Private equity group Advent has agreed a €1.9bn ($2.4bn) deal to buy the European generics unit of French pharma company Sanofi.
Sanofi has been looking to divest the Zentiva generics unit since 2016 as part of restructuring the business under chief executive Olivier Brandicourt, who said: “Transferring this business to Advent is the best option to ensure its long-term success.” Advent reportedly won a contest for Zentiva that also involved other private equity firms including BC Partners and drug makers such as India’s Torrent Pharma.
Negotiations continue, but Sanofi said yesterday that the offer is “firm, binding and fully financed” and will create a new, independent European generics company with operations in 25 countries and “potential for growth”, according to Brandicourt.
Sanofi’s total generics sales fell 3.3% to €1.78bn last year, with the declines most apparent in Europe and emerging markets. Overall, the generics market is growing but competition is increasingly fierce and the process that can be charged for medicines is trending down.
Sanofi is in the midst of a shakedown of its business prompted by a decline in sales of its diabetes blockbuster Lantus (insulin glargine) and the failure of some other products such as dengue fever vaccine Dengvaxia to deliver revenues as expected. The restructuring has already seen it bolster its pipeline in rare diseases with the acquisitions of Bioverativ for $11.6bn and Ablynx for €3.9bn after missing out on earlier bids for Medivation and Actelion.
Analysts suggest that Sanofi will re-invest the proceeds from the sale in its pipeline-building exercise, either through licensing deals or further acquisitions.
Under Brandicourt, the French group has already divested its animal health business via a €22.8bn asset-swap deal with Boehringer Ingelheim in 2015 that bolstered Sanofi’s consumer health unit. At the time, Brandicourt said that the company’s aim is to “build competitive positions in areas where we can achieve leadership”.
Sanofi bought the foundations of its European generics unit when it acquired Czech drug maker Zentiva nine years ago in a deal valued at around $2.6bn.
The deal comes as a number of other big pharma companies have decided to narrow their focus, bulking up in core areas and jettisoning others. Just this month, for example, GlaxoSmithKline divested its rare disease portfolio to start-up Orchard Therapeutics, after buying Novartis out of a consumer health joint venture in March, and Shire has sold its oncology business to Servier.