With rumor drugmaker Sanofi is working on major US purchase, shares of possible targets jump

Shares jump for potential targets of Sanofi deal

TRENTON, N.J. — Rumors French pharmaceutical giant Sanofi-Aventis SA is chasing a big U.S. acquisition on Friday drove up shares of companies investors speculated might be a target — and pushed down Sanofi’s shares.

Shares of Allergan Inc. jumped as much as 9 percent, while Genzyme Corp. and Biogen Idec Inc. both were up at least 5 percent. Sanofi shares dropped nearly 3 percent in U.S. trading, to $29.50 at midday.

That’s after a report by Bloomberg indicated that Sanofi Chief Executive Chris Viehbacher this week briefed his board at a special meeting, saying that the company is working on a deal for a major acquisition in the U.S.

The report said the deal is in the very early stages and does not identify the American company. Two unidentified sources told Bloomberg that the deal might be worth $20 billion or more.

“We don’t comment on market rumors,” Jack Cox, a U.S. spokesman for Sanofi, said Friday.

Like other major international pharmaceutical companies, Sanofi has increasingly been making deals to acquire small companies or rights to promising experimental drugs to help offset inadequate progress from internal research programs and looming revenue declines as blockbuster drugs get generic competition.

Since he became Sanofi’s CEO in December 2008, Viehbacher has arranged dozens of mostly mid-sized acquisitions. Those include a $1.9 billion March deal in which the company bought Tennessee-based Chattem Inc., maker of Gold Bond skin products and Icy Hot pain relief packs, in a strategy to expand its U.S. health care business.

Paris-based Sanofi-Aventis is the world’s fourth-biggest pharmaceutical company, with 2009 revenues of about $35.5 billion.

The company’s top seller is the Lantus insulin brand for diabetes, and it jointly markets blockbuster blood thinner Plavix, the world’s No. 2 drug with about $9 billion in sales last year, with partner Bristol-Myers Squibb Co.

On Friday, Miller Tabak analyst Les Funtleyder wrote in a note to investors that, “even if no deal materializes market chatter can move stocks, especially in low-volume” trading such as right before a three-day weekend.

Funtleyder wrote that he sees “only a handful of possibilities in U.S. pharmaceuticals and biotech.” Those include biotechs Biogen Idec, Celgene Inc., Genzyme and Vertex Pharmaceuticals Inc., drug and device makers Allergan and Hospira Inc., and a few generic drugmakers.

In midday trading Friday, shares of Allergan, the Irvine, Calif.-based maker of Botox and breast implants, were up 6.3 percent at $61.78.

Shares of Genzyme were up 5.3 percent at $52.50. It has been struggling for months with manufacturing problems that have reduced production of two key drugs for genetic diseases, Cerezyme and Fabrazyme.

Biogen Idec was up 4.5 percent at $48.80. It sells the multiple sclerosis drugs Avonex and Tysabri, and it sells cancer drug Rituxan with partner Roche AG.

Vertex was down, though, by 0.8 percent, at $32.04.

Biogen, Genzyme and Vertex all are based in Cambridge, Mass.

Celgene, based in Summit, N.J., might be a stretch right now, as it just announced its own deal Wednesday, to buy Abraxis BioScience Inc. for $2.9 billion. Celgene shares were up to 2.5 percent at $50.84 at midday.

Shares didn’t move much Friday for the generic drugmakers Funtleyder named, including Watson Pharmaceuticals Inc. of Morristown, N.J.; Mylan Inc. of Canonsburg, Pa.; and Perigo Co. of Allegan, Mich., which also makes consumer health products.