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Sanofi and Boehringer in $20bn asset swap negotiations

Want to exchange their consumer health and veterinary interests

Sanofi 

Sanofi and Boehringer Ingelheim are trying to hammer out a deal that would see 20bn-worth of consumer health and veterinary assets change hands.

The proposed transaction would see Sanofi's €11.1bn ($12bn) animal health unit Merial transferred to Boehringer, in exchange for the latter's €6.7bn consumer healthcare business in all markets outside China and €4.7bn in cash.

The deal is reminiscent of the $20bn agreement between Novartis and GlaxoSmithKline to swap oncology and vaccine assets, which closed earlier this year and was well-received by investors. It continues an ongoing theme in big pharma in which companies are increasingly narrowing their focus to a few core businesses, often by divesting or spinning out non-core units.

Sanofi said the agreement would make it the number one company in consumer healthcare, adding big-selling brands such as Pharmaton vitamin supplements, Buscopan for abdominal discomfort and laxative Dulcolax and improving its market position in Japan and Germany.

The combined business would have annual sales of around €5.1bn and a global market share approaching 4.6%, it added, with its headquarters based in Germany.

Boehringer, meanwhile, would become the second-largest animal health company after Pfizer spin-out Zoetis if the deal goes through, with pro forma sales of €3.8bn in 2015 putting it a little ahead of Merck/MSD Animal Health. Boehringer had previously been ranked in sixth position with Merial at number three.

Lyon in France will be the new operational centre for the combined animal health business when the deal goes through. This is expected in the fourth quarter of 2016, assuming regulatory and antitrust approvals are forthcoming.

Sanofi chief executive Olivier Brandicourt said the asset swap would "meet one of the key strategic objectives of our roadmap 2020, namely to build competitive positions in areas where we can achieve leadership".

Boehringer's chairman Andreas Barner echoed that sentiment, saying the deal tied in with the company's "focus on … core areas of expertise and businesses with an established global scale, or where a pathway to a global scale can be achieved".

Article by
Phil Taylor

15th December 2015

From: Sales

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