Obesity Pill Fuels Ј33bn Merger

French bid would create third largest pharmaceutical company. Merger mania gripped the global drugs industry yesterday after Paris-based Sanofi-Synthelabo launched an audacious Ђ48.5bn (Ј33.5bn) bid to swallow its French rival Aventis, in a deal that would create the world's third-biggest pharmaceuticals firm.

Merger mania gripped the global drugs industry yesterday after Paris-based Sanofi-Synthelabo launched an audacious Ђ48.5bn (Ј33.5bn) bid to swallow its French rival Aventis, in a deal that would create the world's third-biggest pharmaceuticals firm.

The move has been partly fuelled by the race to develop and market a new range of lifestyle drugs tackling modern plagues of the developed world such as obesity, depression and sexual impotency.

Sanofi, run by the energetic Jean-Franзois Dehecq, 64, who wants to create a French national drugs champion, already boasts what could prove to be a wonderdrug for the overindulgent: a compound which tackles obesity, nicotine addiction and alcohol addiction all in one pill.

Ironically, the drug, Rimonabant, was derived from observing cannabis smokers developing the "munchies" - an overwhelming urge to snack.

Sanofi's scientists figured that if they could synthesise something that did the opposite of cannabis they might be able to tackle the problem of fat.

Human trials of the resultant drug, which acts by interfering with cannabinoid receptors in the brain, are now under way.

Taking over Aventis, which has a more mature sales and distribution operation, especially in the important US market, would help Sanofi develop and market new drugs like Rimonabant much more effectively.

The board of Aventis reacted angrily yesterday, insisting that the price was far too low. The French government, however, welcomed the prospect of a mega-merger, which would create a Paris-based world-beater with combined sales of up to Ј17bn.

If it succeeds in convincing Aventis shareholders to accept the takeover, Sanofi will buy itself an established US-based sales force to promote its forthcoming drugs in the world's biggest market.

In earlier trials, Rimonabant appeared to have helped obese people to lose weight by interfering with the parts of the brain stimulated by cannabis, and Sanofi hopes that in turn it could also help reduce the incidence of diseases such as diabetes, which can be related to obesity, and thus tap into a huge market.

If the trials are successful, the drug is expected to be launched next year.

However, yesterday's bid was seen by some City analysts as a vote of no confidence by Sanofi in its own drug portfolio, with its second best seller, Plavix, facing patent competition from Indian generics firm Dr Reddy's Laboratories later this year.

Aventis's board said it would advise its shareholders - the largest of which is the Kuwait Petroleum Corporation - to repulse the bid.

"The offer, which was launched without any prior approach from Sanofi-Synthelabo, is of a hostile nature and does not take into account the wide range of risks associated with this move," the board said in a statement.

Union leaders were also outraged by the news, with one body predicting that 25,000 jobs could be at risk.

Sanofi hopes investors will eventually cave in to the logic that in this research-driven industry, bigger is better.

"Research and development is the only important point of success in this business, because if you have no innovative products, it's impossible to grow," Mr Dehecq said.

"We are building a beautiful European company, to guarantee the future of both companies and to meet the challenges facing the pharmaceutical industry."

By joining forces with its rival, Sanofi believes it can make savings of Ј1.1bn a year. It will have the third-largest research and development budget in the industry at its disposal, and as many as 60 products, of which Rimonabant is one of the most promising, in development.

Apart from Plavix, Sanofi has one other blockbuster drug, with sales of $1bn (Ј550m) or more - insomnia remedy Stilnox.

A series of mega-mergers swept the pharmaceuticals industry in the 1990s, including the deal which brought together Glaxo Wellcome with Smithkline Beecham, to create British based giant GlaxoSmithkline, now the world's second-largest.

A pact between Sanofi's two main shareholders, L'Orйal and TotalFina Elf, not to sell their holdings in the company, runs out at the end of this year, and Sanofi is believed to be keen to secure its financial future before then. Between them,L'Orйal and Total own almost 44% of the firm, and they gave their backing to yesterday's bid.

Aventis's leading drugs include allergy treatment Allegra, and cancer treatment Taxotere.

With life-saving breakthroughs few and far between, lifestyle drugs like Rimonabant are seen as one of the main battlegrounds for drugs firms in the years ahead.

"There hasn't been a really good and effective obesity drug - it's a huge untapped market," said Ian Lloyd, the editor of industry database Pharmaprojects, which estimates that the number of anti-obesity drugs in development has quadrupled since 1995, to 120.