Sanofi buys out Shantha

Sanofi Aventis has taken control of Hyderabad-based vaccine maker Shantha Biotechnics.

The French drug maker acquired 68.85% of the 78.85% stake held by ShanH, another French company and a subsidiary of Merieux Alliance (MA), in Shantha.

The deal values Shantha at $781 million (550 million euros), Sanofi said, without disclosing the exact consideration. For a 68.85% stake, it might have paid around $535 million.

K I Varaprasad Reddy, the founder of Shantha, continues to hold about 14% equity.

MA bought stake in Shantha from a Dubai-based investor in November 2006.

Under the terms of the agreement, Sanofi Pasteur will support Shantha’s ongoing development as a platform to address the need for high quality affordable vaccination in international markets. Varaprasad Reddy will continue to lead the company as managing director. The transaction is set to close before the end of the third quarter.

Allain Merieux of MA too would continue as the chairman of Shantha.

For the current fiscal, Shantha’s sales are expected to be around $90 million. Sales are expected to grow significantly, given the commercial resources of Sanofi Pasteur and through the development and launch of Shantha’s pipeline of new vaccines. New products under development at Shantha include a rotavirus vaccine, a conjugated typhoid vaccine and HPV vaccine.

Shantha has about 16 vaccines in the market today and 16 more under development.

Despite having the ability to develop vaccines to be marketed at affordable prices, particularly in the developing countries, the company was facing issues in making further investments. Sources said Shantha was also unable to tap the regulated markets primarily due to the costs involved in conducting the trials and complying with the regulatory approval process.

The Sanofi deal is expected to pump in the required fund for furthering various products that are waiting to move to the next stage of development.

This is the second major acquisition in Hyderabad where a foreign major has bought control over a local company. In August 2006, Mylan had acquired Matrix Laboratories for $736 million.

“There is not going to be any change in the way the company would function. It is just a management change and the objectives of the company to develop and market affordable vaccine would continue.
In fact, this deal should bring in more new products and higher volumes,” Reddy told DNA.