Sanofi mulls selling animal health unit and European generics business worth over $13 bn

French drug giant Sanofi SA yesterday said that it is mulling selling its Merial animal health unit and its European generics business worth over €12 billion ($13 billion) in order to focus on its core drugs.

It also warned that profit would be flat over the next two years.

Olivier Brandicourt, Sanofi's new CEO, yesterday said he was ''exploring all options'' for the company's animal health unit and European generics business, both of which have ''limited synergies'' with the rest of the company.

Ahead of a presentation to investors in Paris, Brandicourt said that the ''Pharmaceutical industry is undergoing a transformation unlike anything we've previously seen. In this context, I am defining new priorities for Sanofi.''

Brandicourt plans to reduce annual costs by €1.5 billion by 2018, in order to earmark funds for acquisitions and investment in research and development.

In line with this plan, Sanofi yesterday signed a licensing deal worth up to $1.7 billion for a new oral diabetes medicine under development by US-based Lexicon Pharmaceuticals.

Earlier this week it struck a $4.2-billion deal with South Korea's Hanmi Pharmaceutical Co to develop experimental, long-acting diabetes treatments. (See: Sanofi strikes €3.5 bn diabetes treatment development deal with Hanmi Pharmaceutical)

Merial animal health business, which had revenues of €2.1 billion in 2014, operates in more than 150 countries and has 17 manufacturing sites and 13 research and development facilities.

Sanofi took full control of Merial in 2009 but failed to merge it with Merck & Co.'s own animal-health division in 2011.

The Lyon-based company is a leader in vaccine technology with recombinant-vectored vaccines for large animals and pets, the first non-adjuvanted feline vaccine line, and oral rabies vaccines for wildlife. 

It also developed the first therapeutic vaccine for cancer in dogs with xenogeneic plasmid DNA vaccine technology. 

Sanofi operates its European generic business under the Zentiva brand, which provides generic drugs to 800 million people across the whole of Europe, Russia and Turkey.

It has over more than 500 products in 800 drug forms for all major therapeutic areas, including cardiovascular, female health, respiratory, anti-infective & anti-fungals, urology, central nervous system, pain and gastrointestinal.

Zentiva has three key production plants in Central and Eastern Europe employing more than 2,000 people and produce an annual output of 450 million units, making Zentiva one of the largest producers of pharmaceuticals, by volume, in Europe.