- Commentary
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By Mimosa Spencer
- Bloomberg
Sanofi-Aventis CEO Chris Viehbacher made it clear right from the start this morning: The French drugs giant had no plans Wednesday, the day it released annual results, to update investors on its negotiations with its takeover target U.S. biotech Genzyme.
Sanofi is still reviewing non-public information from Genzyme, talks are ongoing, all options are still on the table and “we’ll keep you posted.”
“I don’t want to say a whole lot more because today is really about our earnings,” Viehbacher added.
So, ignoring the Genzyme elephant in the room, the Sanofi CEO laid out the company’s 2010 results and projections for the year to come. The key message: Generic competition will only intensify in the coming year, prompting the pharma giant to project a 5% to 10% drop in annual profit.
The subtext: the results only add urgency to Sanofi’s quest to round out its pipeline of future drugs–most obviously by acquiring Genzyme.
As Viehbacher himself says, the company can’t build a future out of cost-cutting alone. That’s why it is seeking to build up its business in areas where healthcare needs are unmet, executives said Wednesday.
It isn’t yet clear why the company wasn’t able to seal the Genzyme deal before releasing annual results, and in so doing, push the market’s focus beyond the so-called patent cliff.
What is clear from its results though, is that Sanofi needs a Genzyme-type deal. And given Genzyme’s manufacturing issues, and no alternative suitors, it seems the Boston-based biotech could use a deal with Sanofi, too.
So you can’t help wondering if, in the past two weeks since Sanofi has had access to Genzyme’s books, an unexpected discovery has thrown a wrench into negotiations.
Mimosa, I think it is clear to all that Sanofi needs Genzyme, but what is your reasoning for why Genzyme needs Sanofi? Sure, they had a major manufacturing hiccup, but this wasn’t a company-wide systemic issue, and although it was unfortunate that it hit the biggest selling products, it wasn’t necessarily a larger problem than has been seen at multiple other pharma companies. Does J&J also need to be taken over as a result of its manufacturing problems?
Ultimately, Genzyme has been able to fund through its own internal cash generation the development of multiple franchises, in oncology, ERTs, and immunology. I would argue that Sanofi’s need to put a band aid on its broken business model is pretty much the only reason this deal will happen.
It every man for himself at Genzyme. Henry and upper management will make sure they are taken care of. Taking back RSU from laid off employees is a new strategy of corporate stock buy (steal) back. Nice
I wonder if the joke about 2 billion in sales and 2 billion in intercompany sales is really true at Genzyme