Sanofi Signs Agreement to Acquire Colombian Pharmaceutical Company, Genfar

With this deal signed on October 2, 2012, Sanofi will become a market leader in Colombia and expand its range of cost-effective pharmaceutical agents in Latin America, according to GlobalData (London, UK), an international market research firm. GlobalData believes the race by pharmaceutical companies to establish themselves in the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa) countries might just have begun. With companies such as Eli Lilly and Pfizer already responding to analysts’ calls for prudence about the potential of emerging markets by reducing their forecasts, the CIVETS countries, which are regarded as second-generation emerging markets and holding significant potential, seem to be the next big thing.

Sanofi’s acquisition is one that could generate significant dividends to the company in the future. In an incredibly competitive global pharmaceutical market, the one who moves first can take advantage, which can frequently be a key determinant of success or failure for players in specific geographic markets. As a result, Sanofi could potentially establish itself as a powerhouse with in Colombia and strengthen the barriers to entry for other pharmaceutical companies that may decide to later enter--meaning, according to GlobalData spokespersons, “get in, bolt the door, and lose the key.” Moreover, the company could utilize its entry into Colombia as a starting point for penetrating other CIVETS countries.

Moreover, Sanofi could potentially achieve comparative advantage over its competitors by moving most of its labor-intensive processes to Colombia, and subsequently other second-generation emerging markets. The cost of labor is expected to be significantly lower in these markets than in first-generation emerging markets including China, India, and Brazil. Therefore, by moving into fruitful economies outside of emerging markets, which are destined to become overcrowded at some time because of the swift movement of pharmaceutical companies into them, Sanofi would enjoy reduced costs and consequently, be able to compete on price if the need arises.

According to GlobablData, by acquiring Genfar, Sanofi is jumping into second-generation emerging markets. It will be interesting to see what the pharmaceutical giant will do next.

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