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SANOFI WOULD IMMEDIATELY ADD FOUR INDs TO ROBINS R&D PIPELINE, ALLOW OTC EXPANSION ABROAD; SANOFI EQUALLY INTERESTED IN OTC AND Rx BUSINESS

Executive Summary

A merger with Robins would allow Sanofi to expedite U.S. clinical study of four development stage Rx compounds and facilitate international expansion of the Robins OTC drug business, according to Sanofi. At a Jan. 7 joint press conference on the proposed merger between the two firms, Sanofi Pharma International President Kurt Briner said that Sanofi would file INDs in the U.S. for Robins to develop and market once the merger is finalized. Candidates for U.S. development by Robins, Briner said, include Sanofi's low molecular weight heparin Fraxiparine, an immunotoxin cancer treatment, an anti-arrhythmic agent, and a disphosphonate compound for Paget's disease and osteoporosis. Fraxiparine is the only one of the four Sanofi compounds currently being marketed. It has been sold in France for two years. Sanofi's immunotoxin and disphosphonate agents are in Phase II clinicals in France; the atiarrhythmic compound is in Phase III clinicals. Under the merger agreement, Robins will be the exclusive licensee for Sanofi products in the U.S. However, the plan does not affect existing Sanofi agreements with U.S. companies. The plan states that "Robins' manufacture, distribution and selling rights will be exclusive unless another party has a non-exclusive right arising out of agreements prior to Dec. 31, 1987, in which event Robins will have a right to co-market." In return, "Robins will pay to Sanofi, depending upon market size, competition, cost of raw materials and selling price, between 25% and 35% of net sales of products as to which Robins' rights are exclusive." Sanofi would bring to the merger a level of research and development spending over three times that of Robins'. Sanofi's R&D spending in 1987 was budgeted at ovef $230 mil. and the company plans to spend $235 mil. in 1988. Robins budgeted $63.7 mil. last year. Sanofi execs at the press conference emphasized that expansion of the Robins OTC business into new international markets would be another advantage to the merger. Sanofi Chief Financial Officer Jean-Paul Leon observed that "there are certain countries where Robins is not present today and where Sanofi is quite strong. For example; in Europe -- Italy, Spain, Belgium and the Netherlands." Noting that an earlier merger offer from the Rorer Group involved the subsequent sales of the Robins OTC products business to Merrell Dow, Sanofi Exec VP and Chief Operating Officer Jean-Francois Dehecq maintained that Sanofi was committed to keeping both the OTC and Rx lines. "Sanofi is as interested in these OTC products as in ethical products. Why? Because Sanofi is a strong company in ethical products around the world, [excluding the U.S.] but we do not have a good position in OTC products," Dehecq asserted. He added that while the firm has an OTC presence in France and Spain, "at Sanofi we think that OTC products are very important around the world for the future. So that's a good part of the synergy between Sanofi and Robins." The merger plan predicts that "operating synergies" will add $26.2 mil. in saved operating expenses to the new Robins by 1989. Savings in the entity created by merging Robins with Sanofi's veterinary health firm CEVA are projected to increase to $53.5 mil. by 1992. Included in the synergies are the "coordination" of Robins and Sanofi R&D activities, which is expected to result in a reduction of Robins expenditures. From 1987 to 1992, R&D spending for the Robins/CEVA combination is expected to be 7.2% of sales, roughly the same percentage now spent by Robins alone. Sanofi's licensing arrangements in the U.S. include agreements with Abbott for the anxiolytic Tranxene (clorazepate) and the anti-convulsant Depakene (valproic acid), and an arrangement with Wyeth for the anti-arrhythmic Cordarone (amiodarone). The firm's platelet aggregation inhibitor Ticlid (ticlopidine), licensed to Syntex, is still in clinicals.
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