1. Description of the Pharmaceutical sector
In the year 2004, the global economy experienced a momentum. After the dot.com bubble and the 9/11 terrorist attacks, the economy slowed down, especially in the USA. The American economy, which was the greatest market for the pharmaceutical industry, suffered an economic recession from 2001 to 2003. However, in 2004 the tax cuts and the lower interest rates stimulated a robust expansion in that country. Particularly, the worldwide sales in pharmaceutical products reached the $550 billion in 2004 and $466 billion in 2003, which implied a growth of 7% and 9% over the previous year. These sales were concentrated in USA, where the market share was about 45% of the global sales. 40% of the total industry revenues took place in Europe and Japan. With regards to the market share ranking of the pharmaceutical sector by revenues, the leader in 2003 was Pfizer, GlaxoSmithKline, Merck, Johnson & Johnson and Aventis. However, due to patent expirations and new successful drug launches, the ranking of top pharmaceutical companies constantly faces numerous variations. The most sold drug in 2003 was Lipitor manufactured by Pfizer, with a global market share of 2.2%, or equivalently sales worth $10.3 billion. During this time, there were 64 blockbusters (products generating over $ 1 billion in sales). Moreover, the pharmaceutical sector has been characterized with a very high M&A activity ‘ a fact that further contributes to the constant variation in the rankings and the dynamism of the pharmaceutical industry in general. For example, in 2003, before the merger took place, Aventis occupied fifth place, as measured by level of revenues, and Sanofi came in thirteenth. After the conclusion of the merger, Sanofi-Aventis emerged as the third largest company in the industry. Therefore, the huge competitive pressure has led to an increasing consolidation in the sector. In 1985, the ten largest companies were responsible for around 18% of the global sales. By 2002 their market share was around 50%. As mentioned above, the characteristics of the industry itself have pushed the companies into acquiring the others or being acquired (in the last year, the industry has also seen an increasingacquisitions trend of biotechnological businesses by pharmaceutical companies). First of all, the main feature of the sector is the R&D dependence. The business model of pharmaceutical firms relies on creating a new drug to heal some specific illness and create a competitive advantage over competitors. If a pharma firma firm is successful at a new innovative product development, it enjoys a patent protection for 20 years. However, this business model also entails high costs ($800 million on average per product due to high R&D expenditures and the huge error rate) and uncertainty, as they depend on ‘being lucky enough’ to discover a useful medicine. To illustrate the importance of the innovation department in pharmaceutical companies, from year 1992 on, the average expenditure in the industry on R&D has been constant around 16% of turnover. Additionally, the pharmaceutical industry has a particular sales and customer structure, as the consumer is not neither the one who decides which medicine is going to be bought (doctor) nor the one who pays it (healthcare insurance or government). The supply and demand laws do not work as well as in other industries. Moreover, the sales department needs to be sure to reach a level of revenues to be able to cover their reinvestments. Therefore, having the broadest distribution and an influent sales team is essential in order to get by in the industry. Finally, pharmaceutical companies need to be always concerned about the regulatory, legal and safety issues and their repercussions. To sum up, these facts lead the businesses in the industry to acquire others in order to achieve economies of scale, reduce cost, gain market consolidation, restore a declining pipeline of products or expand to new products or geographical markets.??
M&A??activity in the pharmaceutical industry
‘It is clear that you cannot stay in the top league if you only grow internally. You cannot catch up just by internal growth. If you want to stay in the top league, you must combine.’ ??Daniel Vasella, CEO of Novartis, 2002.
As we mentioned afore, over the last 25 years the industry has been displaying an increased consolidation trend. During these years, the overall value and the number of transactions have been increasing, although these figures can vary from one year to another due to the weight that a specificdeal can have.??
Regarding the period between 1998 and 2004, there were eight M&A deals between the major pharmaceutical companies. During this period, the number of deals has increased in value but, with time, the number of transactions has been reduced, as can be observed in the table below, which represents the number of deals announced and their value.
