Sanofi-Aventis of Paris, France, exercised its option to combine its Merial animal health business with Intervet/Schering-Plough, Whitehouse Station, N.J.-based Merck’s animal health business, forming a new, much larger joint venture with once and future partner Merck. Executives for the companies contend that the combined entity would be better able to bring new drugs to market, both for production and perhaps especially companion animals. “In addition to protecting their pets from parasites, more and more pet owners find themselves confronting other chronic diseases like diabetes, obesity, arthritis and CNS disorders that affect their pets,” said Richard Clark, Merck’s chairman, president and CEO. “With our combined resources, we can bring new treatments to improve and lengthen pet lives.” The companies also expect to benefit from growth in emerging economies, which they expect to show both in expanding middle classes and pet ownership and increased animal-protein consumption. Overall, the global animal health industry is projected to grow about 5 percent annually for the next five years, from $19.2 billion in 2008 to a forecast $24.1 billion in 2014. Merial had been a joint venture between Sanofi and Merck until Sanofi acquired Merck’s share last July to facilitate Merck’s merger with Schering-Plough. Under the new joint venture, each company will hold a 50 percent stake in the combined business and Sanofi will pay Merck a total of $1 billion. The companies expect the deal, subject to antitrust reviews, to close in about the next 12 months. The companies expect some divestitures would be necessary to earn antitrust approval in the U.S., Europe and possible elsewhere but did not speculate what regulators might require. Pending divestitures, the combined entity would be the world’s largest animal health business, with an estimated market share of about 28 percent, compared to now-largest Pfizer’s roughly 20 percent market share. Intervet/Schering-Plough ranks No. 2 and Merial No. 3 overall. The companies position themselves as largely complementary, with Intervet/Schering Plough stronger in production animals, Europe and vaccines and Merial stronger in companion animals, North America and parasiticides and companion animal pharmaceuticals. The top seven brands of the combined venture (Frontline, Heartgard, Ivomec, Nuflor, panacur, Circumvent PCV and Oleovac FMD) would account for about 40 percent of its sales. The companies expect continued growth from Frontline, which accounted for $1 billion in global sales, for the next couple years, even though the basic product went off patent in Europe last year and will go off patent in the U.S. later this year, Clark said. Still, about two-thirds of Frontline revenues came from combination products and other still patent-protected formulations. By the Numbers: Intervet/Schering Plough Merial 2009 Sales: $2.74 billion $2.55 billion Employees: 8,200 5,600 Production facilities: 28 16 --in countries: 14 9 <HOME>
