Sanofi-Aventis to takeover Genzyme?

To be bought by Sanofi-Aventis

Industry reports indicate that pharmaceutical giant Sanofi-Aventis has approached the board of Genzyme with a takeover bid of US$19 billion (€14.6 billion) for the company.

To quote Reuters, Genzyme is "weighing up an informal approach from the French pharma company", but it would not be surprising if it accepted especially considering the turbulent 12 months the company has suffered, over manufacturing problems with its two key products Cerezyme and Fabrazyme.

Despite this, other pharma companies had seen the potential in the company, hence Sanofi-Aventis' bid. Genzyme's flagship products may have suffered bad publicity of late, but Cerezyme and Fabrazyme are both high-cost treatments for rare genetic disorders and as such, Genzyme has cornered the market with these lucrative drugs.

Hard 12 months

Due to an FDA-enforced shutdown of the production of the drugs, the company saw its Q2 profits decimated; however, with the ban possibly being overturned in the near future, Genzyme's manufacturing issues may be a thing of the past.

In response to the rumours of the takeover, Genzyme has seen its share prices rise strongly, to a level not seen since February 2009 when the manufacturing issues first began. In fact, some analysts have predicts that Genzyme shareholders could accept a price of US$70 to US$80 per share, particularly from those new investors who were attracted to the company when activist investor Carl Icahn gained influence on the company's board in June.

However it is possible that the takeover might not go as smoothly as shareholders hope. Genzyme's founder and current chief executive and president Henri Termeer is expected to resist the takeover leading to possible infighting in the company.

If Sanofi is to continue pursuing Genzyme, it will need to deal with two formidable activist investors Carl Icahn and Ralph Whitworth, who hold stakes in the biotech company and have representatives on the Genzyme board.

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