The transactions during this period were the following:
‘ Astra and Zeneca. 1999. It created the fifth largest pharmaceutical company in the world in terms of sales. The aim of this merger was to reduce the high cost of research and to broaden the pipeline of products. ‘ Aventis (Hoechst and Rh??ne-Poulene). 1999. The merger was driven by motives to create synergies and keep a competitive edge in the pharmaceutical sector. ‘ Sanofi and Synthelabo. 1999. The merger created a new industry powerhouse with sales of $6.2 billion. Moreover, due to synergies, the bottom line was supposed to grow gradually in the following three years. ‘ Pfizer and Warner-Lambert. 2000. Pfizer announced that it would buy Warner Lambert for $90.27 billion in stock in a friendly takeover. ‘ Monsanto and Pharmacia Upjohn. 2000. Agreed to merge in a $26.5 billion deal, which allowed them to become the third sales force in the USA and to save up to $600 million in development cost. ‘ GSK (Glaxo Welcome??and SmithKline Beecham). 2000.The merger took place after the US Federal Commission delayed a couple of months. The stock swap was valued at $76 billion and created the world largest drug maker at that time. ‘ Pfizer and Pharmacia. 2002. Companies formed an alliance in a $60 billion friendly merger. The merger helped the companies to broaden the variety of their products and confirmed Pfizer as the top company in the industry. ‘ Sanofi and Aventis.??
The leading company in the merger of Sanofi-Aventis was Sanofi, which had a considerable experience in mergers and acquisitions processes. Brief history
Ren?? Sautier and Jean-Fran??ois Dehecq founded the company on September 10, 1973. At that time they worked for ELF Aquitaine and the operation was part of the new diversification process of ELF Aquitaine. This company remainedas the major shareholder of the newly formed Sanofi. With the financial help of ELF Aquitaine, Sanofi soon started a process of growth by acquiring other European and American pharmaceutical groups. Until 1999 the major acquisitions and participations of Sanofi were: Labaz (1973), Choay (1975), Midy Clin (1980) and Sterling Winthrop (1991). In May 1999, Sanofi and Synth??labo agreed on a merger to create a major new pharmaceutical??player. This group became the second largest player in France, seventh in Europe and one of the top twenty worldwide, with 33.000 employees and presence in more than a hundred countries. However, its business had a huge European base with around 60% of sales in 2003. The US was the second largest area of business of Sanofi-Synth??labo with around 25% of sales in 2003; it was also the geographical region where the company was experiencing the most growth. Business description pre-merger
Soon after the merger, Sanofi-Synth??labo decided to concentrate on its core business. Therefore, it started a process of divestment of the beauty, diagnostics and veterinary businesses. The principal areas of business that remained were: Cardiovascular/Thrombosis (around 40%), Central nervous System (nearly 30%), Internal medicine (nearly 20%) and Oncology (around 10%). The most sold products of the group were: Plavix (to prevent heart attacks and strokes in persons with heart disease), Aprovel/Avapro (for the treatment of hypertension), Stilnox/Ambien/Myslee (to treat insomnia) and Eloxatine/Eloxatin (to treat colon cancer and colorectal cancer). During the five years between the merger of Sanofi-Synth??labo and the merger with Aventis (1999-2004), the company experienced a persistent period of growing in sales, from 5.350′ million in 1999 to 8.048′ million in 2003. Moreover, the merger of Sanofi-Synth??labo enjoyed positive synergies during this period. This can be deducted for example from the costs and expenses evolution. The cost of goods sold remained quite stable in absolute terms, around 1.400’ million, despite the growth of sales. On the other hand, selling and general expenses showed a more moderated growth compared to sales. Apart from that, Sanofi-Synth??labo could combine and optimize the R&D expenses of both companies. Financial data
In 2003, Sanofi’s assets totalled ‘9.7 billion, providing a ‘6.3 billionequity support over the comfortable debt level of ‘3.4 billion. ‘8 billion were generated in revenues for a net profit of ‘2 billion that yielded ROA and ROE of 20.62% and 31.75%, respectively. Sanofi-Synth??labo share price reached its maximum peak at the end of 2001 and early 2002. After that it experienced a decreasing trend, but recovered the upward trend in 2003. Overall, share price increased 44% between 1999 and 2003, despite the negative evolution of both pharmaceutical industry and markets in general. The main shareholders of the company were L’Or??al, former main shareholder of Synth??labo, and Total, which had acquired ELF Aquitaine, the main shareholder of Sanofi. Nevertheless, around 50% of the shares were public.
