Genzyme, the pioneering US biotechnology company whose drugs are among the most expensive in the world, is plotting tactics to extract as much money as possible for its shareholders in a takeover by the French pharmaceutical giant Sanofi-Aventis.
The two sides began formal talks after Sanofi detailed a preliminary $18.4bn (£11.5bn) offer in a letter sent to Genzyme late on Monday, but the US company's shares dipped yesterday as hopes of a bidding war ebbed. At lunchtime, they remained modestly above the value of Sanofi's $69 a share all-cash offer at $70 apiece.
GlaxoSmithKline, the UK's largest drug maker, is believed to have ruled itself out as a potential white knight, citing price and the fact that it has already expanded its portfolio of medicines for rare diseases through the licensing deal last December with JCR of Japan. Pfizer, another potential suitor, also appeared cool about joining the fray yesterday. The company's finance director, Frank D'Amelio, speaking at its quarterly results, said he was looking only at "bolt-on" acquisitions up to "several billion" dollars.
Johnson & Johnson, the maker of Tylenol cough medicine and Band-Aid bandages, also has a large war chest for acquisitions and has been named as a potential bidder.
The acquisition of Genzyme would propel Sanofi to a leading position in so-called "orphan" drugs, medicines for rare and difficult-to-treat diseases, which are given special privileges by regulators and insurers that make them more profitable. Genzyme generated sales of $4.5bn last year from treatments for rare hereditary disorders such as Gaucher and Fabry disease. Its Gaucher disease treatment Cerezyme alone generated $1.2bn of sales in 2009. Costing more than $200,000 a year, it is one of the most expensive drugs in the world.
"The blockbuster era seems to be on the wane," said Kevin Gorman at the pharmaceuticals consultancy Putnam Associates. "The dramatically unmet needs are in rare diseases."
Sanofi has set off on the acquisition trail to replace revenues lost as its medicines face competition from copycats. It issued a profit warning last month after US regulators approved a generic version of its Lovenox blood thinner. Yesterday, two major investors warned it should not dramatically raise its bid, and certainly not to the $80 per share that Genzyme's board has indicated it wants.