Sanofi’s (SNY) animal health unit, Merial, announced that it will be acquiring Merck & Co. Inc.’s (MRK) manufacturing facility in Barceloneta, Puerto Rico. The successful completion of the acquisition of the facility will help Sanofi to expand its Animal Health business’ global operations.
Also, Sanofi will be able to use the facility’s expertise in chewables’ manufacturing technology. Sanofi will retain Merck’s 200 employees at the Barceloneta facility. The deal is subject to approval from the U.S. Federal Trade Commission.
Sanofi is expected to use the facility for the manufacturing and packaging of its Heartgard and Heartgard Plus products, which help to prevent heartworm disease in dogs and cats.
Sanofi’s Animal Health business currently operates in more than 150 countries with around 6,200 employees. Sanofi’s Animal Health business generated sales of €1.6 billion in the first nine months of 2014, an increase of 5.3% on a constant exchange rates basis.
Our Take
We believe more than any other segment, investor focus to remain on Sanofi’s Pharmaceuticals business, in particular the diabetes business. The company believes that diabetes business to remain flat next year. The company’s diabetes business is one of the largest contributors to the Pharmaceuticals segment as well as to the company’s top-line.
The Animal Health business expansion is meager to offset this loss. The company needs to take greater initiatives to minus Lantus loss.
Sanofi carries a Zacks Rank #5 (Strong Sell). Some better-ranked companies in the health care space are Allergan (AGN) and AbbVie Inc. (ABBV). While Allergan holds a Zacks Rank #1 (Strong Buy), AbbVie carries a Zacks Rank #2 (Buy).
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