Sanofi and Medtronic partner on diabetes

Sanofi and Medtronic have announced a new tie-up that will see both firms develop new products in the increasingly competitive diabetes space.

Under the terms of a ‘memorandum of understanding’, France’s largest pharma company Sanofi and US-based Medtronic will initially co-operate on developing drug-device combinations and offering care management services for diabetes patients.

Depending on the results, they will consider other areas for collaboration, the companies say in a statement. Financial terms of the deal were not disclosed to the public.

“Sanofi will tap into technology advances that aim to create holistic treatment solutions which take into account the individual patient's needs,” explains Pascale Witz, Sanofi’s executive VP of global divisions and strategic development.

The alliance will bring together Sanofi’s insulin portfolio and Medtronic’s insulin pumps and glucose monitoring, with a focus on sufferers unable to achieve glucose control despite multiple daily injections of insulin.

This is not the first deal between the two firms as Sanofi and Medtronic already have an agreement in Europe covering an implantable insulin delivery system for type 1 diabetes, and plan to add this to their alliance.

Sanofi is currently the second biggest producer of diabetes treatments behind specialist Danish firm Novo Nordisk, in a global diabetes market worth over $40 billion.

But this spot could be under threat as its top top-selling drug Lantus, the world’s most prescribed insulin, is set to lose patent protection in 2015 which could see close rival Lilly gain ground in the diabetes market.

Spate of deals

Medtronic, also the world’s biggest maker of pacemakers, was examining a £9.5 billion bid for medical device firm Smith & Nephew, but it emerged over the weekend that the  company has in fact purchased Dublin-based orthopaedic group Covidien in a deal worth $43 billion.

The deal is the largest ever for Medtronic, and gives the Minneapolis-based company access to Covidien’s portfolio of hospital supplies that includes surgical staplers and ventilators.

It also adds size and scope that may allow it to better compete with US giant Johnson & Johnson, the largest medical device company in the world.

At the same time use of Covidien’s Irish HQ could see around $14 billion in cash going back into Medtronic, as it would not have to pay the high rates of tax in the US.

The primary motivation is ‘strategic and operational alignment,’ explains Medtronic chief executive Omar Ishrak to Bloomberg. “It will drive better value for patients and customers around the world,” he adds.

Ben Adams