Sanofi Builds US-based Consumer Powerhouse in Preparation for Allegra OTC Switch

Sanofi' $1.8 billion bid for over-the-counter and personal care product firm Chattem Inc. offers the French firm a coveted toehold in the sizeable US consumer health care market while also opening potential opportunities in emerging markets. [See Deal] As such, the deal is in line with the French pharma's emphasis on diversification, helping the company hedge the development risks associated with its branded pharmaceuticals. Like Sanofi's previous OTC purchases, which also include the Brazilian player Medley Pharmaceuticals[See Deal], the Chattem buy is structured as a bolt-on acquisition, designed to add capability in a low margin sector that is also far less dependent on the changing political winds associated with US health care reform.

It's a strategy almost every Big Pharma is employing—the notable exception being Bristol-Myers Squibb Co., which in 2009 spun out its nutritional division, Mead Johnson Nutrition Co., as part of a purge of non-pharma assets. [See Deal] (See "Pharma's Strategic Divide: Focus or Diversify," IN VIVO, September 2008 Also see "Pharma's Strategic Divide: Focus or Diversify" - In Vivo, 1 September, 2008..) In early January, for instance, Novartis AG announced it was exercising its option to increase its position in Alcon Inc. (part of Nestle SA), while simultaneously bidding for the 23% of the company it still doesn't own in an effort to strengthen its consumer ophthalmology division, while simultaneously adding a robust device group