Oct. 21 (Bloomberg) -- Sanofi-Aventis SA bought rights to an experimental drug from Wellstat Therapeutics Corp. for as much as $350 million to expand its portfolio of diabetes treatments, now led by the world’s best-selling insulin Lantus.

The medicine, called PN2034, is now in the second of the three stages of testing generally required for regulatory approval, Sanofi said today in an e-mailed statement. Sanofi will pay Wellstat royalties on any sales.

“Lantus is their best franchise so it’s not surprising that they would want to build upon it,” Jeff Holford, a London- based analyst at Jefferies International, said in an interview. “They need some more product concentration in that area.”

Chief Executive Officer Chris Viehbacher has identified diabetes as one of “five growth platforms” that may help counter the loss of revenue as prescription medicines accounting for more than 20 percent of the company’s sales face generic competition. He is also looking to beef up the company’s presence in emerging markets and its biotechnology, vaccine and over-the-counter drug units. He has already spent more than 6 billion euros ($9 billion) this year to gain cancer medicines and generic-drug makers in Brazil and Mexico.

Results of two mid-stage trials “demonstrate the potential of PN2034 as one of the most promising treatments for Type 2 diabetes currently in development,” Wellstat said on its Web site. The studies were completed in 2007, according to Bloomberg data.

“It’s a sensible pipeline diversification move for them but we don’t have any data to jump up and down about here,” Holford said. “One would guess they’ve seen something in these data that we haven’t.”

Lantus generated 792 million euros in sales in the second quarter for Sanofi.

To contact the reporters on this story: Angela Cullen in Frankfurt at acullen8@bloomberg.net; Trista Kelley in London at tkelley2@bloomberg.net;

Last Updated: October 21, 2009 04:59 EDT