This Big Pharma Pair Parts Ways

Bristol-Myers Squibb (NYS: BMY) and Sanofi (NYS: 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 (NYS: MRK) and AstraZeneca (NYS: AZN) renegotiated their partnership over Nexium and Prilosec recently. And Merck and Johnson & Johnson (NYS: 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.

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