Pharma deal: French Sanofi-Aventis to buy U.S. Genzyme
The headquarters in Paris shows the logo of French pharmaceutical group Sanofi-Aventis.
TEXT OF EVE TROEH'S UPDATED COVERAGE
JEREMY HOBSON: The French pharmaceutical company Sanofi-Aventis is buying the Massachusetts-based biotech firm Genzyme for more than $20 billion. This is a deal that's been in the works for a long time.
For more on why its finally happening, and what it all means, let's bring in Marketplace's Eve Troeh. She's with us live. Good morning.
EVE TROEH: Good morning.
HOBSON: So these two companies have been trying to make a match for a while, right?
TROEH: Yeah, it's kind of a Parisian and America love story I guess. Rumors have flown since last July, oui, that Sanofi was wooing Genzyme, And it took a while because Genzyme demanded a higher stock price. In the past few years the company's really blossomed from a little biotech start up to a bigger player for innovative drugs that treat rare diseases.
Now most people probably haven't heard of the lover here, Sanofi-Aventis. It's the biggest drug maker in France. And it's been on something of a buying spree, according to Standard and Poor's analyst Jacob Thrane. I talked to him this morning. He says Sanofi's been looking to expand into biotech, and also new markets, so that's why it kept up the courtship for so long.
JACOB THRANE: Buying Genzyme is killing two birds with one stone. It gets a foothold on the U.S. market and it gets a foothold in biologics.
Sanofi CEO Chris Viehbacher says this $20 billion deal is the second biggest in biotech history.
HOBSON: And Eve give us the big "pourquoi" here. Explain why a pharmaceutical company would want to buy a biotech company right now?
TROEH: Well, a lot of the blockbuster drugs that make lots of money for big pharma-companies -- their patents are expiring. Sanofi, for example, has only got another year or so on its big blood-thinning drug,called Plavix. And drug companies are already seeing generic versions of their bestsellers eat into sales.
Biotech companies make drugs in a totally different way. They use proteins and genetic material. That's apparently a lot harder to copy than the chemical recipes of more traditional drugs. So, they think they can make money on them longer.
HOBSON: Alright Marketplace's Eve Troeh, thanks so much.
TEXT OF EVE TROEH'S ORIGINAL COVERAGE
JEREMY HOBSON: The French pharmaceutical company Sanofi-Aventis is buying the U.S. biotech firm Genzyme for more than $20 billion. This is a deal that's been in the making for a long time.
Let's find out why it finally happened and why we should care from Marketplace's Eve Troeh who's with us live. Good morning.
EVE TROEH: Good morning.
HOBSON: So we've been hearing about these two companies potentially tying the knot for quite some time. What's going on?
TROEH: Yes, the rumors have been flying since July of last year, really, that Sanofi had a corporate crush on the biotech drug maker, Genzyme. Genzyme seemed ripe for a takeover since around 2009. There was an outbreak of a virus at a factory where it makes its drugs in Massachusetts. That sent the stock price tumbling. And Sanofi-Aventis has been courting biotech for a while in general and specifically with Genzyme. Now they've gotten $20 billion dollars-worth. The Chief Executive of Sanofi calls this the second biggest biotech deal in the field's history.
HOBSON: And for people who don't spend all their time talking about Sanofi-Aventis and Gensyme tell us who these two companies are.
TROEH: Well Sanofi-Aventis is the biggest French drug company. It's maybe best known for the blood thinner Plaxis. Genzyme is more of a start up. It's known for making drugs that treat rare diseases, and it's based in Cambridge, Massachusetts. Its CEO is really the one who took Genzyme from a little start up to a big player. It's not clear whether he'll stick around. Genzyme actually has a few products in the pipeline right now. There's an experimental drug for multiple-sclerosis that Sanofi really likes.
And that's part of Genzyme's appeal, is the new drugs that the little start up could bring to the big corporate parent. Sanofi-Aventis has had some hot sellers in recent years, but they've been so hot that generic versions are now coming out. And that's eating into their profits. So basically they need some fresh blood to keep sales up.
HOBSON: Marketplace's Eve Troeh , thanks so much.
TROEH: Thank you.