Elf Sanofi pays dollars 1.7bn for US drugs business: French rise 10 places in world league

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The Independent Online
ELF SANOFI, the drug company controlled by the French oil giant Elf, is buying Sterling Winthrop's prescription pharmaceuticals business from the US conglomerate Eastman Kodak for dollars 1.7bn in cash.

The deal gives Sanofi a significant American presence for the first time as well as the clout to operate in what is increasingly becoming a business dominated by giants. Sanofi will move up from the 30th ranking pharmaceutical company in the world to 20th.

The purchase had been expected ever since Eastman put Sterling and some of its other peripheral interests on the market earlier this year in an effort to refocus on its photographic business.

Sanofi, which immediately expressed interest, already had a substantial sales joint venture with Sterling dating back to 1991, under the terms of which it had first refusal rights should Eastman want to sell its drugs activities.

The prescription drug activities Sanofi is acquiring had sales of dollars 1.2bn in 1993. Its acquisition will boost Sanofi's total prescription sales business to around dollars 3bn a year, a global market share of 1.4 per cent, relatively substantial for a highly fragmented industry.

Sanofi, which wants to concentrate on pharmaceuticals, will finance the deal by disposals - it plans to sell off some of its bioscience and animal healthcare businesses with sales of around dollars 500m. It is not clear whether it also plans to reduce its commitment to beauty products and perfumes.

No profit figures were disclosed for Sterling Winthrop, although operating margins before research and development are thought to be about 35 per cent of sales.

Sanofi said the concern was 'immensely profitable' and would ensure income per share growth of 10-15 per cent in 1995. As part of the deal Sanofi is also selling its minority holding in Sterling Health Europe, which specialises in over-the-counter drugs, to Kodak for an unspecified amount.

A spokesman for Sanofi said that unlike other pharmaceutical groups, it had no drugs that looked likely to make the transition to over-the-counter sales in the near future.