AstraZeneca, Sanofi Add New Twist to Pharma Merger Mania

November 20, 2015, 11:02 AM UTC
A picture shows British pharmaceutical company AstraZeneca's manufacturing site in Macclesfield, northwest England, on May 8, 2014. British drugmaker AstraZeneca said it was targeting annual revenues of more than $45 billion (32 billion euros) by 2023, upping its defence against a takeover bid from US rival Pfizer. AFP PHOTO/ANDREW YATES (Photo credit should read ANDREW YATES/AFP/Getty Images)
Photograph by Andrew Yates AFP—Getty Images

French drugmaker Sanofi and Britain’s AstraZeneca said on Friday they had agreed a direct exchange of 210,000 chemical compounds from their respective libraries in a new twist on the drive to boost open innovation.

The deal is an intriguing echo of the merger-mania that has gripped the pharma industry in the U.S. this year, which appears to be reaching a climax as Pfizer Inc. and Allergan Plc (AGN) close in on what would be the sector’s biggest-ever merger.

In a bid to increase the number of leads for new medicines, and save both time and money, pharmaceutical companies are experimenting with novel ways to share early-stage research.

Other examples in recent years include partnership deals and the creation of consortia, often with academia, based on pooled research in certain disease areas, before the work reaches the competitive stage of developing patented medicines.

In the case of the Sanofi-AstraZeneca deal, no money will change hands and both companies will be free to use the chemical compounds without restrictions.

The choice of compounds was based on differences from those already existing in the firms’ own libraries and the large volume means there will be enough for scientists to run high throughput screening tests to see if they work against a range of disease targets.

That process is likely to take several years and only afterwards will promising chemicals be identified as ‘lead compounds’ to be taken forward into preclinical and eventually clinical development.

As a result, it represents a long-term bet on a new approach to drug R&D but both sides hope it will ultimately speed up the lengthy and costly process of developing novel treatments.

“It will accelerate our ability to identify unique starting points that could become new medicines for patients,” AstraZeneca’s head of innovative medicines and early development Mene Pangalos said.

For Sanofi, the announcement is the first since its new chief executive officer Olivier Brandicourt unveiled his long-term strategy for the company two weeks ago. The company is facing two years of stagnant profits as it looks for a new generation of money-spinning drugs to compensate for the loss of patent protection at its blockbuster diabetes drug Lantus. Brandicourt also wants to “build competitive positions” in treatments for multiple sclerosis and cancer, as well as in consumer healthcare.”

AstraZeneca, meanwhile, has also been under pressure from its investors to justify its standalone strategy after it enlisted political support to rebuff Pfizer Inc.’s (PFE) approach last year. It agreed to buy U.S.-based ZS Pharma for $2.7 billion earlier this month, a deal that has pushed its stock to a six-month high.

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