Speculation that Sanofi-Aventis, the world's third-largest pharmaceutical company, may buy Bristol-Myers Squibb was grew Monday as an unsourced report from French financial newsletter "La Lettre de l'Expansio" reported that a pre-merger agreement was signed last week.
But the potential deal may prove to be premature, as litigation concerns surrounding Bristol-Myers may throw future profitability into question.
“One of the sticking points is the patent litigation around Plavix, the blood thinner. We don’t expect any resolution until the second half of this year,” said Karl Heinz Koch, senior pharmaceuticals analyst at Vontobel.
Sanofi and Bristol-Myers are trying to protect Plavix from copy-cat competition as a cheaper version of the drug is being made by generic drug maker Apotex.
“There is no great rush in Sanofi snapping up Bristol-Myers Squibb until the outcome of this litigation is known as this is a very substantial part of the value for Bristol-Myers,” Koch added.
If the “obvious problems” at Bristol-Myers, cited by Koch, can be overcome, Sanofi stands to gain substantially from the combination.
“Sanofi will be able to access all of the profits of Plavix and Avapro (for treating high blood pressure) and quite a complementary new product pipeline in areas of strategic interest to Sanofi,” said Koch.
Sanofi and Bristol-Myers have often been linked as potential merger partners, partly due to their previous joint-marketing campaigns for Plavix and Avapro.