Sector News

Top execs bicker over Sanofi’s plan to unload $8B portfolio of old drugs

October 6, 2014
Life sciences

Back in April, Sanofi CEO Chris Viehbachersaid he planned to sell off some of the company’s mature products to make room for higher-value “bolt-on” acquisitions. Rumors about potential buyers immediately started flying. Analysts estimated the drugs could fetch $8 billion or more.

 
Now it appears Sanofi’s plan has stalled. According to anonymous insiders who spoke to Bloomberg, top managers at the company cannot come to an agreement about how to move forward with the sale. The assets that were to have been carved out under the plan, nicknamed Phoenix earlier this year, included four factories, two distribution centers and several hundred employees, making it so complex that internal squabbles have made a deal highly unlikely in the near future, according to Bloomberg.
 
The prospect of a Sanofi spinoff had attracted quite a bit of interest. Sanofi hired adviser Evercore Partners to handle the sale, which included treatments for high blood pressure and cardio-metabolic diseases. Discussions quickly followed with the likes of Mylan, Abbott Laboratories, and private equity firms KKR, Blackstone and TP
 
Sanofi was far from alone in its plan to jettison mature products. Merck, AstraZeneca and GlaxoSmithKline have also moved to slim down their portfolios and make room for new, higher-margin products. In September, AstraZeneca pulled off a small deal, selling 18 drugs it was no longer marketing to specialty generics maker IGI Laboratories for $500,000 up front, plus $6 million in milestones and up to $3 million in royalties.
 
Earlier this year, it appeared private equity firms would be lining up to make multibillion-dollar deals for mature product portfolios and other pharma spinoffs. Carlyle Group, after all, did spend $4 billion on Johnson & Johnson’s Otho Clinical Diagnostics unit. But private equity deals have been sparse since then, and some analysts question whether those firms have the wherewithal to turn tired products into anything of significant value.
 
As for Sanofi, it has not held serious talks with any potential buyers in weeks, the insiders told Bloomberg. The company had been weighing the possibility of forming a partnership to market the portfolio, but it hasn’t really followed up on that either. In fact, no formal plan for dealing with the old assets has even been presented to the company’s board of directors, the insiders report. Sanofi has yet to comment.
 
By Arlene Weintrub
 
 

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