April 3, 2006

French firm sanofi-aventis has acquired a 25-percent stake in Czech generic drug firm Zentiva N.V., sanofi-aventis said recently. The $517.8 million deal may signal a shift in sanofi-aventis' strategy for growing its generics business, one analyst said.

Sanofi-aventis has previously said it would seek to strengthen its generics business from within, but this move suggests an "increased appetite" to do so through acquisitions, analyst Graham Parry of Merrill Lynch said in a research note.

The buy is "not financially material" for sanofi-aventis, but signals an increased interest in the fast-growing Eastern European and generics markets, Parry said. Sanofi-aventis will claim 25 percent of Zentiva's 2005 income, but that represents only 0.3 percent of sanofi-aventis' profits.

Zentiva has a strong presence in the Czech Republic, Slovakia and Romania and is growing rapidly in Poland, Russia and the Baltic States, sanofi-aventis said.