Sanofi to grow animal health through bolt-on buys

PARIS (Reuters) - Sanofi-Aventis (SASY.PA) aims to expand its animal health business through small acquisitions, the drugmaker's head said after plans collapsed to create the world's top joint venture in that area with Merck (MRK.N).

Sanofi is also looking to boost its position in the treatment of eye diseases through purchases or partnerships, Chief Executive Chris Viehbacher said on Wednesday.

Sanofi and Merck on Tuesday dropped plans to merge Sanofi's pet-focused Merial unit, which they once jointly owned, with Merck's bigger, livestock-oriented Intervet business, a venture that would have had sales of some $5 billion.

The companies blamed the complexity of selling assets to placate regulators, adding that they both remained committed to their animal health businesses, which for Sanofi generated annual 2010 sales of $2.6 billion.

"Bolt-ons are going to be easier" than large acquisitions, Viehbacher said, citing competition issues in the increasingly consolidating industry.

The head of unlisted German drugmaker Boehringer Ingelheim, Joachim Hasenmaier, said separately on Wednesday that the duo's decision to abandon the joint venture would reduce pressure on rivals to strike defensive deals.

Still, Hasenmaier said he would not be completely surprised if one of the top seven players exited the veterinary medicine sector in the coming years. He said there were no attractive assets left to acquire.

The animal health sector is dominated by Pfizer (PFE.N), Intervet, Merial, Eli Lilly's (LLY.N) Elanco, Novartis (NOVN.VX), Bayer (BAYGn.DE) and Boehringer.

For Sanofi, which agreed last month to buy U.S. rare disease specialist Genzyme GENZ.O for $20.1 billion, animal health has become part of its diversification strategy.

EYE TREATMENT

Consolidation in animal health recently had intensified with Eli Lilly planning to buy Johnson & Johnson's (JNJ.N) animal health unit and privately-held Lextron buying Animal Health International AHII.O.

Diversified Swiss drugmaker Novartis, which in December wrapped up a $52 billion deal to buy eyecare group Alcon, has also said a bolt-on acquisition in animal health would make sense.

Viehbacher said at the signing of a partnership with France's Vision Institute on Wednesday that Sanofi was interested in expanding in the treatment of eye diseases by adding technologies as well as medication.

"Clearly we are interested in strengthening our position in ophthalmology" through partnerships or acquisitions, the CEO said.

Sanofi created an ophthalmology division after expanding into the treatment of eye diseases in 2009, when it bought Fovea Pharmaceuticals, and sealing a partnership with British gene therapy specialist Oxford BioMedica (OXB.L).

Ophthalmology is one of Sanofi's three disease divisions next to diabetes and oncology. (Additional reporting by Ben Hirschler in London) (Editing by James Regan)