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Sanofi and Merck Are Ditching a 22-Year-Old Joint Venture

Influenza vaccine syringes at a Sanofi Pasteur factoryInfluenza vaccine syringes at a Sanofi Pasteur factory
Influenza vaccine syringes at a Sanofi Pasteur factoryPhotograph by AFP/Getty Images

Pharma giants Sanofi and Merck announced on Tuesday that they are ending a joint venture on vaccines in Europe that has existed for more than two decades.

The consolidated operation, called Sanofi Pasteur MSD, was created in 1994, is owned on a 50-50 basis by the two firms, and operates in 19 European countries.

But as Bloomberg notes, sales have been flagging over the past several years and fell 3% to $908 million in 2015. That’s despite a portfolio which includes some of the best-selling vaccines in the world, including Merck’s HPV shot Gardasil. Sanofi Pasteur MSD also supplied a hefty portion of Europe’s flu vaccines and other inoculations for infections ranging from rabies to pneumonia to hepatitis A and B.

“After carefully considering our individual strategic priorities, alongside the economic and regulatory environments for vaccine operations in the European Union, we have mutually agreed that it is in our best interests to manage our vaccine product portfolios independently,” said the companies in a statement, adding that the split would “better position [them] to drive growth.”

 

Sanofi CEO Olivier Brandicourt has been on a mission to get the company in shape since taking over in spring 2015 after the ouster of Chris Viehbacher. Sanofi has been hammered in recent years by diminishing sales of flagship products in its powerhouse diabetes franchise, including the insulin Lantus, leading the pharmaceutical to prioritize its most promising pipeline candidates.

The shift has led to a major restructuring effort aimed at saving $1.8 billion by 2018 which will include significant layoffs. More than 100 job cuts could be on the horizon as a result of the Sanofi Pasteur MSD split.

While the Sanofi vaccines pipeline isn’t necessarily loaded with major revenue-boosters, the company has been accelerating development of a Zika vaccine and introduced a pioneering Dengue vaccination into the global market last year.

All told, the bestselling vaccine in the world is Pfizer’s Prevnar 13. The pneumococcal shot is expected to reach sales as high as $5.83 billion by 2020, according to some analysts.