Sanofi’s Regeneron fix requires extra shot of M&A

Regeneron Pharmaceuticals

01/10/2026 10:13

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Aimee Donnellan
DUBLIN, Oct 1 (Reuters Breakingviews) - Sanofi SASY.PA has taken the first step to treating a long list of ailments. On Thursday, the $100 billion drugmaker agreed to pay US pharma group Regeneron REGN.O $1 billion to help develop four new immune system treatments, with up to $7 billion more if the experimental drugs make it to market. Belen Garijo, who took over as CEO in May, is right to try and get ahead of a looming loss of patent protection on key drugs, but the potential revenue hole is so big, she may need stronger medicine.
Sanofi’s relationship with Regeneron spans more than two decades. In 2003, Aventis, which merged with Sanofi the following year, began working with the Westchester County-based biotech on drug development. Four years later, the French group increased its equity stake in Regeneron to 19% as part of a deal to develop antibody treatments together which yielded star eczema drug Dupixent, now Sanofi's top-selling drug. In 2020, it sold its 21% stake in the business for nearly $12 billion to raise cash for more M&A and drug development, but the two continued to work together in certain areas. Their historic success, however, has an expiry date: In 2031, Dupixent, which accounted for 36% of Sanofi’s nearly €44 billion in sales in 2025, will lose patent protection in the US. In the four years that follow, the French group's sales are expected to plummet by nearly €14 billion, according to Visible Alpha estimates.
Thursday's deal will cement the Regeneron partnership and give Sanofi access to more early-stage treatments. But Garijo will need to do more. Luckily for her, she has plenty of firepower. Sanofi has debt less than one times EBITDA, which means she could borrow an extra €35 billion before gearing hit three times that measure of earnings.
Investors have been jumpy over recent pharma M&A: AstraZeneca's early talks with Bristol Myers Squibb sent its shares down nearly 7% in August, while Novartis' dealmaking missteps prompted an activist campaign. Yet Sanofi's shares are already very depressed, trading at just eight times its expected earnings, far below Roche and Novartis, which both trade at over 15 times earnings. With so much pain priced in, shareholders may well welcome any sign that Garijo is willing to tackle Sanofi's sickness.
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CONTEXT NEWS
Sanofi and US partner Regeneron on October 1 said they would expand their partnership to develop four new drugs, in a deal that includes up to $7 billion in milestone payments.
Sanofi will pay Regeneron $1 billion upfront, with additional payments tied to development, regulatory and commercial milestones being met.
The deal also settles litigation between the partners and addresses some investor concerns around Dupixent, their blockbuster eczema drug, which is set to lose patent protection in 2031.
Shares in Sanofi were up 0.91% by 0900 GMT on October 1.

(Editing by Neil Unmack; Production by Varun H K)
((For previous columns by the author, Reuters customers can click on DONNELLAN/Aimee.Donnellan@thomsonreuters.com))