What's going on?

You didn�t hear it from us, but French pharmaceutical giant Sanofi agreed to buy US biotech Principia Biopharma for $3.4 billion on Monday.

What does this mean?

Sanofi�s a pretty traditional pharma outfit, so its purchase of Principia should help push it toward more innovative therapies � for multiple sclerosis, say, or a variety of autoimmune complaints � which might lift earnings growth.


Most of the world�s big pharma and biotech companies are squarely focused on producing and trialing vaccines to defeat the coronavirus pandemic. But since analysts reckon a successful drug might not be the financial blockbuster investors had hoped for, healthcare companies have had to keep their eyes peeled for other potentially growth-boosting opportunities too.

Why should I care?

For markets: Agreement in Principia.

Sanofi will pay Principia�s stockholders $100 in cash for each share they own. That�s only 10% more than Principia�s stock was worth on Friday, but its investors are probably doing okay: it�d already risen almost 66% this year prior to another jump on Monday. Sanofi�s shares, meanwhile, rose almost 2%. That�s surprising considering a company�s shares usually fall when it announces an acquisition � perhaps because investors worry it may have paid too much � and even more surprising considering Sanofi is paying 34 times Principia’s predicted revenue in three years� time. Still, investors might think this deal is a shrewd one: the successful development of new, more innovative drugs under Sanofi�s ownership could more than justify the big spend.

The bigger picture: Sanofi�s choice.

Sanofi�s deal is the second-biggest pharmaceutical acquisition this year (second only to Gilead Sciences� $5 billion cancer-related purchase) and follows its purchase of Synthorx for $2.5 billion back in December (tweet this). And it might not be done yet: some analysts reckon Sanofi�s likely to spend $50 billion on acquisitions after it sold off its stake in another biotech company earlier this year.