 billion. Sanofi will also capture a leading position in several therapeutic areas, including feminine care and digestive health.

Adding Merial, meanwhile, will bring Boehringer’s animal health sales to more than $4.2 billion. Boehringer says the combination will take it from being the sixth-largest animal health player to number two in the industry after Zoetis, the former Pfizer animal health business.

The deal is the first major move by Sanofi’s Chief Executive Officer Olivier Brandicourt, who took the helm in April six months after the French firm’s board ousted Christopher Viehbacher. Last month, Brandicourt laid out his strategic plan for the next five years. That road map included the promise of 3 to 4% compounded annual growth, establishing leading positions in key therapeutic areas and in consumer health, and exploring options for both Merial and Sanofi’s European generics business.

The swiftness of the animal health deal with Boehringer is a surprise to many Sanofi watchers. “We certainly did not expect this move at this point in time,” Leerink stock analyst Seamus Fernandez said this morning in a note to investors. Fernandez called Brandicourt’s “rapid moves” to enact his five-year plan “encouraging,” and noted that the swap is a “strong first step towards his move to build leadership positions across key areas for Sanofi.”

The deal is reminiscent of a three-part swap last year between Novartis, GlaxoSmithKline, and Eli Lilly & Co. In a complex transaction that took nearly a year to complete, Novartis acquired GSK’s oncology business, GSK bought Novartis’s vaccines business, and Lilly bought Novartis’s animal health division .

Sanofi and Boehringer expect to sign definitive agreements on their swap in the coming months and close the deal in the fourth quarter of 2016.



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