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BUSINESS STRATEGY

Sanofi Looks Over the Counter

French Pharma spends $1.9 billion to deepen its reach in consumer healthcare.

The Burrill Report

“The acquisition of Chattem will be a significant milestone in Sanofi-Aventis' transformation strategy and will provide us with the ideal platform in the U.S. consumer healthcare market.”

Sanofi-Aventis said it will buy Chattem, maker of Icy Hot pain reliever, Selsun Blue dandruff shampoo and other consumer products, for about $1.9 billion in a bid to help it diversify beyond prescription drug revenue by further embracing the consumer healthcare market. The Paris-based pharmaceutical plans to launch an over-the-counter version of its Allegra allergy medication as part of its efforts to springboard off Chattem's U.S. consumer market expertise.
 
That move could help Sanofi stem some of the revenue loss it faces from Teva Pharmaceuticals' generic competitor to the drug. Allegra still delivered Sanofi $333 million in 2008 in net U.S. sales, but will lose patent protections for its various forms of the drug between 2012 and 2018.
 
Sanofi's Lovenox, Plavix, Ambien CR and Eloxatine are all facing or potentially face generic competition. Building over-the-counter and consumer product revenue in United States could help offset global losses for the company. Already, Sanofi generated about $2 billion in over-the-counter revenues with little presence in the U.S. market.
 
“The acquisition of Chattem will be a significant milestone in Sanofi-Aventis' transformation strategy and will provide us with the ideal platform in the U.S. consumer healthcare market,” says Chris Viehbacher, CEO of Sanofi. “We believe our ability to convert prescription medicines to OTC products will be enhanced by Chattem's leading sales, marketing and distribution channels.”
 
Sanofi's tender offer for Chattem of $93.50 per share represents a 34 percent premium above the closing price of Chattem's shares on December 18. The companies anticipate the transaction will close in the first quarter of 2010. Once completed, the deal will make Sanofi the world's fifth-largest consumer healthcare company measured by product revenues.
 
Sanofi has racked up a string of acquisitions and partnerships in 2009, including the acquisition of another consumer-focused company, France's Laboratoire Oenobiol, which specializes in nutritional, health and beauty supplements. It also bought BiPar Sciences and Fovea Pharmaceuticals and purchased a majority stake in a Russian insulin maker. Sanofi also acquired the rights to a Syntiron vaccine to protect against multi-drug-resistant Staphylococcus aureus, created a strategic research alliance with the California Institute of Technology, took an option on an anti-infective from Alopexx Pharmaceuticals' and expanded its R&D deal with Regeneron Pharmaceuticals.


December 23, 2009
http://www.burrillreport.com/article-sanofi_looks_over_the_counter.html

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