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Apparently Merck (NYSE: MRK ) and sanofi-aventis' (NYSE: SNY ) infatuation with each other was just puppy love after all. The two pharmas have called off their plan to set up a joint venture with their respective animal-health businesses.
The two dated for many years in a joint venture called Merial. But when Merck decided to buy Schering-Plough, which had an animal-health business of its own called Intervet, it sold the full rights to Merial to Sanofi.
After Merck's acquisition, the two decided to give it another go, joining Merial and Intervet to surpass Pfizer (NYSE: PFE ) as the world's largest animal-health business. The deal made a lot of sense with the potential to share fixed costs.
A year later, the deal isn't complete because antitrust regulators are apparently worried about the new company gouging farmers and pet owners in product areas where Merial-Intervet would have too large of a market share.
The two reportedly tried to sell off assets to satisfy regulators, but it appears they couldn't reach an agreement that would satisfy potential buyers and regulators while still making sense for the companies. Genzyme (Nasdaq: GENZ ) , tying up much of Sanofi's time during their protracted engagement, likely didn't help matters much.
It's a mixed bag for other pharmas with animal-health businesses: Bayer, Boehringer Ingelheim, Novartis (NYSE: NVS ) , and Eli Lilly (NYSE: LLY ) . They won't have to compete with a giant, but some of the assets won't be available at fire-sale prices either. Looks like Eli Lilly made a good move grabbing up Johnson & Johnson's (NYSE: JNJ ) business last week; waiting could have increased the competition substantially.
With Merial-Intervet in the doghouse, Pfizer is the big winner, remaining No. 1 in the animal-health business.
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