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Bristol Shares Climb On Sanofi Merger Rumor

Lookin' Out for No. 1

If the report is true, Sanofi-Aventis and Bristol-Myers Squibb could soon merge to create the world's biggest drug company. (Pfizer's No. 1 today.) The story comes out of a French financial "newsletter" which attributed the information to no one -- not even unnamed sources close to the alleged negotiations. The publication says the two companies signed some kind of initial agreement last week, and could announce a done deal within the next few weeks. The market seemed to put some credence into the report: Bristol shares closed at a new high on five times the average daily volume -- and Sanofi shares fell. Some analysts say if Bristol is going to merge or sell itself, Sanofi is the most sensible suitor, since the companies are already partners on the blood-thinner Plavix. They're in court right now defending the patent on that drug; the trial's expected to last a few more weeks and the judge could take several months to hand down his decision. Spokespeople for both companies told us they don't comment on rumor or speculation.

If the rumor or speculation turns out to be true, it shouldn't come as a shock: Analysts have been saying for quite some time that continued consolidation in the pharma sector is inevitable. Most of the big drugmakers have a relative dearth of big, new products coming out of their pipelines, and face increased competition from generic drugs, the threat of pricing pressure from Washington (especially if a Democrat wins the White House in 2008) and pushback from doctors, who say way too many pharma salespeople are sitting in their waiting rooms. Banc of America pharma analyst Chris Schott in a research note to clients today estimates the merger of Bristol-Myers and Sanofi could save as much as $1.5 billion per year in expenses (read: fewer sales reps, among other things).

Earnings Season Rolls On

Tomorrow (Tuesday), we've got Wyeth and Merck on tap. And Lilly reports on Wednesday. Lilly's partner on the relatively new diabetes drug Byetta, Amylin Pharmaceuticals, reports after the bell tomorrow. Wednesday after the bell, we hear from Gilead Sciences, which in partnership with Bristol, makes the new and first-of-its-kind one-a-day HIV/AIDS drug Atripla. The company also receives royalties from Roche on the flu-fighter Tamiflu. When we were out at the JPMorgan Healthcare Conference in San Francisco earlier this month, we visited Gilead and did an interview with the inventor of Tamiflu, who's now the head of research and development at the biotech. We hope to bring you that story on CNBC on Thursday. Wait'll you hear his very candid remarks about this suddenly in-demand and overnight blockbuster product.

Questions? Comments? Pharma@cnbc.com