Market share discussions killed Sanofi-Merck JV
Sanofi-Aventis plans to cut costs and expand its animal health business through acquisitions as it fully integrates Merial after the collapse of its longstanding joint venture with Merck of the US, The Financial Times writes.
<- As of Friday May 6, Sanofi-Aventis shareholders approved a name change. From now on the company is known as Sanofi.
Chris Viehbacher, chief executive of the French pharmaceutical group, told the Financial Times there was scope for “synergy” in back office operations, manufacturing, marketing, and research and development.
He said the failure of the partnership meant Sanofi-Aventis would seek new takeover targets in animal health and plan to grow, notably in emerging markets where animal health sales contributed a smaller proportion than other divisions in the group.
Failure reasons
In the first detailed comments by either company on the reasons for the failure, Viehbacher said that the failure to recombine the two companies’ animal health divisions was caused by difficulties in clearly defining market share and concentration in a way that permitted international regulatory approvals.
The process led to repeated delays and Viehbacher said that one cannot put a business on hold, stressing that both companies would have preferred to maintain the joint venture.
The current structure allows Sanofi-Aventis to fully consolidate its animal health operations.
Seeking acquisitions
He said Merial was likely to seek acquisitions “probably not of significant size” as it expanded, stressing that it generated only a fifth of its sales in emerging markets compared with a third for the group overall. It would also seek closer links to joint development of human and animal treatments.
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