The core business of Aventis constitutes discovery, development and marketing of branded prescription drugs, vaccines and animal health products. Brief history
Aventis, currently part of the Sanofi-Aventis family, came to existence in 1998 as a result of a series of mergers and acquisitions and enjoys a solid position as one of the world’s largest pharmaceutical companies. Sanofi-Aventis is most credited with the development of Plavix, the blockbuster blood-thinner that alone contributed around $9 billion in revenues in 2010 and was the best-selling drug in the world for years (until the introduction of generic substitutes in 2012 subsequent to the Plavix patent expiration). The so-called ‘blockbuster drugs’ are extremely popular drugs that generate sales of at least $1 billion. The history of Aventis traces its roots to 1858 with the foundation of Poulenc that began its operations as a drugstore in France. Subsequently, Poulenc expanded into chemicals, textiles and even photography supplies throughout the nineteenth century and contributed greatly to the production of various drugs and medical supplies that were utilized by the French military during WWI. Close to the turn of the century, another French company, Rhone, began its operations in 1895, specializing mainly in the production of fragrances and perfumes. Most notably, Rhone is credited with the development of Rhodine ‘ a medical product that would later become aspirin. As a result of the looming crisis and stringent competition, the two companies joined forced in 1928 to form Soci??t?? des Usines Chimiques Rh??ne-Poulenc. The 1800sfurthermore marked the birth of the German Hoechst in 1863, which was basing its business mainly on the production of dyes and chemicals and only intermittent drug development. Hoechst’s biggest contributions have been the invention of Novocaine and adrenaline. Similarly to Poulenc, the company played an important role in WWII through its military production. Although eventually Hoechst increased its focus towards drug development, chemical production still remained its primary business activity. Rhone-Poulenc continued its rapid expansion into the pharmaceuticals throughout the twentieth century to become the largest drug manufacturer in Europe. By the later part of the century, Hoechst too gradually shifted its specialization towards drug production and became one of the leaders in antibiotics, diabetes medication and steroids production globally. Selling their remaining chemical and industrial operations, the two companies decided to join forces and form an alliance in 1998, thus bringing into existence Aventis as we know it today. Business description pre-merger
The company’s main focus before the merger comprised seven high-potential strategic products, including Allegra/Telfast (allergies), Lovenox/Clexane (thrombosis), Taxotere (oncology), and Delix/Tritace (hypertension). All four mentioned drugs had been enjoying a blockbuster status. Additionally, the key contributor to Aventis’ success has been Aventis Pasteur ‘ the vaccines division of the company that has tripled its sales in the preceding decade. Aventis has devoted resources to producing several products of special importance to developing countries, such as vaccines and sleeping sickness, leishmaniasis and tuberculosis medication among others. The drug manufacturer has marked its commercial presence in 85 countries, with sales in over 170. Financial data
Prior to the merger with Sanofi, Aventis continued its successful operations and consistently demonstrated strong profits. In 2003, ROA and ROE came in at 10.67% and 18.27%, respectively. In 2003, the company’s revenues amounted to a whopping ‘16.5 billion that yielded ‘2.5 billion in net profits ‘ a growth 17.5% over the previous year. The company’s market capitalization was at ’42 billion, while the P/E ratio was at 16.85 ‘ a rather small number compared to a 17.8 European industry average. Total assets constituted ‘28.3billion, with comparatively lower liabilities of ‘17.9 billion ‘ allowing the company to enjoy a comfortable ‘10.4 billion equity cushion. Listed on the Paris, New York and Frankfurt stock exchanges, at the time a total of around 802 million shares were outstanding, with Group Kuwait accounting for a 13.5% majority ownership, European shareholders together holding 53.6%, while 24% belonging to the American counterparts (the remainder was held by other parties and Aventis itself).??
