This Big Pharma Pair Parts Ways

Bristol-Myers Squibb (NYSE: BMY  ) and Sanofi (NYSE: SNY  ) have been through a lot together, making tens of billions of dollars from selling Plavix, Avapro, and Avalide.

Most notably, there was the 2006 at-risk launch of generic Plavix by Apotex Pharmaceuticals, which the companies stopped rather quickly but still felt lingering effects from. And let's not forget the countless rumors that the two would eventually merge.

But all good things must come to an end. With all three drugs now facing legitimate generic competition, Bristol and Sanofi have decided to go their separate ways for the most part. Starting Jan. 1, Bristol will give up its rights to all three drugs worldwide, with the exception of Plavix in the U.S. and Puerto Rico. Bristol will get a royalty on sales of the drugs through 2018 and $200 million at the end of the revised deal. The Plavix deal for the U.S. and Puerto Rico remains intact through 2018.

Big pharmas renegotiating contracts is fairly common when circumstances change. Merck (NYSE: MRK  ) and AstraZeneca (NYSE: AZN  ) renegotiated their partnership over Nexium and Prilosec recently. And Merck and Johnson & Johnson (NYSE: JNJ  ) adjusted their partnership for Remicade after Merck bought Schering-Plough and J&J cried foul.

By parsing out the regions, Bristol and Sanofi won't have to coordinate sales of the drugs. With multi-billion-dollar blockbusters, two heads might be better than one, but with dwindling sales, the extra input just adds a layer of bureaucracy that isn't necessary.

Like most partnerships, Bristol and Sanofi have had their tiffs, including last year over a supply disruption of Avalide. While they were parting ways, the companies decided to resolve their differences, which included Bristol making a one-time $80 million payment to Sanofi.

Now they can go to bed happy. In separate beds, of course.

This pair is parting ways, but don't do the same with your portfolio -- dividends can help investors ride the waves of drug development. Check out the Fool's new free report "Secure Your Future With 9 Rock-Solid Dividend Stocks," where you'll find one drug developer and eight other promising companies. Just click here to get your free copy.

Fool contributor Brian Orelli has no positions in the stocks mentioned above. The Motley Fool owns shares of AstraZeneca plc (ADR) and Johnson & Johnson. Motley Fool newsletter services recommend Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2044442, ~/Articles/ArticleHandler.aspx, 9/2/2014 6:15:14 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement