Sanofi-Aventis is buying specialty drugmaker Genzyme for $20.1 billion, the latest example of a beleaguered pharmaceutical company snapping up high-priced biotech drugs to offset dwindling sales of older, simpler medications facing generic competition.
Sanofi, the world’s fourth-largest drug maker, overcame Genzyme’s reluctance to a takeover by raising its previous offer to $74 per share and agreeing to make additional cash payments pending the success of several drugs.
Wednesday’s announcement comes after nearly nine months of back-and-forth between the two companies, with Sanofi-Aventis finally deciding Genzyme’s portfolio of rare disease treatments was worth adding an extra $5 a share to its original $69 per share offer.
Genzyme’s shares rose 80 cents, or 1 percent, to $75.10 Wednesday.
The combination seems odd at first: a huge French company best known for vaccines used by millions of patients each year, buying a Cambridge, Mass.-based biotech company whose drugs are taken by only a handful of patients around the world.
But experts say the merger reflects the landscape of the pharmaceutical industry, as companies seek to replace older medications that have lost their patent protection.
“There’s a view among a lot of the pharma companies that biotech companies are particularly helpful in addressing the conundrum of patent expirations,” said Adam Berger, managing director with investment bank Leerink Swann.
By the end of 2011, medications worth more than $30 billion in annual sales industrywide will begin competing with low-cost generic drugs. Many of these drugs, developed in the 1990s, treat common diseases like arthritis, diabetes and asthma. Sanofi’s blood thinner Plavix, the second-best selling drug in the world, loses patent protection in 2012.
Compared with these pill-based drugs, Genzyme’s high-tech injectable drugs are virtually immune to generic competition. Not only are they extremely difficult to manufacture, but they enjoy extra patent protections…