Scent Of A Deal: Is There A Sanofi/Bristol Merger?

Sanofi Aventis

Rumors about merger talks between pharmaceutical giants Sanofi-Aventis and Bristol-Myers Squibb have picked up speed after French financial newsletter La Lettre de I Expansion reported a deal was in the works. Thomas Burnett, director of research at Wall Street Access, was on “Morning Call” to give his take on the possible friendly takeover.

FYI: Bristol and Sanofi already collaborate on the marketing of Plavix, the popular anti-platelet drug that fights coronary artery disease. Burnett says the Plavix partnership would give the two companies reason to merge, especially as Plavix has faced fierce competition from generic brands.

Plavix currently accounts for roughly 23% of Bristol’s total revenue, according to Burnett. He questions whether it’s the right time for Sanofi to be “doubling down its bet” on the drug by making an acquisition of Bristol.

Sanofi, meanwhile, only gets 45% of its total revenue from the U.S. The merger would make it the world’s largest pharmaceutical company. But could that be a red flag for U.S. regulators? Burnett says there is still enough competition in the field that regulatory issues would not block the deal. Burnett’s firm believes the merger is very possible to take place at some point, but he says it’s still unlikely in the short term.

One reason to believe a merger could happen, according to Burnett, is the new leadership at Bristol. The company’s previous CEO Peter Dolan left the company last fall after a patent dispute regarding Plavix. He was not known to be flexible when it came to mergers and acquisitions. Bristol’s new CEO, James Cornelius, might have a more open approach to being acquired, Burnett says.

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