UPDATE: Sanofi Forms Vitamin JV In China With Minsheng Pharmaceutical

Drug company Sanofi-Aventis (SNY) Friday expanded its reach in the consumer drugs market to China, with the creation of a vitamin and mineral supplements joint venture with Minsheng Pharmaceutical Co. Ltd.

The French company is one of many drug companies vying for a share in over-the-counter markets as patents expire, allowing generic drugs cut in to traditional sources of revenue.

Sanofi-Aventis gained a foothold in the U.S. consumer drugs market in December with the $1.9 billion acquisition of Chattem Inc. (CHTT), maker of consumer products such as Selsun Blue shampoo and Gold Bond lotions.

Sanofi-Aventis did not provide financial details of the Chinese plan, but said it would have a majority equity stake in the new venture with Minsheng, which owns the multi vitamin brand 21 Super-Vita.

"The agreement helps the group diversify and reinforce its presence in a very dynamic market," Arsene Guekam, analyst with CM-CIC Securities, said in a research note. He added that he doesn't expect the deal to have an immediate effect on group accounts. Guekam rates Sanofi's shares as a buy with a EUR59 target price.

Sanofi estimates the Chinese over-the-counter market was worth EUR7 billion in 2008 and will grow at double-digit rates over the next five years.

"Combined with our leadership position in vaccines, we will continue to contribute to preventative healthcare in China," said Hanspeter Spek, President of Sanofi-Aventis' Global Operations.

"Entering the world's second largest consumer healthcare market is also a strategic move for Sanofi-Aventis to consolidate its position in consumer healthcare," he added.

Sanofi has three manufacturing sites in China. At 1100 GMT, Sanofi shares traded up 1.4% or EUR0.72 at EUR53.40, slightly higher than the French market.

By Mimosa Spencer and William Horobin, Dow Jones Newswires; [phone]; [e-mail]