Sanofi SA (ADR) (SNY), Shire PLC (ADR) (SHPG): Making Sense of the Drama About Viropharma Inc (VPHM)

Sanofi SA (ADR) (NYSE:SNY) has three main business segments: pharmaceuticals, human vaccines, and animal health products. Acquiring ViroPharma could boost sales from its pharmaceuticals segment, which reported a 7.1% year-on-year decrease in revenue to 6.7 billion euros ($8.9 billion) last quarter. Acquiring ViroPharma would only boost Sanofi SA (ADR) (NYSE:SNY)’s quarterly revenue by roughly $100 million, but sales of Cinryze are still expected to rise to peak annual sales of $600 million in North America and $100 million in Europe.

For Shire PLC (ADR) (NASDAQ:SHPG), acquiring ViroPharma would significantly increase its footprint in HAE treatments, with Cinryze complementing its own acute attack treatment Firazyr, which generated $50 million in sales last quarter — a 50% year-on-year increase.

Foolish bottom line

Investors should pay attention to the buzz surrounding ViroPharma carefully. Other smaller companies, like Dyax, could also become acquisition targets if larger pharmaceutical companies are interested in increasing their presence in HAE treatments. Extreme caution is advised when investing in these smaller, more speculative biotech companies, however. Their share prices are often moved by approvals, rejections, takeover chatter, and lofty promises of future growth, rather than by solid fundamentals.

The article Making Sense of the Drama About ViroPharma originally appeared on Fool.com and is written by Leo Sun.

Leo Sun has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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