Sanofi and Bristol-Myers Squibb (BMS) have announced a significant restructuring of their 15-year alliance, prompted by the loss of exclusivity for their blockbuster medications Plavix and Avapro/Avalide. The reorganization, set to take effect January 1st, 2013, marks a major shift in the companies' long-standing partnership amid increasing generic competition.
Under the new agreement, Sanofi will acquire global commercial rights to both Plavix and Avapro/Avalide from BMS, with the notable exception of Plavix in the United States and Puerto Rico. In return, BMS will receive royalty payments on Sanofi's worldwide sales of both branded and unbranded Plavix through 2018, concluding with a terminal payment of $200 million.
Financial Impact and Strategic Implications
The restructuring comes at a critical time for both companies, with Sanofi projecting a substantial $1.85 billion reduction in net income due to generic competition for both drugs. To offset this impact, Sanofi is actively pursuing growth in emerging markets, diabetes treatments, vaccines, and novel therapeutics. The company has already taken steps in this direction, announcing its acquisition of Genfar, Colombia's second-largest generic drug manufacturer.
"The revised agreement further supports Sanofi's strategic priorities while continuing to offer the clinical benefits of these well-established products to millions of patients around the world," stated Hanspeter Spek, President of Global Operations at Sanofi.
Streamlined Operations and Future Focus
For Bristol-Myers Squibb, the restructuring represents an opportunity to concentrate on its research and development pipeline. Lamberto Andreotti, CEO of Bristol-Myers Squibb, emphasized that the revised agreement "simplifies operations and supports Bristol-Myers Squibb's ability to focus on delivering our promising, innovation-driven R&D portfolio and setting the foundation for future success."
The new arrangement also resolves ongoing disputes between the two pharmaceutical giants, paving the way for a more streamlined relationship. This restructuring reflects the broader industry trend of major pharmaceutical companies adapting their business models and partnerships in response to patent expirations and increasing generic competition.
