After more than 20 years of collaboration, Sanofi and Merck & Co have agreed to dismantle their vaccines joint venture Sanofi Pasteur MSD, which has shown lacklustre growth in recent years.
The 50:50-owned Sanofi Pasteur MSD JV - which operates in Europe - had sales of €824m last year and were flat compared to 2014. For comparison, Sanofi's top-line vaccine sales for the year were €4.7bn while Merck booked around $5.7bn from its vaccine operations in 2015.
Both Sanofi and Merck (which operates as MSD outside North America) say they will take their vaccine assets back in-house and "pursue their own distinct growth strategies in Europe".
The announcement comes as Sanofi is in the midst of a major restructuring drive announced by chief executive Olivier Brandicourt last year, which is focused around five core business units and is intended to reduce costs and boost profitability at the company.
Vaccines represent one of five core business units remaining after the restructuring along with cancer/rare disease, general medicines/emerging markets, diabetes/cardiovascular and animal health.
The future of Sanofi Pasteur MSD has however been under speculation for a couple of weeks, after a Bloomberg report suggested Brandicourt was taking a close look at the future of the JV. The news wire has also suggested that around 115 jobs could go as a result of the divorce, mainly from voluntary redundancies.
The decision to part company comes at a time when both big pharma partners have promising vaccine candidates coming through their R&D pipelines.
In Sanofi's case the company has just started rolling out the first-ever vaccine for dengue fever and has a number of candidates in development for other insect-borne diseases, including yellow fever, Japanese encephalitis and Zika.
Meanwhile, Merck's pipeline includes an Ebola vaccine - which could be on the market next year - and an inactivated varicella zoster vaccine in phase III.
"We are proud of Sanofi Pasteur MSD's successful 20-year history. Our joint venture has achieved considerable success over the past two decades from a public health and commercial perspective", said the two companies in a joint statement.
"We believe that focusing our efforts on opportunities unique to our respective companies will better position us to drive growth, execute in a more efficient manner and optimize vaccine coverage."