Genzyme + Sanofi = unfriendly takeover
A cure for a rare disease
The French pharmaceutical giant Sanofi-Aventis has expressed a desire to buy the American biopharmaceutical company GenzymeTigran Oganesyan, Expert Magazine
The initial purchase price indicated in the official letter that Sanofi-Aventis (SA) Chief Executive Christopher Wiebacher sent on August 29 to Genzyme CEO Henri Termeer was $18.5 billion, or $69 per share.
Information about this offer became the most important news of the global corporate market in the last week of summer 2010. However, rumors about the impending unfriendly takeover of Genzyme appeared back in June, after a number of reshuffles in the board of directors of the American company, and since the end of July, when market players received clearer positive signals from the French, its shares on the NASDAQ high-tech exchange began to grow rapidly. Before the last weekend, on Friday, September 2, Genzyme quotes were trading in the range of 70.7-70.8 dollars per share.
Why is Sanofi-Aventis starting this expensive deal? After all, if we are based on formal financial indicators, then SA, like most other international pharmaceutical giants, is now very profitable: its current market capitalization exceeds $ 75 billion, and total sales by the end of 2009 amounted to about $ 38 billion (for comparison: Genzyme's total revenue last year was $ 4.5 billion).
However, over the past few years, the drug portfolios of the largest pharmaceutical companies have been experiencing strong competitive pressure from generics. According to some analysts, because of this, SA may lose about 20% of its current revenues by 2013.
Of course, such an unpleasant financial prospect makes the top management of the French pharmaceutical company hastily look for new directions of development. Answering the questions of the "Expert", Nikolay Savchuk, director of the American investment company Torry Pines Investment (San Diego, California), specializing in the support of various biopharmaceuticals at the early stages of their development, in particular, noted that over the past two years Sanofi-Aventis, under the leadership of the new Chief Executive Officer Christopher Vibacher, has been implementing a broad diversification program, gradually shifting the emphasis from the most susceptible to the attack of generic pharmaceutical drugs to drugs developed on the basis of biotechnology and cell therapy. During this period alone, the company spent about $17 billion on 25 new acquisitions, absorbing smaller companies.
According to Nikolay Savchuk, "just a couple of years ago it was hard to even imagine that the sale of Genzyme would be seriously discussed. The American company has created its own profitable niche in the pharmaceutical market, developing diagnostic tools and treatment methods for so-called orphan diseases (rare severe diseases often caused by genetic causes). According to the legislation adopted in many developed countries, the developers of such drugs receive patent protection for them, the validity of which significantly exceeds the standard expiration dates of patents. At the same time, the cost of such developments, mostly based on the use of modern biotechnologies, does not differ much from the cost of developing "blockbusters" for the most common diseases, competition from large international companies is minimal, and generic manufacturers are not yet able to offer drugs of this level."
Thanks to this, Genzyme gained a significant advantage in the new market segment for some time (at the peak of expansion, in early 2008, its stock quotes exceeded $ 80).
However, about a year ago, the company suddenly had serious problems. Contamination was detected at the Genzyme sterile biotech plant in the town of Alston Landing (Massachusetts), and the elimination of their causes led to large delays in the delivery of two of the company's most popular drugs, which, in turn, stimulated market regulators in the US and the EU to speed up the approval procedure for the use of competing medicines. In addition, this unpleasant story resulted in large fines from the federal authorities ($ 175 million). As a result, the company's image suffered greatly, and its shares plummeted in price (the minimum of $ 47.16 was reached on June 9, 2010). Thus, the Sanofi-Aventis management chose the time to attack the new asset correctly.
However, as noted above, after information about the possible purchase of Genzyme leaked to the market, its stock quotes quickly went up again, and while top managers and major shareholders of the company rejected the initial offer of the French ($ 69 per share), because they are still counting on additional stock exchange earnings. However, according to experts in the biotech market, the limit of their growth has almost been reached today, and, as most market analysts believe, CEO Genzyme Termeer will be forced to agree to the sale of the company.
Jeffrey Porges, an authoritative American specialist from Sanford Bernstein, believes that the final price may be about $ 77-78 per share, that is, about 10% higher than the initial estimate of Sanofi-Aventis.
Portal "Eternal youth" http://vechnayamolodost.ru13.09.2010