When you have $5.5 billion in your wallet, it's understandable if there's a hankering to spend some of it.

French drugmaker Sanofi (NYSE:SNY) counted that much money in its coffers as of the end of June, including cash, cash equivalents, and short-term investments. Last week, the company's CEO hinted that it might spend some of its cash to buy a bigger stake of a fast-growing biotech. Rumors from another potential biotech buyout also mentioned Sanofi. Here's the scoop on these two biotechs catching the big pharmaceutical's eye.

Getting closer
Sanofi has enjoyed a close relationship with Regeneron Pharmaceuticals (NASDAQ:REGN) for years. Aventis collaborated with Regeneron before it was acquired by Sanofi in 2004. The merged company continued that tight relationship, gaining FDA approval for colorectal cancer drug Zaltrap in 2012. Sanofi and Regeneron are also working together on developing a cholesterol drug.

Sanofihq

Source: Sanofi. 

In February of this year, Sanofi announced that it planned to bump up its stake in Regeneron from around 16% to 30%. At that time, speculation mounted that the big drugmaker could be eyeing a hostile takeover of its smaller partner. Sanofi attempted to brush aside those rumors and didn't take any immediate action on buying more shares.

Last Friday, though, CEO Chris Viehbacher again raised the prospect of increasing its ownership of Regeneron to the maximum 30% allowed under the two companies' collaboration agreement. Viehbacher noted that the relationship had been "extremely productive." However, he indicated that the timing on how quickly Sanofi might move was not set in stone.

A rare deal?
Viehbacher didn't comment on another possible buy for Sanofi, but plenty of others did. On Friday, ViroPharma (NASDAQ:VPHM) shares soared on news that the biotech might be up for sale. The two companies most often mentioned as potential buyers were Shire Plc (NASDAQ:SHPG) and -- you guessed it -- Sanofi.

ViroPharma currently markets a couple of drugs in the U.S. , but 88% of its total sales stems from Cinryze, which is used to treat hereditary angioedema, or HAE. This is a very rare genetic disease that occurs in fewer than one in 10,000 people.

Since its pickup of Genzyme in 2010, Sanofi has become increasingly involved in developing drugs that target rare diseases. ViroPharma could fit well into the French company's strategic direction.

However, Shire might be an even better fit for ViroPharma. Shire has an HAE drug, Firazyr, so it already claims a sales force ready to sell to that market. Because of this synergy, Shire could be more likely to offer more for ViroPharma. Sanofi has a significantly larger cash stockpile, though.

Foolish take
Sanofi has certainly profited from its stake in Regeneron. Buying more shares in February when the company first announced plans to do so would have been a smart move. Since then, Regeneron's stock has jumped more than 70%.

Is buying more of Regeneron still a smart move for Sanofi? It's certainly not a cheap proposition. Regeneron trades at a price-to-earnings multiple of 38. Its forward P/E is even higher. That being said, I don't think it's a bad idea for Sanofi to incrementally raise its position size in Regeneron over time.

ViroPharma could certainly be a good acquisition -- but only if the price isn't ridiculously high. The news of a potential buyout drove ViroPharma shares up to more than $39 per share. I don't see it making sense for Sanofi to pay much more than $45 per share.

The best stock for Sanofi to buy just might be its own. Cosmetics company L'Oreal currently owns 9% of the company. L'Oreal's CEO has indicated that it might want to sell that stake. Sanofi seems to have its eyes on a couple of biotechs, but the best value could be found by simply looking in the mirror. Sometimes the smartest way to handle money burning a hole in your pocket is to just put it in another pocket.

Fool contributor Keith Speights has no position in any stocks mentioned, and neither does The Motley Fool. 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.