Zentiva, Sanofi’s Generic Arm to be Sold for $2.4B
The French healthcare firm is now reportedly in talks to sell off its generic medicine wing for an estimated 1.9 billion euros ($2.4 billion) in order to bring its biotech back in focus. It is pitching its copycat drug unit Zentiva to Advent International, the companies acknowledged that they are in exclusive negotiations. And Advent said it has big plans for the European generics business.
The sale of Zentiva was delayed partly to decide which parts of the division to sell. Some of the rationale behind the sale is related to distributor consolidation. Distributors buy generic versions to sell to
patients, and once merged, they have more leverage to negotiate lower prices. For the last three years, there has been significant consolidation of generics distributors worldwide.“Zentiva is a robust business with a highly talented workforce and we believe it has demonstrated its potential for growth. Following a comprehensive review of strategic options for our generics unit in Europe, we have determined that transferring this business to Advent is the best option to ensure its long-term success,” said Olivier Brandicourt, Sanofi’s chief executive, explaining the decision.
“We have long been attracted to the generic pharmaceutical sector as it enables more people to access high quality treatments by lowering their cost,” said Advent managing directors Tom Allen, also co-head of Advent International’s European Healthcare team, and Cédric Chateau, also head of Advent International in France.
“We believe that Zentiva is a great platform, full of talented people, who we can invest behind to build a new, independent, European generics leader”.
The transaction is expected to close by the end of 2018, subject to finalization of definitive agreements, completion of the appropriate social processes and approval of relevant regulatory authorities.
Reuters quoted Jerome Schupp, fund manager at Geneva-based Prime Partners, as commenting: “The sale price is decent, but nothing that extraordinary. Sanofi will probably re-invest the proceeds in looking to make pharma or biotech acquisitions. They are looking to strengthen their pipeline, which is a bit weak at the moment”.
