Sanofi "no comment" on deal for Brazil's Medley

By Gareth Macdonald

- Last updated on GMT

Related tags Sanofi-aventis Brazil

French drug major Sanofi Aventis is in talks about taking over market leading Brazilian generics firm Medley, according to reports the country’s Valor Economico newspaper.

The Sao Paulo-based newspaper suggests that the Negrao family who control Medley are struggling to raise funds in the current economic climate and are asking for $221m (€175m) for the firm.

According to another report in Spain’s Europa press​, Medley has also had difficulty importing raw materials given the 30 per cent slide in the value of the Brazilian real against the US dollar in the last six months and that this has accelerated the Sanofi talks.

The report also suggests that Medley’s distribution network, which covers an area 15 times the size of France, is likely to be attractive to any potential buyer.

A Sanofi spokes person told in-PharmaTechnologist that it is not the company’s policy to comment on M&A speculation. He added that, as well as being number one in Europe, the company also heads the field in emerging markets, including Brazil where it leads in terms of sales.

Although the Medley deal has yet to be confirmed, such an acquisition would be very much in keeping with recent comments made by company CEO Christopher Viebacher.

The deal would also fit well with Sanofi’s move for of Czech generics group Zentiva and media speculation that it is interested in another non-branded drugmaker, Iceland’s Actavis.

Sanofi already has a manufacturing presence in Brazil through its Sao Paulo-headquartered Sanofi-aventis Farmacêutica subsidiary.

The unit produces some of the country’s best selling products including the non-steroidal anti-inflammatories​Novalgin (dipyrone) and Dorflex (dipyrone-orphenadrine) and has collaborated with several local pharmaceutical developers under its neglected diseases programme.

Brazil’s generics market

In Brazil the generics market, which is expanding at 38 per cent, is worth around $1bn a year, equivalent to 10 per cent of the country’s total pharmaceutical sales according to a recent survey by RNCOS.

The study forecasts that this growth will continue for the foreseeable future, predicting that generics will make up 23 per cent of the country’s total drug sales by 2011, making it one of the world’s largest markets.

While at present domestic producers like EMS Sigma Pharma, Eurofarma and Ache Pharmaceutical Laboratories dominate the sector, foreign non-branded drug firms including India’s Ranbaxy and Dr Reddy’s have ramped up their efforts in Brazil.

In addition, in August last year the Brazilian government said that it will provide incentives to encourage foreign drug companies to set up operations or partnerships in the country.

These incentives coupled with the positive stance authorities have taken on generics in the past, most notably through the introduction of laws allowing companies to legally produce copies of patented drugs in 1999, suggest that the country’s non-branded market will continue to be attractive for foreign firms.

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