Sanofi-Aventis Buys Chattem, a Leader in Over-the-Counter Sales
Cracking the U.S. Market
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% Sanofi-Aventis said it will maintain Chattem's two manufacturing facilities and will continue construction on a third, and will keep Chattem's corporate brand, with its senior execs leading the subsidiary.
Sanofi has generated $2 billion in OTC sales overseas this year, but buying Chattem -- a 130-year-old company based in Chattanooga, Tennessee -- will help it crack the U.S. market. That alone may be enough to justify spending four times as much as Chattam's 2008 sales: The U.S. represents about 25% of the worldwide market, Sanofi said, with more than $21 billion in sales last year.
Sanofi expects to expand sales of Chattem brands -- including Gold Bond skin products, Icy Hot muscle pain relief, and Selsun Blue dandruff shampoo -- into emerging markets and other regions where it has a strong presence. Chattem's growth of sales and profit has been sustainable, Sanofi said, with a compound annual growth rate of 12% in the past five years.
Allegra to Go Over-the-Counter?
Sanofi also wants to turn its prescription medication Allegra into an OTC product and plans to convert other drugs in time, a strategy increasing in popularity as pharmas try to maintain revenues of drugs going off patent. Sanofi said on Monday that it would stop development on two products: an investigational insomnia treatment, eplivanserin, and an atrial fibrillation, idrabiotaparinux.
The Food and Drug Administration has granted a fast-track designation for Sanofi's prostate-cancer drug, cabazitaxel, and the company is making progress with European regulators. Europe has recommended Sanofi's DuoPlavin combination of the Plavix blood-thinner and aspirin for patients taking both medicines to prevent clots.
While analysts at Jefferies & Co. said the updates result in the loss of 1% of estimated 2015 revenue, others generally approved of the deal with Chattem. Shares of Sanofi traded about 0.5% higher by noon, while CHTT shares rallied by more than 32%.