The generic drug space is hotting up, with several companies making bids for several other entities. After Japanese company Daiichi's takeover of India's biggest drugmaker Ranbaxy  (See: Daiichi to make open offer for Ranbaxy on August 8), French pharmaceuticals major Sanofi-Aventis has come out with a counter offer for Czech generic drugmaker Zentiva, only a day after the latter received an offer from its second-largest shareholder Czech financial group PPF.

The Sanofi-Aventis bid of 1,050 koruna (Czech crowns) per share values Zentiva at 40.043 billion koruna, or 1.655 billion euros. Earlier on Tuesday, PPF had launched a 950 koruna per share bid for Zentiva, indicating the offer could be raised or withdrawn in the event of a counter offer. Sanofi-Aventis and PPF are the two largest shareholders in Zentiva, holding 24.9 per cent and 19.2 per cent stakes respectively.

''Sanofi-Aventis is already established in the various markets where Zentiva operates. The intended acquisition of the control of Zentiva carries a strong strategic rationale,'' Sanofi-Aventis stated to push its case.

Analysts expect another offer from PPF, because its own stake had peen purchased at a price close to the Sanofi-Aventis offer, and in the words of one analyst, it is improbable that ''PPF wants to make zero percent profit for two years' shareholding.'' That is, if it sells its stake to Sanofi-Aventis.

With a successful acquisition, Sanofi-Aventis would gain cheaper copies of more than 180 generic medicines, including copies of Bristol-Myers Squibb Co.'s Glucophage diabetes pill and Merck & Co.'s Zocor for cholesterol.
 
Moreover, Sanofi-Aventis asserts that unlike other generic players, Zentiva backs its products with a sales force. In acquiring Zentiva, the company will benefit from higher-margin generic sales in Russia, Poland, the Czech Republic, Romania and Turkey, company spokesperson Jean- Marc Podvin said.

''It's not a shift, it's a continuation of the strategy,'' he added. ''Zentiva is not looked on as a typical generic business, it's more of a branded-generic business.''

Sanofi-Aventis said its offer price represents a 14.6 per cent premium to Zentiva's 30 April closing price of 916 crowns, the day before PPF announced its planned cash offer for Zentiva. The offer price represents a 10.5 per cent premium to PPF's offer price of 950 crowns.

PPF last month announced its intention to make the offer, which sent shares up around 10 per cent since, and has said it wants to take a more active role in the group.

Zentiva said in a statement that its board would review the announcement and issue a full response once details of the Sanofi-Aventis bid are published.

'In the meantime shareholders are advised not to take any action in regards to the intended competing offer or the offer recently made by (PPF subsidiary) Anthiarose Limited,' Zentiva's statement said.

Sanofi-Aventis' first-quarter profit fell 12 per cent, and rivals are planning copies of its two best- sellers, the Plavix and Lovenox clot treatments, which can further erode its bottomline. Hence, it is looking to move into the generic space to offset losses to its proprietary lines.

The market for generic medicines is growing at twice the rate of patent-protected products as ageing populations and the rise of heart disease, cancer and diabetes swallows more health-care funds, forcing governments to turn to cheaper treatments to save costs.

There have been close to $50 billion in generic-drug acquisitions between January 2005 and today, compared with $12.4 billion between January 2000 and December 2004. Some of them are the Daiichi-Ranbaxy deal, and Novartis' takeovers of German generic-drug maker Hexal AG and Eon Labs Inc. of the US.

Zentiva, based in Prague, was formed in 2003 through the union of the Czech Leciva AS and Slovakia's Slovakofarma AS. It expanded into Romania in 2005 through its acquisition of the former Sicomed SA and into Turkey with its purchase of Eczacibasi.

Its top-selling products include Simvacard, a copy of Merck & Co.'s Zocor cholesterol medication, and Helicid, a generic version of AstraZeneca Plc's Prilosec heartburn treatment.

The Czech company has reported declining profit for the past four quarters as it struggles against spending cuts at home and unpaid invoices in Romania. However, its share price has increased considerably over the last month on the interest shown by various parties, and rose 81 koruna, or 7.8 percent, to 1,120 koruna after this latest announcement.

Sanofi-Aventis, headquartered in Paris, France, is a multinational pharmaceutical company. The company is one of the six largest pharmaceutical companies in the world. Sanofi-Aventis engages in the research, development, manufacturing and marketing of pharmaceutical products for sale principally in the prescription market, but they also develop over-the-counter medication.

Sanofi-Aventis cover 7 major therapeutic areas: cardiovascular, thrombosis, oncology, diabetes, central nervous system, internal medicine and vaccines (with its subsidiary Sanofi Pasteur).