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Sanofi and Boehringer agree asset swap deal

Will exchange Merial animal health business for consumer healthcare unit in $25bn deal
Sanofi

Sanofi has agreed to exchange its Merial animal health business for Boehringer Ingelheim's consumer healthcare unit in a deal that will see €21.8bn-worth ($25bn) of assets and cash change hands.

The deal ties in with the current trend among pharma companies to rationalise their businesses and focus on fewer key product categories. Sanofi will transfer ownership of the €11.4bn Merial division to Boehringer in return for the latter's consumer health unit - valued at €6.7bn - and €4.7bn in cash.

Contracts to start the process have been signed and the transaction is expected to close before the end of the year, according to the two companies, which have been negotiating the asset swap deal since December 2015.

Both the animal and consumer health sectors have seen considerable consolidation in the last few years, as companies strive to boost profitability by broadening product ranges, reducing duplicate costs and expanding in overseas markets.

The veterinary sector saw Pfizer spin out its Zoetis unit - the biggest player in the market - in 2011, while Elanco bought Novartis' unit last year to claim the second spot ahead of Merck/MSD Animal Health.

It is estimated that combining Merial with Boehringer's smaller operations will allow the combined business to leapfrog into the second-place spot in terms of market share, with pro forma sales of around €3.8bn in 2015.

In consumer health, the deal comes in the wake of Bayer's $14.2bn purchase of Merck & Co's unit in 2014, as well as a link-up in the category between Novartis and GlaxoSmithKline, part of their own $20bn asset-swap deal involving cancer and vaccine products.

Sanofi said the agreement would make it the number one company in the sector, ahead of Bayer, adding brands such as Pharmaton vitamin supplements, Buscopan for abdominal discomfort and laxative Dulcolax.

Boehringer's chairman Andreas Barner said the deal was a win-win for both companies. For Boehringer the deal was in accordance with the "consistent orientation of our business towards innovation-driven sectors," he added.

Sanofi's chief executive Olivier Brandicourt said meanwhile that the swap meets  "one of the key strategic goals of our roadmap 2020, namely to become a leader in consumer healthcare and a leading diversified global human healthcare company".

Article by
Phil Taylor

27th June 2016

From: Sales

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