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Sanofi-Aventis Seeks To Acquire Biotech Player
http://www.therapeuticsdaily.com/news/article.cfm?contenttype=sentryarticle&contentvalue=1186631...
Business Monitor Pharmaceuticals & Healthcare Report - Dec. 22, 2006

Following a year of furious M&A activity, France's Sanofi-Aventis has revealed that it is interested in buying a biotechnology firm with "three or four products" that is in the mould of US-based stellar performer Genentech. Biotech is currently outperforming the traditional small-molecule industry and Sanofi-Aventis is hoping to get its share of the action as it faces falling revenue from patent expiries and state-imposed cost-containment measures. BMI concurs with the French firm's rationale but is highly sceptical that it will secure a company of Genentech's pedigree.

Big pharma is slowly becoming an anachronism, with the days of almost certain double-digit growth long gone. For the 15 largest drugmakers, the number of new molecular entities (NMEs) approved by the US FDA has fallen from 24 in 1998 to just 11 in 2005. Conversely, biotech is on the up. The number of registered biotech NMEs jumped from 11 in 1998 to 18 in 2005, and there were even more - 20 - in 2004. Furthermore, large pharmaceutical companies are experiencing a sharp increase in the number of patent expiries, reducing income even more.

US-based Pfizer's US$3.3bn depression treatment, Zoloft (sertraline), lost patent protection this year, while Zithromax (azithromycin), its US$2bn anti-infective, lost protection in 2005. Meanwhile, Lipitor (atorvastatin), its US$12bn cholesterol lowerer, becomes fair game for generics in 2011. And it's not just Pfizer, every multinational is affected. Merck & Co's US$3bn Fosamax (alendronate), a treatment for osteoporosis, comes off patent in 2008, while Singulair (montelukast), a US$3bn drug for controlling chronic asthma, loses protection in 2010. Bristol-Myers Squibb loses the anti-clotting drug Plavix (clopidogrel), the second largest-selling drug globally, in 2011. And that same year, Eli Lilly will lose exclusivity for Zyprexa (olanzapine), a schizophrenia drug worth US$4bn in annual sales.

Despite these negatives, large pharmaceutical companies are cash-rich, enabling them to acquire cutting-edge biotech companies. Boosted by 2004 legislation that allowed them to repatriate cash generated abroad, most US multinationals are sitting on huge sum of capital. Pfizer has US$13bn, Johnson & Johnson has US$15bn, Merck & Co has US$9bn and Wyeth has US$8bn.

BMI predicts that M&A activity will continue to be strong in 2007 as big pharma leverages its size and ambition. Biotech will continue to become more global as companies, particularly in the US, look to India and China for their manufacturing needs and to conduct clinical trials. But our most promising tip for the near future is the emergence of biosimilars, which are poised to revolutionise the pharmaceutical industry.