UPDATE 1-Sanofi may take Zealand Pharma stake-Les Echos

* Mulling expanding partnership into share ownership-paper

* Could pay as much as 100 million euros-paper

* No comment from Sanofi

* Overweight-linked diabetes epidemic

(Adds background, shares)

PARIS, Dec 23 (Reuters) - Sanofi-Aventis (SASY.PA) could buy a 19.9 percent stake in Danish biotech Zealand Pharma for up to 100 million euros ($143 million), a paper said on Wednesday, as the drugmaker aims to make diabetes one of its key growth areas.

Zealand Pharma already has a partnership with Sanofi to develop lixisenatide, or AVE0010/ZP10, to treat type 2 diabetes, the most common form of the disease, which is exploding worldwide as more and more people become overweight.

"A deeper relationship would benefit both companies," Zealand Pharma Chief Executive David Solomon told Les Echos newspaper.

A spokesman for Sanofi declined to comment on the article.

Sanofi is seeking to broaden its diabetes offering, which includes blockbuster insulin Lantus, Apidra and Amaryl, and has set up a diabetes division with its own research and development and own sales force that should boost its competitive position.

Copenhagen-based Zealand Pharma was created in 1999. Final-stage or Phase III clinical trials on lixisenatide, which it has licensed to Sanofi, began in May 2008.

Sanofi has been snapping up biotechnology companies and sealing partnerships to develop drugs to replenish its trimmed pipeline and to find new drugs that can help offset a looming loss in sales from patent expiries.

Sanofi earlier this year bought a candidate drug from U.S. biotech Wellstat Therapeutics to treat type 2 diabetes, caused by weight and lack of excercise.

Drugmakers like Roche (ROG.VX), Novo Nordisk (NOVOb.CO) and Eli Lilly (LLY.N) are aiming to expand their share in the epidemic diabetes market.

The World Health Organisation (WHO) says on its website that more than 220 million people have diabetes, of which type 2 diabetes occurs in 90 percent, and the number could double between 2005 and 2030 with children now also increasingly affected by the disease.

Sanofi shares were up 0.6 percent at 55.73 euros by 0927 GMT, having hit a year high at 55.82 euros earlier in the day.

The stock has been gaining ground since the company began diversifying its activities rather than focusing only on prescription drugs. On Monday it boosted its over-the-counter business by announcing the takeover of Chattem in the United States. ($1=.6990 Euro) (Reporting by Caroline Jacobs; Additional reporting by Gilles Guillaume; Editing by Hans Peters and David Cowell)