4. Purpose of the deal
As a result of the merger between Sanofi and Aventis, a global healthcare company and a third largest pharmaceutical company emerged (behind giants Pfizer and GlaxoSmithKline), as well as the world’s largest producer of vaccines. Originally, the French government was opposing the idea of Swiss Novartis as a ‘white knight’, displaying its enthusiasm for a French candidate and stressing the need for France to guarantee access to vaccines in the event of a terrorist attack. The stance of the French government has changed from a refusal to adopt a clear position to an outright support of the takeover. Aventis was under pressure from the government for the takeover to succeed, at the fear of loosing a top-tier pharma company based in the country to foreign White Knights. In light of this as a result of an improved offer coming from Sanofi, Aventis chose to eventually engage in merger discussions with the acquirer. Consequently, Novartis has elected to drop out of the race, as it has previously indicated that it would only push its offer if the French government took a neutral position, which of course was not the case. An alliance between Aventis and Novartis would have created the number two pharmaceutical company in the world, just behind Pfizer. What is really interesting about this particular takeover case is that Aventis, at least at the time, was a much bigger player in the pharmaceutical industry than Sanofi. Moreover, hostile takeovers in the pharmaceutical industry are rare, due to the secretive and unpredictable nature of the business, where the acquirers are not able to get a deep insight and conduct a due diligence process on clinical trials of new drugs, legal files, and patent specifications. The CEO of Sanofi, and the future CEO of Sanofi-Aventis, Jean-Francois Dehecq indicated ‘I had a very strong feeling that if we didn’t do this deal now then one of our internationalcompetitors would have bought either Aventis or Sanofi’. As the statement suggests, the takeover did not only take place as the result of lucrative opportunities stemming from the merger, but also with the fears of a takeover of Sanofi itself by a third party. Sanofi had stated that it expected synergies of ‘1.6 billion by 2006, with 10% realizing immediately in 2004, 50% in 2005 and the remainder in 2006. As such, in taking over Aventis, Dehecq’s goal was to create a solid company that was reorganized in such a way as to eliminate any overlaps and reduce costs, thus allowing the company to direct its focus towards strategic products and providing superior return to shareholders. By integrating the two companies, Sanofi’s main objective was to create an entity with enough weight to take on its rivals. The acquisition of Aventis would provide Sanofi with increased market share in the US, in addition to more power in the global pharmaceutical market. This initiative was also part of the strategy to find ‘blockbuster’ drugs. The so-called ‘blockbuster’ drugs are drugs that have a potential to generate ‘1 billion or more each annually and whose development and marketing present relatively fewer risks, thus saving costs and time. However, the potential threat arising as a result of competition from cheaper generics at patent expiration is considerably higher and crippling for this drug category. Best-selling drug until its patent expiration in May 2012, Plavix saw its sales plummet by 95%, and this is just one compelling example. The deal and the profit potential of the resulting pharmaceutical giant were attractive, as both companies have been enjoying solid profits up to the takeover announcement. The main arguments provided by the acquirer were centered on the resulting entity’s size, significant R&D investment, existing high-growth products (9 drugs each with over $600 million annually n sales), 60 products in late-stage development, and expected savings of nearly $2 billion per year. Industry analysts have generally sided with Sanofi, believing that it offered a stronger potential for earnings growth than Aventis. They were of the opinion that with a combined 12 new chemical entities being launched between 2005 and 2007, the product profile would be broad and diversified enough to reduce dependency on any one product and help counter the effects of patent expiration, and thus generic drugs infiltration. As such, the new entity would enjoy an improved risk profile. There are some dubious motivations for the mergersuch as the drive to improve service towards patients, because after all the pharmaceutical industry is a business that has shareholders’ interests in mind. Additionally, the validity of these claims cannot be verified precisely until some time has passed after the merger. As to the reaction of Aventis to the deal and as one of its arguments against the merger, the company responded with the fears of potential loss of patent protection on two of Sanofi’s main products, which as claimed by the company, would result in a 43% decrease in sales for the acquirer. As such, the real concern was that Aventis’ own growth as well any suggested growth resulting from the merger after the deal might not have been realized. Additionally, a patent on one of the leading drugs, Plavix, of the acquirer was being challenged in court. In case of an unfavourable decision, Sanofi’s sales would be reduced by around $1.65 billion, an amount believed to reduce the share price by a third. In fact, Aventis even provided an outside legal analysis of the Plavix litigation on its website and the danger of the drug loosing its market exclusivity, complaining that Sanofi’s statements contained ‘significant omissions and representations’ relating to the case. Looming job loss from the merger, significant differences in size and organizational cultures were often other cited reasons for the opposing stance adopted by Aventis. Aventis maintained that the Sanofi proposal offered inferior value and undue significant risks. Finally, the target claimed that its valuation was 30% too low (despite the 15% offer premium) and that Aventis itself was in a better position to drive growth through new product launches and contribute the most to earnings growth. The former CEO of Aventis, Igor Landau has commented: ‘we don’t need Sanofi, but they need Aventis’. The company noted that between 2004 and 2006, it was expecting to launch six new products, whereas Sanofi only anticipated three. The French government also came under harsh criticism for not supporting Novartis stepping in as the White Knight. The argument was that by standing against a potentially more value-generating offer from Novartis than Sanofi, defence of French national interests by the government was in contradiction to shareholders’ best interests and traditional commercial factors such as R&D priorities and strategic synergies. Some analysts have indicated that Novartis offered a more attractive strategic fit when it comes to research and product complementarity as well as company culture.
