EghtesadOnline: For the last year, Sanofi's chief executive has made clear his quest for deals to help revive the fortunes of France's biggest drugmaker.
The market is still waiting. Olivier Brandicourt's failure to land two big biotech acquisitions he was chasing has led to growing impatience among some investors.
"The company needs a growth driver and must make an acquisition. Time is running out," said Olivier David of Vega Investment Managers, who holds shares in the company.
In an interview at the World Economic Forum in the Swiss resort of Davos this week Brandicourt defended his track record, citing an unwillingness to overpay for pricey assets and a paucity of good opportunities, according to Reuters.
"We can grow without M&A. However, it is a tool which we do continue to consider and which can help growth potentially, only if it makes sense strategically," he said. "The reason why it is so competitive is that you don't have a very, very large number of potential targets."
Sanofi's misses underscore the race for assets as the world's top drugmakers try to replenish their medicine cabinets.
After entering exclusive talks, Johnson & Johnson appears to be closing in on a deal to buy Actelion for some $28 billion, edging out Sanofi, which also tried to buy the Swiss company, according to people familiar with the matter.
It marks a second setback for Brandicourt's M&A ambitions after he was beaten by Pfizer's $14 billion bid for U.S. cancer specialist Medivation last August.
Brandicourt said he had to tread a fine line between delivering and overpaying, arguing many shareholders appreciated the financial discipline needed to walk away from deals.
"Shareholders being frustrated after one year is not automatically what I'm hearing, to be honest, because when I see investors they seem to be very happy for us not to have spent $14 billion on Medivation," he said.
"On Actelion, I'm not making any comment but you will understand that a company like ours will continuously look at what's happening in the world of potential mergers and acquisitions."
The global pharmaceutical industry has seen a flurry of acquisitions in recent years as leading players build their drug pipelines by snapping up young biotech firms.
Sanofi has a particular need to do this because its core U.S. diabetes business has stalled.
Brandicourt - who joined the company in April 2015 after the ousting of former CEO Chris Viehbacher - insisted Sanofi was delivering effectively on a plan set out to 2020.
The drugmaker posted better-than-expected quarterly earnings in October, helped by a surge in flu vaccine sales, but it stuck to its guidance for currency-adjusted sales at its embattled diabetes business to shrink by 4-8 percent per year on average from 2015 to 2018.
Despite a rally since October, over the last five years Sanofi shares have lagged the sector, rising around 37 percent, against a 61 percent gain for the STOXX Europe 600 Healthcare index.
"A lot of fund managers and historic shareholders are fed up with Sanofi and tired of seeing the stock in this 'vegetative' state," said Frederic Rozier, a Sanofi investor and fund manager with Meeschaert.
"Cost cutting is not enough, we want to see growth in sales, that's where we need to see progress." "CONSTANT SCREENING MODE"
Sanofi is due to publish annual results on Feb. 8 and its 2016 financial performance is expected to hinge on cost savings.
The fear is that with few potential new blockbusters in development, with the notable exception of dupilumab for eczema and asthma, Sanofi may find itself stuck with no meaningful growth for a while.
"Sanofi is looking for a pipeline and for this very reason it must engage in external growth," said Rudi Van den Eynde, with asset management firm Candriam.
"At the moment, the company is being overtaken by other groups that are offering more money. One can applaud that Sanofi is financially disciplined but it is a pity that it misses its targets ... it doesn't help in terms of credibility."
Sanofi's failure to land either Medivation or Actelion has raised questions over its acquisition strategy, even as the group insists it is in "constant screening mode".
"Is Sanofi not too rigid when it comes to pricing? At the end, they lose to someone else," said a Paris-based banker who asked not to be identified.
Another banking source said Sanofi's hostile approach in the Medivation process had been a mistake. Weeks before losing out to Pfizer, Sanofi tried to oust Medivation's board members to replace them with new directors.
"Everyone knows that 95 percent of hostile approaches go wrong," the source said, adding that in the final stage Pfizer and Sanofi were only a few hundred millions apart.
Brandicourt said he simply stuck to his guns on price and he noted that Sanofi, with a relatively small oncology business, may have had fewer potential cost savings than competitors.
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Sanofi has signaled its readiness to do deals of a similar size to its $20 billion purchase of Genzyme in 2011 but finding the right large biotech to fit is not that easy.
"Alternatively, Sanofi could purchase smaller companies, along the lines of the strategy pursued by Japan's Takeda. It would be more realistic," Van den Eynde said.
Sanofi may also look at more asset swaps, after agreeing to hand its animal unit to Boehringer Ingelheim in exchange for the German firm's consumer healthcare operations, a business strand it is keen to grow.
"A number of healthcare companies are looking at Pfizer's consumer health unit. Sanofi is one of them," said one healthcare banker. A Sanofi spokesman declined to comment.