PARIS, France—Boosting its presence in the emerging markets, Sanofi Pasteur Holding, the vaccine division of leading French pharma sanofi-aventis, is poised to take majority control of Indian vaccine manufacturer Shantha Biotechnics Ltd. in a $781 million deal which includes a state-of-the-art vaccine manufacturing facility in Hyderabad, India, and a portfolio of new vaccines.
Sanofi has accomplished this coup through the acquisition of Mérieux Alliance subsidiary Shan H, which owns 80 percent of Shantha Biotechnics. The deal, slated to close in the third quarter, is a strategic fit for both Sanofi and Shantha. The French firm gets a portfolio of new vaccines under development, while Shantha gains access to new technologies and the global market.
Shantha is expected to achieve sales of $90 million in the current fiscal year, and its sales are expected to grow significantly due to the launch of its pipeline of new vaccines and the commercial resources of its vaccine business.
"Shantha provides Sanofi Pasteur with a portfolio of new vaccines in development which complement Sanofi Pasteur's current vaccines," says Christopher Viehbacher, CEO of Sanofi-aventis. The deal positions his company "to accelerate its growth in strategically important emerging markets," he adds.
Sanofi Pasteur reports it has provided more than 1.6 billion doses of vaccine in 2008, making it possible to immunize more than 500 million people across the globe against 20 infectious diseases.
The Indian pharmaceutical market ranks 13th in the world, with sales of $7.7 billion last year, an increase of 4 percent over 2007. The new products being developed at the Indian biotech company include a rotavirus vaccine for infant diarrhea, a conjugated typhoid vaccine and a human papillomavirus (HPV) vaccine for cervical cancer.
Jean-Marc Podvin, vice president of media relations at sanofi-aventis says, "Shantha will give Sanofi Pasteur the opportunity to produce and deliver vaccines that conform with international standards of high order and at affordable prices for the short-, mid- and long-term. Sanofi Pasteur will support Shantha's ongoing development as a platform to address the need for high quality affordable vaccinations in international markets. We consider the acquisition of Shantha as a unique opportunity to complement our offer of solutions to public health authorities and international NGOs."
The strategic interest in the acquisition of Shantha "is multidimensional and will strengthen its position in the Indian public market; expand its products to international public and private markets and expand its R&D products pipeline," Podvin adds.
Shantha provides Sanofi Pasteur with a portfolio of new vaccines in development which complement Sanofi Pasteur's current vaccines, "positioning the company to accelerate its growth in strategically important emerging markets," Podvin says.
"The state-of-the-art manufacturing facilities allow Sanofi Pasteur to gain high-quality capacity and enable us to provide important vaccines at affordable prices to many people around the world," he says.
Shantha's R&D capabilities also could enhance time-to-market of Sanofi Pasteur products by performing early stage clinical trials, he says.
"Our objective is to preserve Shantha's competitive advantage by maintaining its flexibility and strong company culture," Podvin says. "Thus, Sanofi Pasteur intends to operate Shantha as a separate business unit."
The vaccine market is set to double by 2017, Podvin says.
"Investment in vaccine development is the responsible thing to do in a world that is increasingly turning to prevention as a way to meet global health needs," he says. "Having multiple production and R&D sites around the world is the key to a strong, innovative and resilient organization that can truly meet the needs of immunization worldwide."
Dr. Varaprasad Reddy, the founder of Shantha Biotechnics, will continue to run the firm as managing director. Alain Mérieux, chairman of Mérieux Alliance, will chair a new vaccine strategic committee of Sanofi Pasteur for emerging markets.
Ironically, Sanofi and Mérieux have a shared history. Both grew out of Institut Mérieux, which was founded in 1897 by Marcel Mérieux, a student of Louis Pasteur, the renowned biologist who developed the first vaccine for human use against rabies.
Anne de Chiffreville, Mérieux Alliance corporate vice president of communication, says, "Over the last three years, Mérieux Alliance has developed Shantha Biotechnics considerably. We have renewed the focus on the firm's vaccines business and broadened its product portfolio, such as the successful launch of a pentavalent pediatric and a cholera vaccine."
This growth has taken place in line with Shantha's philosophy to make vaccines that comply with international quality standards available to developing countries at an affordable price, de Chiffreville says. Sales at Shantha grew from $15 million in 2006, to nearly $43 million in 2008 and $90 million the current fiscal year.
The alliance gives Shantha access to a talent pool and additional resources to develop and bolster its manufacturing capacity, enable the production of vaccine on a larger scale and allows Shantha to consider the development of new products and vaccine combinations, de Chiffreville says. Shantha has focused exclusively on public health needs in developing countries and deals almost exclusively with large international health organizations such as the United Nation's Children's Fund (UNICEF) and the Pan American Health Organization (PAHO). This new alliance grants access to a commercial network, she adds.
"Shantha's portfolio now offers vaccines that are likely to interest industrialized countries, yet it does not have the necessary marketing resources and networks," de Chiffreville says. "This is something the alliance with Sanofi will bring."