5. Analysis of the deal
Rumours of a potential bid by Sanofi-Synthelabo SA (Sanofi) for Aventis first appeared on the 25th of January 2004, with a subsequent drop in the share price of Sanofi and a similar rise in Aventis’s. The following day, Jean-Francois Dehecq, CEO of SA-SY, submitted an offer to Aventis shareholders for ‘47.8 billion, in what is known as a hostile bid, with no contact whatsoever with Aventis beforehand. The deal would take the form of a stock exchange (81%) plus some cash (19%), which would value the shares of Aventis at ‘60.43. Reaction??
As previously outlined, Aventis’ Management team quickly reacted by refusing the offer, arguing that it greatly undervalued Aventis shared (which they believed were already undervalued by the market), that they offered little strategic advantage and there was a lot of risk associated with this takeover as it would be paid principally in Sanofi shares. Sanofi was at the time involved in a legal battle regarding the patent for their major drug Plavix that apart from jeopardizing a key revenue source could lead to major job cutting. The following week, both companies duly surrounded themselves by the best advisors, with Meryl Lynch and BNP Paribas working with Sanofi while Aventis contracted Goldman Sachs, Rothschild and Morgan Stanley to help them in the takeover battle. As common in these hostile takeovers, both sets of companies will come out with statements either eulogizing the strength of the bidder (Sanofi) or criticizing the bidder’s offer (Aventis). Sanofi insisted on the fact that they were in a strong financial position and that the financial power of the two companies would enable them to develop a much larger number of products that were in their pipeline. Moreover, it defended its stance that a hostile takeover was necessary, as negotiation would have taken too much time due to the difference in strategies of the two firms. Aventis took the opportunity to criticize Sanofi’s timing of the proposed acquisition, which was just before the release of very promising forecasts of growth and amidst Sanofi’s legal battle regarding the patent for Plavix, Doubts were also cast over their plan to dispose of slow growing and stagnating products and the threat ofmajor cost-saving employment cuts was emphasized. Additional backlash came from employees at both firms. As Jean-Fran??ois Dehecq stated, the goal of the takeover was create a strong company, reorganizing it in such a way to reduce costs and to remove overlaps. Unions from both companies were concerned about the detrimental impact on employment that this merger could have. From the unions’ point of view, the employees were the major losers in deals such the Sanofi takeover, and they called for protest demonstrations. In addition to this, both companies had carried out some readjustment in their workforce in the previous year. In fact, Aventis did close an R&D center and eliminated more than 800 jobs. The same year, Sanofi dismissed more than 700 employees when they slated a plant in France for sale. Therefore, employees from both sides were reluctant to the acquisition. White Knight & Poison Pill
From this point on, Aventis had only one option to answer to Sanofi threat: Call on a ‘White Knight’ to acquire it in a friendly manner, or at least drive the price up in a bidding contest. The possibility to submit a counter offer was not on the table due to Sanofi being protected by a moratorium. It is at this moment in time that Novartis starts being dubbed as the possible saviour of Aventis, having already had contacts with them on a possible merger in late 2003. This was obviously good news for Aventis, as it would at least increase the bid price if they failed to keep hold of their independence. On Novartis’s side, the shareholders remained sceptical despite their CEO, Daniel Vasella, stating that consolidations in the sector were inevitable to fight rising R&D costs and pressure on prices, and emphasizing that Aventis was undervalued and represented a good strategic fit for Novartis. The Aventis Supervisory Board proceeded to hold a meeting where it unanimously empowered the Executive Board to enter into negotiations with Novartis over a possible merger of the two firms. Furthermore, they agreed that there would be an issuance of subscription rights which entitled Aventis shareholders to subscribe to 28 new shares in Aventis at a notional price of ‘3.28 per share ‘ a move that would effectively protect Aventis shareholders from the threats of substantial loss in value in the event that Sanofi lost the patent protection for Plavix. Sanofi regarded such an option as a ‘poison pill’. Lastly, Aventisalso discussed an extension of all employee contracts, as to render the acquisition more difficult as well as financially less attractive. At the end of April, Novartis formally entered into negotiations with Aventis, even though certain conditions for this, in particular the promise of French neutrality, had not been fulfilled. French Government intervention
