Sanofi Aventis has confirmed it is buying Brazil’s Medley for $664m (€500m), to position it as the largest player in South America’s generics market.
The deal, speculation about which was first reported by in-PharmaTechnologist in February, follows Sanofi’s acquisition of Mexican non-branded player Laboratorios Kendrick last week.
Israeli generics giant Teva Pharmaceutical Industries was also in the running to buy Medley, according to a report on the Haaretz news website, but was eventually put off by the Brazilian firm’s asking price
Teva, the world’s biggest generics firm by sales, has steered clear of Brazil in the past arguing that the lack of rules on bioequivalence testing for non-branded drugs set too low a market entry barrier to make the country a viable proposition.
Sanofi’s acquisition of Medley is an indication that the French drugmaker either does not share Teva’s concerns about the Brazilian market or that it views South America’s non-branded drug sector as key to its future.
The latter point would fit with Sanofi CEO Christopher Viebacher recent comments about the importance of emerging markets for the firm’s future development and prosperity.
In Medley’s home base of Brazil alone the generics market is worth $1bn a year and, according to a recent RNCOS survey, will grow at a rate of 38 per cent a year over the next few years.
Through the Medley deal, which is expected to be completed this quarter, Sanofi gains some 127 new generic products, 20 of which are Brazil’s top sellers, as well as two manufacturing facilities in the capital Sao Paulo.
Although at a much smaller scale, Sanofi’s Medley purchase is keeping with the firm’s effort to boost its generics market that began with its acquisition of Czech group Zentiva last year.
Sanofi’s move also makes sense in a wider industry context. In the last year, both Pfizer and GlaxoSmithKline (GSK) have signed deals to sell off-patent generics in emerging markets, following the pattern set by Novartis’ with its Sandoz business.