SNY Sanofi

By Denise Roland 

For Sanofi SA, a deal with Actelion Pharmaceuticals Ltd. would help offset declining sales of its best-selling insulin Lantus--though, like Johnson & Johnson, it might struggle to agree on price.

Paris-based Sanofi is in talks for a deal with the Swiss biotech company, which had also drawn interest from J&J until the U.S. health-care giant bowed out of the race on Tuesday.

The big attraction for Sanofi is Actelion's portfolio of drugs for pulmonary arterial hypertension, a rare respiratory disease. That franchise is expected to notch strong growth thanks to the recent launch of two new drugs for the disorder.

Those drugs, and others in the portfolio, would immediately boost Sanofi's top line, which is struggling to grow amid dwindling sales of its best-selling insulin Lantus.

Sanofi, like other insulin makers, is being forced to cut or flatten its prices by powerful middlemen that buy drugs on behalf of insurers and employers. Eli Lilly & Co. plans to launch a cheaper copycat of Lantus in the U.S. early next year, piling further pressure on Sanofi.

That has sent Sanofi on a deal-hunting spree: Earlier this year it mounted a failed bid for cancer biotech Medivation Inc.

Acquiring or otherwise joining with Actelion would also fit with Chief Executive Olivier Brandicourt's aim of focusing the company on a narrow group of areas where it can play to its strengths. Sanofi is already one of the world's largest makers of rare-disease drugs through its Genzyme business.

Still, Sanofi could come up against the same roadblock as J&J: price.

One problem is that wringing synergies out of an acquisition of Actelion could "kill the goose that lays the golden egg," said UBS analyst Michael Leuchten. That is because Actelion's sales force is highly specialized and would need to be retained following any deal.

Another is the difficulty of evaluating Actelion's pipeline of experimental drugs, many of which are in the midst of crucial clinical trials that haven't so far produced results. It isn't clear what price Sanofi is discussing paying or what structure is envisioned, but a deal could value Actelion at as much as $30 billion. Sanofi declined to comment.

"There's a disconnect between what [Actelion] thinks it's worth and what the market believes it's worth," said UBS's Mr. Leuchten. Actelion had a market value of more than $22 billion as of Tuesday's close but was down nearly 10% in afternoon Zurich trading on Wednesday. Sanofi shares were down 2.1% in afternoon Paris trading.

What's more, Actelion's founder and chief executive, Jean-Paul Clozel, has been resistant to takeover approaches in the past and ultimately could decide to remain independent or strike a deal that falls short of an acquisition.

Actelion is unusual among companies of its size for a strong sense of identity that stems from the husband-and-wife team at its core.

Dr. Clozel's wife, Martine, is the company's chief scientific officer. The pair, along with other former Roche Holding AG employees, left the Swiss drug giant to found Actelion in 1997 after Roche decided not to pursue a project their group was working on.

Actelion couldn't immediately be reached for comment.

Write to Denise Roland at Denise.Roland@wsj.com

(END) Dow Jones Newswires

December 14, 2016 08:23 ET (13:23 GMT)

Sanofi (NASDAQ:SNY)
Historical Stock Chart
From Mar 2024 to Apr 2024

Sanofi (NASDAQ:SNY)
Historical Stock Chart
From Apr 2023 to Apr 2024