Sanofi Aventis's Piramal plans fall through

4 Apr 2009, 1900 hrs IST, Khomba Singh, ET Bureau

NEW DELHI: French pharma major Sanofi Aventis’s plans to acquire a majority stake in Mumbai-based Piramal Healthcare has fallen through due to differences over valuation, two persons familiar with the development told ET .

"Sanofi Aventis had put a valuation of over Rs 300 per share for Piramal Healthcare. But, this price was not acceptable to the promoters," a merchant banker familiar with the development said. On Thursday, Piramal Healthcare’s scrip rose 4.15% to close at Rs 201.80, at the Bombay Stock Exchange (BSE) as against BSE Healthcare index which moved up 1.75%.

Sanofi Aventis is already among the top 15 companies in India and the proposed deal would have strengthened its presence in the country.
Besides Piramal Healthcare, Piramals also control Piramal Lifesciences, a separate public listed research firm, demerged out of Piramal Healthcare in 2008. This research arm was not part of the promoters’ plans to sell their pharma business.

Another senior pharma industry official, who has been briefed about the proposed deal added that talks between Sanofi Aventis and Piramal Healthcare had reached an advanced stage before it collapsed. Earlier, UK-based GlaxoSmithKline (GSK) was also reportedly in the fray. But this official said GSK had not moved forward beyond the initial stages.

When contacted by ET , both Sanofi Aventis’s spokeswoman and Piramal Healthcare spokesman declined to comment. But the Piramals have repeatedly denied they are looking to sell Piramal Healthcare after reports of a possible stake sale first appeared in February, and have termed the reports as ‘unfounded.’

Some analyst feel that there is limited strategic fit for Sanofi Aventis in acquiring Piramal Healthcare as the Indian company’s business is confined to the domestic market, where the French company Sanofi already has a significant presence.

Global innovator pharma majors have been buying generic drugmakers to grapple with falling sales as their top selling products are set to lose patents in the next few years.

Last year, Daiichi Sankyo acquired India’s largest pharma company Ranbaxy for about $4 billion. Besides GSK and Sanofi Aventis, other global players such as Pfizer are also scouting to buy an Indian firm.