Sanofi-Aventis Animal Health Division Starts China Facility Expansion

Merial, the animal health division of Sanofi-Aventis (NYSE: SNY), broke ground on a $70 million expansion of its manufacturing facility in the Nanchang Hi-tech Development Zone. The existing factory, which has been in operation for almost 20 years, produces poultry vaccines for use in China. Phase I of the new construction will add almost 30,000 square meters of floor space, and the expansion will ultimately double the existing facility’s production capacity.

Merial operates in China together with partner organizations. Besides vaccines, the company also seeks to improve the quantity and quality of poultry protein.

Merial Limited was established in 1997 as a joint venture between Sanofi-Aventis and Merck (NYSE: MRK). In July of this year, Merck sold its 50% interest in the JV to Sanofi-Aventis for $4 billion. Following Merck’s agreement to purchase Schering-Plough (NYSE: SGP) in March, Merck was seeking to raise cash. In addition, Schering-Plough has its own animal division.

At the moment, Sanofi-Aventis owns 100% of Merial. However, after the merger between Merck and Schering-Plough closes, a call option will become effective that allows Sanofi to re-create a JV with the new Merck, with Merck adding the Intervet/Schering-Plough animal health business to Merial.

In 2008, Merial generated over $2.6 billion in revenue.

Disclosure: none.