Sanofi to sell generics for $2.4 billion

Sanofi plans to sell its European generic-drug unit to buyout firm Advent International for $2.4 billion as part of a broader move by Chief Executive Officer Olivier Brandicourt to focus resources on biotechnology and new medicines.

Advent has made a binding and fully financed offer, and the companies are in exclusive negotiations, Sanofi said Tuesday. The deal should close by the end of the year, it said.

Brandicourt has undertaken a series of transactions to shift Sanofi toward businesses with more potential for growth. The company has announced about $16 billion of deals this year, agreeing to buy Bioverativ to expand in hemophilia treatments and Ablynx to gain an experimental medicine for another rare bleeding disorder.

The French company isn’t the only drugmaker revamping its product offerings and pipeline to adjust to industry changes. Novartis made an $8.7 billion cash offer for AveXis on Tuesday, to gain at least one promising experimental drug for a rare and often fatal disease, using some of the $13 billion from selling its stake in a consumerhealth joint venture. GlaxoSmithKline has also been reviewing its portfolio, and is selling its rare-disease division to a biotechnology company as treatment sales have flagged.

Sanofi stock has dropped almost 8 percent so far this year, faring worse than both Novartis and Glaxo.

Besides generics, Brandicourt has overseen the divestiture of Sanofi’s veterinary-medicines business to Boehringer Ingelheim in an asset swap. The French drugmaker is reportedly also exploring the sale of some European over-thecounter treatments.

While the generics market is expanding in Europe as more brandname drugs go off patent, competition and pricing pressure in the sector are increasing. Governments have cut reimbursements as part of an effort to curb health care costs, while consolidation among wholesalers and retailers in some markets is increasing their power to negotiate with manufacturers of generics, according to Moody’s Investors Service.

Sanofi said in October 2016 that it was thinking of divesting it generic drug business. Sanofi bought Zentiva, a publicly traded Czech generic maker, in 2009 for about $2.6 billion.

Sanofi’s sales of generic medicines fell 3.3 percent last year, while overall sales climbed 5.6 percent, the company said in February.

Zentiva, which trace its roots back to the Black Eagle pharmacy in the 15th century, operates in 50 countries, notably the Czech Republic, Slovakia and Romania, according to its website.

Rothschild, JPMorgan Chase & Co. and Morgan Stanley advised Sanofi, while Advent’s advisers were PJT Partners Inc. and Goldman Sachs Group Inc.