Sanofi Acquires Genzyme ($20B Deal)
Posted on 17 February, 2011 | No Comments
Sanofi is paying $74 a share, or $20.1 billion, plus a contingent value right, or CVR—a pledge of additional payment of up to $14 a share if Genzyme meets certain sales and manufacturing targets. Genzyme shareholders will get extra money if Lemtrada, Genzyme’s experimental treatment for multiple sclerosis, makes it to market and achieves certain sales. Shareholders will receive additional money if Genzyme restores manufacturing to certain levels at the plant that has experienced problems.
Acquiring Genzyme gives Sanofi its own dedicated research team in the U.S., and better links to other U.S. research partners in academia and the biotech industry, Mr. Viehbacher said Wednesday.
“Although the opportunities [for research collaborations] are global, it is still true today that the most numerous opportunities are in the U.S.,” he said during a webcast with shareholders held at Genzyme headquarters. “To work collaboratively we felt we really needed to have a stronger presence here in the U.S., particularly on the research side.”
Genzyme also gives Sanofi more know-how in biological drugs, which are proteins made in living cells. Biological drugs have been among the most effective treatments discovered in recent years, making it crucial for companies to have expertise in the area.
The deal was announced as Genzyme said its fourth-quarter earnings surged as the company continues to recover from manufacturing problems that temporarily shut down its main production site in 2009. The plant is the sole source of Genzyme’s top-selling products, Gaucher’s disease treatment Cerezyme and the Fabry disease drug Fabrazyme, which are recovering from shortages that stemmed from the shutdown. In the quarter, Cerezyme sales more than doubled on increased shipments, while Fabrazyme sales were up 6.2% as supplies improved. Genzyme reported a profit of $471.9 million, or $1.76 a share, up from $23.2 million, or 9 cents a share, a year earlier.
Sanofi said Genzyme will keep its name and operate as a separate unit focused on rare diseases, an area Genzyme has specialized in. Mr. Viehbacher said he planned to “keep the identity of the company, keep everyone in the company but still achieve some synergies.”
A joint integration steering committee will be co-chaired by Mr. Viehbacher and Henri Termeer, who will resign as chairman and chief executive of Genzyme when the transaction is completed.
Sanofi for years was staunchly French, focusing much of its drug research in its home country. But since Chris Viehbacher took over as chief executive in 2009, the company has been widening its research net in an effort to improve its drug development. Mr. Viehbacher, a citizen of Canada and Germany, has struck more research partnerships with outside academic groups and biotech companies, and in December hired a new head of R&D—Elias Zerhouni, the former director of the U.S. National Institutes of Health.
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