While the analysis and attractiveness of a Novartis-Aventis deal was a hot topic of discussion, the French government decided to step in, with then French prime minister Jean-Pierre Raffarin stressing the need to support the French industry, ‘If we have a chance of having the largest pharmaceutical groups in our country let’s take it!’. He further underlined the importance of Aventis’ vaccine research in light of bio-terrorist threats. When Novartis formally entered into negotiations with Aventis, Nicolas Sarkozy, then French minister of Finance and Industry decided to intervene and organise a meeting with respective CEOs of Sanofi and Aventis, during which he ‘supposedly told Dehecq (Sanofi) to raise his offer and advised Landau (Aventis) to engage in friendly discussions’. On top of this, the French government declared Aventis’ subscription rights to be unlawful ‘ a move that introduced a major setback is in the company’s fight against the hostile takeover. Done Deal
On the 25th of April, the Supervisory Board of Aventis accepted an improved offer from Sanofi and cleared the way for the formation of the third largest manufacturer of prescription drugs in the world, signalling the end of a 3-month hostile takeover battle. The new offer valued Aventis at around ’54 billion, representing a 16% premium ‘ a value significantly higher than the initial 3.4% premium offered by Sanofi in January 2003. The deal would be structured as a 71% share exchange, with Sanofi offering 5 of its shares for every 6 of those of Aventis, and a 29% in cash representing ‘15.95 billion. In other words, an Aventis shareholder would receive .83 Sanofi shares and ’20 for each Aventis share held, which would value Aventis at ‘60.4 per share. Igor Landau departed Aventis with a $31 million golden parachute in hand. Modification of Purchase bid
After the dividend resolution by the Aventis shareholders on 11th of June2004, Sanofi altered its bid price one last time. Standard Entitlement: 5 Sanofi-Aventis ordinary shares and ‘115.08 in cash for 6 Aventis ordinary shares (or 0.8333 of a Sanofi-Aventis ordinary shares and ‘19.18 in cash for each Aventis ordinary share; and 1.6667 Sanofi-Aventis ADSs and an amount in U.S. dollars equal to ‘19.18 in cash for each Aventis ADS); All Stock Election: 1.16 Sanofi-Aventis ordinary shares for each Aventis ordinary share (or 2.3200 Sanofi-Aventis ADSs for each Aventis ADS); All Cash Election: ‘68.11 in cash for each Aventis ordinary share (or an amount in U.S. dollars equal to ‘68.11 in cash for each Aventis ADS).
Reaction of the stock market
Stocks of both, Sanofi and Aventis, registered a sharp fall in prices on the Paris stock exchange the morning following the announcement of the merger. Aventis recorded a decrease of 5.3% while shares of Sanofi went down 7%, with doubts creeping in about the future success of the merged company and the difficulty of the integration of the two groups. Indeed, Sanofi still had the oncoming threat of the legal decision on the Plavix patent, while Aventis’s Allegra was also being contested. There was also doubt about the high number of compromises made by Sanofi, especially regarding the composition of the management team, which would be made up of half of the Aventis team and half of the Sanofi team. This was seen as a negative signal, since Sanofi would not have total control over the future strategy of Sanofi-Aventis, and certain members of the Aventis management team could object to certain cost cutting activities. Outcome Expectations
“This merger helped the two companies gain leverage in the market, taking advantage of synergies to cut costs and increase development.” Analysts believed the merger made sense, as the two companies had a “good fit” (albeit not as favourable as it would have been with Novartis), with Sanofi having the better product pipeline but Aventis having a stronger marketing force, particularly in the US. Additionally, as both companies had large overlapping operations in France, this would give a large scope for cost cutting. Lastly, it is important to know that the risk of having problems linked to culture differences was very low. The merged company expected aturnover of around ’25 billion with an employee base of more than 100,000 people across more than 80 countries. It would also boost the merging entities’ respective pipelines with about a dozen of new active agents, which could potentially come to the market between 2005 and 2007 and several of which were rumoured to have the potential to develop into blockbusters. Although no detailed analysis of the synergies were undertaken due to the nature of the bid (which stared as hostile), Dehecq had claimed in his original statement that the merger would yield cost savings of ‘1.6 billion adding ‘if we go over that figure it will demotivate the company, the plan is to sell more drugs, not to fire people’. Combined activities
