IHS Global Insight Perspective | |
Significance | The transaction was agreed between Mérieux Alliance which held an 80% stake in Shantha Biotechnics and Sanofi Pasteur. The total financial consideration was 550 million euro (US$783 million). |
Implications | With this purchase, Sanofi will inherit a strong portfolio in affordable vaccines aimed at the developing and least developed markets. Apart from the vaccines, Shantha Biotechnics also has a sizeable oncotherapeutics portfolio primarily containing off-patent drugs. |
Outlook | Sanofi is to close the transaction in the third quarter of 2009 and will gain valuable entry into emerging markets and potentially expand its presence in the biosimilars market in the medium term. |
GSK's Loss Becomes Sanofi's Gain
Sanofi Pasteur, the vaccine arm of the French major Sanofi-Aventis entered into an agreement with Mérieux Alliance to buy out the latter's subsidiary Shantha Biotechnics (Shantha Biotech) in India. The transaction involves Mérieux's 80% stake in the Indian firm which will cost Sanofi a total of US$783 million. The deal was made following hectic activity in an otherwise sombre Indian vaccine market with Big Pharma firms such as GlaxoSmithkline (U.K.) eyeing majority stakes in Shantha Biotech.
Interestingly, the deal will see Sanofi, Mérieux and Shantha Biotech form a new joint committee chaired by Alain Mérieux on vaccine strategy for emerging markets. Clarity on the scope of this committee and its influence in the new acquisition is awaited.
What Does Sanofi Get for its Cash?
The table below lists the main brands in the marketed portfolio of Shantha Biotech.
Shantha Biotechnics' Portfolio | |
Brand Name | Therapeutic Area/Indications |
Shanvac-B | Recombinant DNA hepatitis B vaccine |
Shanferon | Recombinant interferon alpha 2b |
Shanpoietin | Recombinant human erythropoietin |
Shantetra | Diphtheria + Pertussis + Tetanus (DPT) + Hepatitis B (H) vaccine |
Shan Hib | Vaccine against infections caused by haemophilus influenzae type-B (Hib) |
Shan Hib-DPT | DPT + Hib vaccine |
Shan5 | DPT + H + Hib vaccine |
Shan TT | Tetanus vaccine |
Source: Shantha Biotechnics | |
It is evident that Shantha's strengths primarily lie within the vaccine sector. The firm is known to be one of the suppliers to organisations such as UNICEF (United Nations Children Fund) and PAHO (Pan American Health Organization). The firm is also credited with the launch of the first recombinant hepatitis B vaccine produced in India in 1997. At that time, Shanvac-B vaccine triggered a substantial drop in prices from 780 rupees (US$16.18) to 50 rupees per dose.
Shantha Biotechnics' Oncology Portfolio | |
Brand Name | Active Ingredient |
Epiricin | epirubicin hydrochloride |
Shancyte | gemcitabine |
Zoledron | zoledronic acid |
Platoxin | oxaliplatin |
Shanferon | recombinant interferon alpha 2b |
Captabin | capecitabine |
Shanmyde | cyclophosphamide |
M-Fost | amifostine |
Paxytol | paclitaxel |
Cistriz | cisplatin |
Talimyde | thalidomide |
Doxel | docetaxel |
Shantroz | letrozole |
Source: Shantha Biotechnics | |
Along with the vaccine portfolio, Sanofi Pasteur also inherits an oncology drugs portfolio primarily consisting of off-patent drugs. Shantha initiated its entry into the Indian oncology drugs market in the recent past through its division Cytocrest. The unit has in-house developed as well as drugs obtained through alliances with Big Pharma firms. Shantha Biotech said that it expects to register sales of US$90 million in the current fiscal year (2009/10).
Outlook and Implications
The acquisition provides Sanofi Pasteur with market presence in the emerging markets particularly India and regional presence through the United Nations supply initiatives in Latin America, Asia-Pacific and sub-Saharan Africa. The deal itself pursued a rocky road for the two Big Pharma players interested. It was rumoured that Sanofi at one point withdrew from the race bolstering GSK's bid. However, it seems that the French proximity namely towards Mérieux Alliance finally tipped the scales for Sanofi Pasteur.
Taking a look at the marketed portfolio, some inherent positives apart from the vaccine portfolio can be identified. The Cytocrest initiative provides Sanofi with access to cost-effective oncology therapies that could be expanded to other developing markets. The unit itself brought Shantha recognition as one of the top ten producers of biosimilar products in India. Others in the sector are: RPG LifeSciencs, Panacea Biotech, Intas Biopharmaceuticals, Dabur Pharma (now a part of Fresenius Kabi) and Biocon among others.
The French firm would also have valued Shantha Biotech's pipeline. Shantha Biotech is expected to commercialise over the next five years the following vaccines: rotavirus vaccine, conjugated typhoid vaccine and vaccine for infections caused by human papillomavirus. While the list for future product launches is again vaccine heavy, Sanofi can expect to use Shantha Biotech's R&D infrastructure to support its own development initiatives gaining a lower cost structure. The transaction is expected to be completed by the end of the third quarter of 2009.
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