Sanofi Chief Executive Officer Chris Viehbacher said he’s satisfied with his stable of experimental drugs and doesn’t need to chase a big deal even as his rivals pursue acquisitions like never before.
“Unlike everybody else, we feel we’ve got critical mass in all of our businesses,” the CEO said in an interview yesterday in Lyon, France. “We look constantly at everything just to make sure that we are not missing an opportunity, but at today’s prices I don’t see anything that I can acquire that strengthens our company and creates value for our shareholders.”
Drugmakers including Novartis AG (NOVN), GlaxoSmithKline Plc, Eli Lilly & Co., Bayer AG and Merck & Co. have participated in a record $139 billion of deals so far this quarter, not including AstraZeneca Plc’s rejection of Pfizer Inc. (PFE:US)’s 69.4 billion pound ($117 billion) takeover bid last month. The collapse of that deal suggests investors may be starting to place more value on medicines under development, Viehbacher said.
“The really interesting thing about Pfizer-AstraZeneca was that actually shareholders, at least short-term, were willing to forgo 20 pounds of premium, largely on the basis of a pipeline that is still some time away,” he said. “Is that really a sign that amongst big pharma investors, which hasn’t typically been the case, there is a willingness now to value pipelines? We’ll have to wait and see.”
Investor attention to medicines under development is important to the biggest drugmakers, who have been criticized for being slow to find the next big thing as patent protections for their blockbusters expire.
Sanofi (SAN) this year forecast its first increase in annual profit in four years as the company gains from the approval of new drugs such as multiple sclerosis medicines Aubagio and Lemtrada, and moves away from the expiry of patents on blockbusters such as blood thinner Plavix.
Still, Viehbacher said he doesn’t think the Pfizer-Astra deal is necessarily a “harbinger of things to come.” Most of the deals announced this year have been an exercise in “portfolio optimization” rather than strategic changes in direction, the CEO said.
“If you look at the valuations involved and the volume of M&A it’s big, but if you step back and look at it from a management point of view, none of these things have really dramatically changed the footprint of any of the companies.”
Sanofi agreed in January to pay about $700 million for a 12 percent stake in Alnylam Pharmaceuticals Inc. and access to the company’s experimental drugs for rare diseases. That’s the Paris-based company’s biggest deal since its $20.1 billion acquisition of Genzyme Corp. in 2011.
“Valuations are extremely high right now,” Viehbacher said. “I am very glad I did most of my M&A activity from 2009 to 2011. I am feeling great about what we have; I haven’t felt this great in years.”
Viehbacher declined to comment on whether the company has any plans to sell its portfolio of older drugs.
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