Genzyme seen more attractive to Sanofi than Glaxo

* Glaxo already has rare disease presence via JCR deal

* Sanofi seen in greater need of earnings-boosting M&A

* Sanofi shares hold steady, Glaxo down 2 pct

By Ben Hirschler, European Pharmaceuticals Correspondent

LONDON, July 26 (BestGrowthStock) – Sanofi-Aventis (SASY.PA: ) is far
more likely to buy Genzyme (GENZ.O: ) than GlaxoSmithKline
(GSK.L: ), which already has a presence in rare diseases via a
deal with Japan’s JCR Pharmaceuticals (4552.OS: ), industry
experts said on Monday.

Sources familiar with the matter said on Friday that Sanofi
was sounding out Genzyme as the French drugmaker hunts for a
large acquisition, prompting a 15 percent jump in the U.S.
biotech company’s market value to $16.7 billion. [ID:nN23155324]

The Wall Street Journal said Britain’s Glaxo had also
recently made “a very casual approach”, but industry insiders
and analysts said Glaxo Chief Executive Andrew Witty, with a
reputation for caution on M&A, was unlikely to chase the asset.

One of Genzyme’s main appeals is its strength in rare
diseases, a high-margin sector that is winning fans in Big
Pharma. Yet Glaxo already has access to a rare diseases
portfolio after becoming the biggest shareholder in JCR, in
March, with a 17 percent stake.

The British company also has less strategic need for a large
acquisition than its French counterpart, since it has already
put many of its big drug patent losses behind it.

“Glaxo is less likely to enter a competitive process,” said
UBS analyst Gbola Amusa.

“In Glaxo’s case they are post the generics cliff, they are
just emerging from that, so Glaxo doesn’t quite fit the profile
to do a large deal for the sake of earnings growth,” he said.

“The question is: who wants Genzyme the most? Our view is
that Sanofi is likely to emerge, simply because they are
relatively deficient in biotech capabilities versus their peers
and they need to better globally diversify their R&D engine.”

Officials at Glaxo and Sanofi declined to comment.

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For BreakingViews comment on Genzyme see [ID:nLDE66P0L1]

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Genzyme is beginning to emerge from a manufacturing crisis
that caused shortages of two of its biggest-selling drugs,
leaving it relatively cheaply priced and potentially vulnerable
to a takeover.

Sanofi, meanwhile, is facing patent expirations on some its
top products. Late on Friday, the company lowered its view for
2010 earnings per share — although it kept its 2013 guidance —
after U.S. regulators approved a generic form of the Lovenox
blood thinner, its No. 2 product last year. [ID:nN23123382]

SANOFI SHARES STEADY, GLAXO SLIPS

Sanofi shares, which had fallen more than 4 percent on
Friday, gained 0.1 percent by 0945 GMT, outperforming a 1.2
percent decline in the European drugs sector (.SXDP: ), as
analysts saw the logic in a bid for Genzyme and investors took
comfort from the company sticking to its 2013 outlook.

Andrew Baum, an analyst at Morgan Stanley, said a move on
Genzyme was “potentially positive for the stock”, since it would
be a good fit and would reduce the risk of Sanofi buying higher-
multiple assets, which might offer lower returns.

Baum and other analysts at Deutsche Bank and Jefferies also
noted that the arrival of generic Lovenox had cleared a
long-anticipated “overhang” for the French drugmaker’s shares.

GlaxoSmithKline shares, however, fell 2 percent on fears
that CEO Witty might get sucked into an expensive bidding war
for Genzyme against Sanofi and other potential cash-rich
acquirers, such as Johnson & Johnson (JNJ.N: ).

Stock Today

(Editing by Erica Billingham)

Genzyme seen more attractive to Sanofi than Glaxo