27.07.2010 • NewsGenzymeGlaxoSmithKline (GSK)Sanofi

Genzyme Seen More Attractive To Sanofi Than Glaxo

Sanofi-Aventis is far more likely to buy Genzyme than GlaxoSmithKline, which already has a presence in rare diseases via a deal with Japan's JCR Pharmaceuticals, industry experts said on Monday.

Sources familiar with the matter said on Friday that Sanofi was sounding out Genzyme as the French drugmaker hunts for a large acquisition, prompting a 15% jump in the U.S. biotech company's market value to $16.7 billion.

The Wall Street Journal said Britain's Glaxo had also recently made "a very casual approach," but industry insiders and analysts said Glaxo Chief Executive Andrew Witty, with a reputation for caution on M&A, was unlikely to chase the asset.

One of Genzyme's main appeals is its strength in rare diseases, a high-margin sector that is winning fans in Big Pharma. Yet Glaxo already has access to a rare diseases portfolio after becoming the biggest shareholder in JCR, in March, with a 17% stake.
The British company also has less strategic need for a large acquisition than its French counterpart, since it has already put many of its big drug patent losses behind it.

"Glaxo is less likely to enter a competitive process," said UBS analyst Gbola Amusa.

"In Glaxo's case they are post the generics cliff, they are just emerging from that, so Glaxo doesn't quite fit the profile to do a large deal for the sake of earnings growth," he said. "The question is: who wants Genzyme the most? Our view is that Sanofi is likely to emerge, simply because they are relatively deficient in biotech capabilities versus their peers and they need to better globally diversify their R&D engine."

Officials at Glaxo and Sanofi declined to comment.

Genzyme is beginning to emerge from a manufacturing crisis that caused shortages of two of its biggest-selling drugs, leaving it relatively cheaply priced and potentially vulnerable to a takeover.

Sanofi, meanwhile, is facing patent expirations on some its top products. Late on Friday, the company lowered its view for 2010 earnings per share - although it kept its 2013 guidance - after U.S. regulators approved a generic form of the Lovenox blood thinner, its no. 2 product last year.

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