SANOFI-AVENTIS SA, France's largest pharmaceutical company, offered to buy the rest of Czech generic-drug maker Zentiva NV for 30 billion koruna (US$1.94 billion), topping a bid by PPF Group NV, to gain cheaper copies of heart, pain and inflammation treatments.
Sanofi, which owns 25 percent of Zentiva, plans to bid 1,050 koruna for each remaining share, 11 percent higher than PDF's May 2 bid. The offer is 15 percent higher than Zentiva's closing price on April 30, the day before PPF said it would bid, Bloomberg News reported.
Zentiva gives the Paris-based drug maker more than 180 generic medicines, including copies of Bristol-Myers Squibb Co's Glucophage diabetes pill and Merck & Co's Zocor for cholesterol, and the top spot in Turkey, Romania and Slovakia.
The market for generic medicines is growing at twice the rate of patent-protected products, and Sanofi only gets about 2 percent of sales from generics. Sanofi's first-quarter profit fell 12 percent, and rivals are planning copies of its two best-sellers, the Plavix and Lovenox clot treatments.
"They want to position themselves as a major actor in the generics market as one way to deal with national regulations," said Denise Anderson, a Landsbanki Kepler analyst.
"Companies see this as a way to enter emerging markets where branded drugs are still too expensive. We see generics as an extremely volatile business." Zentiva rose 75 koruna, or 7.2 percent, to 1,114 koruna at 10:52am yesterday in Prague, its steepest increase since PPF first announced its offer last month. They've risen 14 percent this year. Sanofi shares rose 0.48 euros, or 1.1 percent, to 42.53 euros (US$65.85) at 10:56am in Paris trading. Sanofi shares have fallen 33 percent since December.
PPF, the largest closely held financial group in the Czech Republic, yesterday said it may be willing to increase its offer. PPF owns about 20 percent of the Czech drug maker.
Zentiva spokeswoman Vera Kudynova and PPF spokesman Alexej Bechtin said they were unable to immediately comment yesterday.
"The key will be if the price is interesting enough for PPF to tender its stake" to Sanofi, said Bram Buring, who follows eastern European pharmaceutical companies at Wood & Co in Prague.
Gerard Le Fur took over as Sanofi's chief executive officer last year, and is struggling with the patent expiration of several products as he tries to push new medicines through the labs. First-quarter profit was hurt by a 65-percent decline in sales of the Ambien sleeping pill after the medicine lost patent protection.
Sanofi is cutting marketing costs to prepare for generic competition to products including Lovenox and the Plavix starting in 2011.
Zentiva, based in Prague, was formed in 2003 through the union of the Czech Leciva AS and Slovakia's Slovakofarma AS. It expanded into Romania in 2005 through its acquisition of the former Sicomed SA and into Turkey with its purchase of Eczacibasi.
Its top-selling product include Simvacard, a copy of Merck & Co's Zocor cholesterol medication, and Helicid, a generic version of AstraZeneca Plc's Prilosec heartburn treatment.
The Czech company has reported declining profit as it struggles against spending cuts at home and unpaid invoices in Romania.