Sanofi and Boehringer Ingelheim Agree Asset Swap

16.12.2015 -

French drugmaker Sanofi and German pharmaceutical company Boehringer Ingelheim have begun exclusive negotiations toward a swap of Sanofi’s subsidiary Merial, a manufacturer of animal health products, for Boehringer’s consumer healthcare (CHC) business, excluding its Chinese activities.

Sanofi said recently it was looking to partner its animal health business.

As Sanofi’s portfolio, with an enterprise value of €11.4 billion, is much bigger than the Boehringer’s, valued at €6.7 billion, the Germany company – upon a successful conclusion of the talks – would make a gross cash payment of €4.7 billion to the French company.

Through the deal, Sanofi said it would become the number one player in CHC, with expected pro forma sales of around €5.1 billion based on 2015 figures, and a global market share close to 4.6%. Sales of the Boehringer CHC business excluding China, estimated at about €1.6 billion in 2015, are said to be “highly complementary” to those of Sanofi CHC, both in terms of products and geographies.

Acquiring the German player’s CHC business would improve Sanofi’s position both in Germany and Japan, where the French drugmaker’s presence in the relevant markets is limited. Sanofi said it would gain access to “iconic brands” in antispasmodics, gastrointestinal, VMS and analgesics, and attain critical mass in cough & cold applications.

At the same time, Sanofi said the swap would be able to “significantly” expand its CHC business in the US, Europe, Latin America and Eurasia, thereby gaining multiple leadership positions in key countries and/or on key product categories.

Germany would become a key center of Sanofi’s CHC business, in particular for gastrointestinal and cough & cold categories. By the reverse token, Lyon, France, would become a key operational center of Boehringer Ingelheim's Animal Health business.

The German company said it would “commit to maintain business operations, R&D and manufacturing centers in France.” As the US market is an important part of Merial's business, it would also “pay particular attention” to sustaining the momentum of operations there.

Boehringer said combining Merial's strengths with its own would create the second largest player in the global animal health market with estimated pro forma sales of some €3.8 billion based on 2015 figures, and the company would have the ability to compete for global market leadership.

According to Boehringer, the species portfolios are “highly complementary.” It plans to build on Merial's expertise in companion animals and poultry, matching its own expertise in swine. The company added that the combined portfolios and technology platforms in anti-parasitics, vaccines and pharmaceutical specialties would place it in the key growth segments of the industry.

With the asset swap, Sanofi CEO Olivier Brandicourt said his company has “acted swiftly to meet one of the key strategic objectives of our roadmap 2020, namely to build competitive positions in areas where we can achieve leadership.”

Boehringer Ingelheim chairman, Andreas Barner, said the planned deal with Sanofi reflects the company’s “strategic priority to focus on its core areas of expertise and businesses with an established global scale, or where a pathway to a global scale can be achieved and prioritized.”