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Shares fall as Sanofi announces $11.6bn deal to acquire Bioverativ

French healthcare group Sanofi witnessed a sharp fall in its share price after acquiring biotech company Bioverativ for a premium, but maintains the deal will add to its earnings per share in the current financial year

Sanofi has agreed to purchase Bioverativ’s outstanding shares for $105 each – a rate 64 percent higher than the company’s closing stock price on January 19

On January 22, pharmaceutical company Sanofi agreed to buy US haemophilia specialist Bioverativ for $11.6bn. The cash deal represents the French company’s largest acquisition since its 2011 takeover of US biotech group Genzyme for $20bn. Sanofi will purchase Bioverativ’s outstanding shares for $105 each – a rate 64 percent higher than the company’s closing stock price on January 19.

The high premium concerned some investors, with Sanofi’s share price falling 2.3 percent after the announcement. But, despite the qualms of some shareholders, the Bioverativ deal marks a turnaround in Sanofi’s investment fortunes. The healthcare group had failed to secure two major biotech deals in recent years, with bids for Medivation and Actelion trumped by competitors Pfizer and Johnson & Johnson.

According to a press release issued by Sanofi, the worldwide haemophilia market is growing by seven percent each year. The market currently represents around 181,000 people, and attracts approximately $10bn in annual sales. Sanofi expects to receive a return on its invested capital within three years.

Despite the qualms of some shareholders, the Bioverativ deal marks a turnaround in Sanofi’s investment fortunes

The French company also maintains Bioverativ will add to its earnings per share in the current financial year, with up to five percent accretion in 2019. This confidence can be attributed to Bioverativ’s recent performance, which has seen the company generate $274.8m in third-quarter revenue from its two haemophilia products – an increase of 27 percent from the previous year. However, gene therapy approaches being developed by companies such as Biomartin and Spark Therapeutics could present significant competition going forward.

The deal comes during an energetic month for pharmaceutical mergers and acquisitions: in January, US biotech giant Celgene announced its $7bn takeover of Impact Biomedicines, while Japanese Takeda Pharmaceutical revealed plans to buy TiGenix for $630m. Europe’s Novo Nordisk has also tendered an offer of $3.1bn for Ablynx, a biopharmaceutical company specialising in the development of nanobodies.

These acquisitions indicate an increased interest among big pharmaceuticals to invest in smaller companies capitalising on niche markets in treatments for rare diseases and hi-tech therapies. Provided Sanofi share prices bounce back, Bioverativ could prove a valuable acquisition that affirms the current industry trend for investment in lucrative specialisation.