Sanofi, Advent finally shake hands on $2.2B European generics sale

It’s official: Sanofi is finally ready to unload its European generics business.

More than two months after disclosing that they were in exclusive talks, the French drugmaker and buyer Advent International have ironed out the details on a €1.9 billion sale of the unit, dubbed Zentiva. The pair expects the deal to close in the fourth quarter of this year, Sanofi said.

Advent was already making plans for its new pickup well before negotiations wrapped. "We believe that Zentiva is a great platform, full of talented people, who we can invest behind to build a new, independent, European generics leader," managing directors Tom Allen and Cédric Chateau said in a statement in April.

And Sanofi, for its part, has been looking forward to a Zentiva-free future for years. Chief executive Olivier Brandicourt first announced his intent to unload the business back in 2015 as part of a refocusing effort, but other moves took priority: Since then, the company has sold off animal health business Merial in exchange for Boehringer Ingelheim’s consumer health assets, and it’s shelled out billions for Ablynx and hemophilia specialist Bioverativ, too.

Now, though, it can home in on its core areas of global medicines and emerging markets, specialty care and diabetes/cardiovascular, a goal Brandicourt unveiled shortly after taking the helm. He vowed to bulk up four subscale units—multiple sclerosis, oncology, immunology and consumer healthcare—to join diabetes/cardiovascular, vaccines, rare disease and emerging markets as areas Sanofi can fight for a leading spot. And the Ablynx and Bioverativ buys have already furthered those aims.

It’s been a big couple of years for generics M&A, prompted, in part, by pricing pressure that’s wreaked havoc on the industry. Some companies, such as Allergan—which sold its generics unit to Teva for $40.5 billion—have bowed out of the field completely, while others, such as Impax and Amneal, have taken a "bigger is better" approach and joined hands.

That pressure hasn’t been as bad in Europe, where Zentiva plays, but the unit did record a sales drop in 2017. The unit, which operates in 50 countries and sells drugs in disease areas ranging from cardiovascular to gastrointestinal, generated €760 million last year, a 4.9% dip from 2016’s haul.