Sanofi (SAN) and Merck (MRK) & Co. have joined the ranks of large drugmakers that are considering selling their portfolios of mature drugs, people with knowledge of the matter said, as the industry recalibrates amid of a wave of patent expiries.
Sanofi, the Paris-based maker of the world’s top-selling diabetes treatment, could sell some of the older drugs, swap them for others or create a joint-venture for them, one of the people said, asking not to be identified because the deliberations are private. Merck also is weighing a sale of drugs collectively valued at more than $15 billion, another person said.
The mature drugs, even those that face competition from generic versions, command a premium in emerging markets and are expected to remain profitable for some time. Pfizer Inc. and GlaxoSmithKline Plc both have created separate established-product businesses that could eventually be split off or sold.
The 13 biggest U.S. and European drugmakers will lose $50 billion in sales from patent expirations from 2013 to 2018, data compiled by Bloomberg show. That’s driving a realignment of the businesses and has spurred more than $217 billion in deal agreements or proposals in the past month, including Pfizer Inc.’s attempt to acquire AstraZeneca Plc and Merck’s sale of its over-the-counter consumer products business.
“We assess on an ongoing basis whether or not particular assets are core to our strategy, whether they provide strategic advantage, and whether they generate long-term value,” Steve Cragle, a spokesman for Merck, said yesterday by e-mail. He declined to comment on the comany’s plans for its drug portfolio.
Jack Cox, a spokesman for Sanofi in Paris, declined to comment. Reuters previously reported that Merck and Sanofi are weighing selling portfolios of mature drugs.
Considering options to rationalize the portfolio isn’t something new for Sanofi Chief Executive Officer Chris Viehbacher, who divested assets before. In 2011, the French drugmaker sold its dermatology unit Dermik to Valeant Pharmaceuticals International Inc., Canada’s biggest pharmaceutical company.
Sanofi is working with Evercore Partners Inc. on the review of the drug portfolio, which is at an early stage, two people said. The company is considering several options, and selling a drug portfolio is one possibility, they said. A representative for Evercore didn’t respond to a request for comment.
Mylan Inc. has been looking for new generic and brand-name drugs to add to its portfolio, and Chief Executive Officer Heather Bresch said that the Canonsburg, Pennsylvania-based company would look at anything the companies are selling.
“We are very interested, and I do think those type of assets are out there,” she said in an interview in New York May 1. The biggest U.S. generic drugmaker, with $6.91 billion in sales last year, approached Meda AB with a $6.7 billion bid that has so far been rebuffed.
Glaxo is considering options for its established products portfolio, Chief Executive Officer Andrew Witty said on an April 30 call with analysts. It probably will divest individual products, though it’s possible too that the company will sell blocks of products, he said.
The portfolio, which Glaxo set up last year, includes more than 50 older products with sales of 4.22 billion pounds ($7.1 billion) last year including the Lovaza heart drug and Malarone for malaria.
Pfizer has reorganized its business over the past three years, shuttering some research projects and emphasizing others. The biggest U.S. drugmaker has split itself into three units internally, including a business with mature products.
The company will produce separate profit and loss statements for each business, and let investors value the units. If investors think the segments would be more valuable as independent entities, then Pfizer would move forward with a full separation in a few years, it has said.
AstraZeneca, the U.K.’s second-biggest drugmaker, is resisting Pfizer’s overtures and has rejected a sweetened bid, saying that it fails to value properly AstraZeneca’s promising drug pipeline and relies too much on equity.
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