Regarding the threat hanging over Plavix, in the end Apotex finally lost on the patent litigation issues after its third appeal was ruled in favour of Sanofi in November 2011; Apotex had to pay $442 million in damages and $108 million in interest for infringing the patent, which it paid in full by February 2012. And to answer to the threat posed to Aventis’ employees and their job security, the days following the announcement, an agreement was reached between work councils and the board of the company that there would be no operational dismissals in Germany before 2007. In 2007, Sanofi-Aventis expanded on Aventis’ prior relationship with Regeneron in a new deal, where it agreed to pay Regeneron $100 million per year for five years. With a collaboration goal to advance 4 to 5 antibodies per year into clinical development, the deal stated that Regeneron would use its monoclonal antibody discovery platform to create new biopharmaceutical products, which Sanofi-Aventis gained the exclusive right to co-develop, In 2008 Sanofi-Aventis, led by new CEO Chris Viebacher, initiated a spree of acquisitions in order to strengthen its consumer healthcare and generics platforms, which led to $17 billion being spent on M&A activities up until 2010. But the biggest deal to date was in April 2011, with the acquisition of the biotech company Genzyme. The newly merged company also formed a subsidiary known as Sanofi Pasteur, which is today one of the world’s largest producers of vaccinations for a variety of conditions, including tetanus, hepatitis A, hepatitis B, MMR, polio and most recently, influenza. Effect on France
Speaking about the French government, Daniel Vasella had this to say: ‘I think it is, in the short term, a big win for Sarkozy but, in the long term, it is a big setback for the country in terms of foreign investment’. The French government’s interference in the deal was seen worldwide as an act of nationalism which would cast doubt over foreign investors’ desire to invest in France, and the amount of liberty they would have in doing so. Jean-Pierre Raffarrin responded to those critics by affirming that this move didn’t imply that France was nationalistic or individualistic, but that it showed they were open to projects with their European and other partners. Today
Today Sanofi-Aventis has changed its name back to Sanofi and remains the third largest company in the healthcare industry, with a market capitalization of $141.12 billion and revenues of 32.951 billion for the past year (2013). Dans le rapport annuel 2005, le PDG affichait sa satisfaction en d??clarant que ?? les 15 premiers m??dicaments du groupe ??taient en progression de 14% et les vaccins,??
activit?? strat??gique pour le groupe, r??alisaient une croissance de 26,9% ?? et JF Dehecq d??clarait que ?? l’innovation serait incontestablement le facteur cl?? de la croissance. ??
. Sanofi Pasteur est la plus importante soci??t?? au monde ?? se consacrer enti??rement aux vaccins
s Les 15 premiers m??dicaments??
ont enregistr?? une progression de 17,8%. Parmi eux, 8 m??dicaments phares ??taient affich??s : Lovenox, Plavix et Aprovel dans les domaines cardiovasculaires, Ambien dans le syst??me nerveux central, Allegra et Actonel en m??decine interne. Le domaine vaccin ??tait consid??r?? comme strat??gique pour le groupe. Le chiffre d’affaires a progress?? de 7,5 % port?? principalement par les vaccins contre la grippe
En 2005, Sanofi Aventis proc??dait ?? une r??organisation de sa R & D par projet Une politique active de recherche et d??veloppement a ??t?? mise en ??uvre. Un an et demi apr??s la fusion, le portefeuille de mol??cules de Sanofi Aventiscomprenait 127 mol??cules et vaccins en d??veloppement dont 56 en phase avanc??es phases II et III. Sanofi Aventis privil??giait une approche internationale de sa R & D et poss??dait plusieurs centres de recherche dans le monde. La m??thode de travail de la recherche et d??veloppement reposait sur un ??quilibre entre sanofi et aventis.??
La nouvelle organisation mise en place par le groupe pharmaceutique Sanofi Aventis s’appuie d??sormais sur plusieurs centres de R&D largement implant??s dans le monde.??
...(download the rest of the essay above)