Sanofi and Merck to End Joint Vaccines Venture in Europe

  • Split to be completed by end of 2016 if regulators allow
  • Sanofi reviewed venture due to lack of promising pipeline

Sanofi and Merck & Co. plan to end a two-decade-long joint venture to sell vaccines in Europe as revenue from the products dwindles.

The business, in which the companies each hold 50 percent, will be split and folded back into the parents’ operations, Merck and Sanofi said in a joint statement. The separation should be completed by the end of the year, if it doesn’t hit snags with regulators or local labor laws, they said.

The joint venture, known as Sanofi Pasteur MSD, had revenue of about 824 million euros ($908 million) last year. It supplies almost half of Europe’s flu vaccines, as well as shots against shingles and the cervical cancer vaccine Gardasil, in Europe. Sales have grown in only one of the past eight quarters. They fell about 3 percent last year.

The division is based in Lyon, a stone’s throw from Sanofi’s own vaccine business, called Sanofi Pasteur. That unit is starting to roll out the world’s first vaccine against dengue fever and is working on other life-threatening diseases such as clostridium difficile. Merck also has its own vaccines division, which is developing a shot against Ebola.

Bare Pipeline

“We believe that focusing our efforts on opportunities unique to our respective companies will better position us to drive growth, execute in a more efficient manner and optimize vaccine coverage,” Paris-based Sanofi and Kenilworth, New Jersey-based Merck said.

Sanofi reviewed the alliance because of a lack of promising assets in the business’s pipeline, people familiar with the plan said last month. Chief Executive Officer Olivier Brandicourt is also working to simplify the French drugmaker’s portfolio, reduce management layers and cut costs.

About 115 positions could disappear in France as a result of the split, with as many as 100 employees who may agree to voluntary departures, the companies said. Sanofi Pasteur and MSD, as Merck is known in Europe, will keep a presence in Lyon and ensure that “any impact on employees as a result of the proposed changes to the business model will be managed responsibly.”

Sanofi shares showed little change in Paris, falling 0.1 percent to 72.46 euros. Merck was unchanged at $52.61 at 11:50 a.m. in New York.

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