Sanofi-Aventis Faced with Possible Stake Sales

Shares of pharmaceutical company sanofi-aventis hit a two-year low Wednesday, in part on concerns two of its biggest shareholders will sell their stakes now that sanofi has won its patent-protection lawsuit regarding its blockbuster Plavix. Merrill Lynch said in a note that a "further cap on the share price is likely to be the increased likelihood that major shareholders Total and L'Oreal ... now divest their stakes." Christophe de Margerie, CEO of the Total oil company, said Wednesday his company has "a mission to sell" its 13.12% stake in sanofi now that the Plavix case is resolved and will do so "in the near term." Cosmetics manufacturer L'Oreal, however, which holds 10.6% of sanofi, said its stake is "not strategic, it's historical...A share sale is not imminent." Sanofi shares reacted positively to Tuesday's news of the patent win, but retreated on speculation the company might buy marketing partner Bristol-Myers Squibb and concerns over the share sales. Separately, after an FDA panel recently voted against recommending approval for sanofi's obesity drug Acomplia on concerns over psychological side effects, Wednesday a German court concurred with Germany's Joint Committee (a group of doctors and insurers who provide drug recommendations) that Acomplia should be labeled a "lifestyle" drug, which would render it ineligible for reimbursement.

Sources: Reuters I, II, III
Commentary: Plavix Patent Upheld; Bristol-Myers Shares Rise on Renewed Buyout Chatter • FDA Panel: Sanofi-Aventis Has Not Shown Acomplia to Be Safe • Sanofi Can Blame Itself for FDA Rejection of Acomplia Weight Drug
Stocks/ETFs to watch: sanofi-aventis (SNY), Total S.A. [ADR] (TOT), Bristol-Myers Squibb (BMY). Competitors: Eli Lilly & Co. (LLY), Merck & Co. Inc. (MRK), Pfizer Inc. (PFE). ETFs: Pharmaceutical HOLDRs (PPH), iShares Dow Jones US Pharmaceuticals (IHE)

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