France's biggest drug maker, Sanofi-Aventis will acquire majority control of unlisted Indian vaccines maker Shanta Biotechnics in a deal that values the unlisted Indian company at nearly Rs3,757 crore ($781 million / 550 euros).

Paris-based Sanofi-Aventis said that its vaccine division, Sanofi Pasteur would acquire Merieux Alliance's French subsidiary ShanH, which owns 80 per cent of unlisted Shantha Biotech.

Mérieux Alliance and Sanofi Pasteur have a common heritage originating from Institute Mérieux, which was founded in 1897 by Marcel Mérieux, a student of Louis Pasteur and Alain Mérieux's grandfather.

Alain Mérieux will chair the board of ShanH and a new joint committee will be created to be chaired by Alain Mérieux on vaccine strategy for the emerging markets, a company press release said.

Under the terms of the agreement, Sanofi Pasteur, the vaccines division of the Snofi-Aentis group, will support Shantha's ongoing development as a platform to address the need for high quality affordable vaccines in international markets.

Dr Varaprasad Reddy, the founder of Shantha Biotechnics, will continue to lead the company as managing director. The transaction is to close before the end of the third quarter.

"During the last three years, we have, together with Dr Varaprasad Reddy, Shantha's founder, significantly developed the company. We have in particular refocused its activity on vaccines and strengthened its range of products, especially by successfully launching a pentavalent pediatric vaccine as well as a Cholera vaccine. We have built up a portfolio of new products which are today in development - Rotavirus vaccine, Conjugated Typhoid vaccine, and HPV vaccine," said Alain Mérieux, chairman of Mérieux Alliance.

"I am also pleased to remain involved - together with Dr. Varaprasad Reddy- in the group's strategy in the domain of preventive medicine and of human vaccines tailored to the countries of the South," he added.

Shantha, created in 1993 by Dr Varaprasad Reddy, develops, manufactures and markets several important vaccines.

Mérieux Alliance, the family holding of biotech billionaire Alain Mérieux, whose father Marcel Merieux, was a former laboratory aide to Louis Pasteur had acquired a 60-per cent stake in Shantha Biotech in November 2006 from Oman-based financial firms, and later increased its stake to 80 per cent. (See: Merieux Alliance acquires majority stake in Shantha Biotechnics)

GlaxoSmithKline had also shown an interest in acquiring Shantha and had held several rounds of talks with the company in March. (See: Glaxo, Sanofi in talks for Shanta Biotch takeover)

Under the terms of the agreement, Sanofi Pasteur, will support Shantha's ongoing development as a platform to address the need for high-quality affordable vaccination in international markets.

Sanofi said that the transaction would close before the end of the third quarter. For the current fiscal year, sales of Shantha are expected to be around $90 million, which are expected to grow significantly given the commercial resources of Sanofi Pasteur and through the development and launch of Shantha's pipeline of new vaccines.

Christopher Viehbacher, chief executive officer of Sanofi-Aventis said, ''Shantha provides Sanofi Pasteur with a portfolio of new vaccines in development which complement Sanofi Pasteur's current vaccines, positioning the company to accelerate its growth in strategically important emerging markets.''

The state-of-the-art manufacturing facilities allow Sanofi Pasteur to gain high-quality capacity in order to enable us to provide important vaccines at affordable prices to many people around the world,'' he added.

Shantha Biotech, which develops, manufactures and markets several important vaccines at international standards in a state-of-the-art facility in Hyderabad is run by Varaprasad Reddy, who founded the company in 1993. He will continue to head the company as managing director. Under Reddy, the company became India's first bio-pharmaceuticals company to develop, manufacture and market a recombinant hepatitis B vaccine in 1997 with its branded indigenous recombinant hepatitis-B vaccine, enabling India to become one of the five countries to have this know-how.

The Indian company has been involved in developing biogeneric drugs and new molecules, for monoclonal antibodies for various types of cancer and has a high-level R&D team and a bio-production potential which conforming to strictest international quality norms.

However, it has been unable to replicate these success, though it has been supplying its products directly in various countries and through UNICEF agencies after its Shanvac-B received the WHO-Geneva pre-qualification. Shanvac-B and Shanferon received an overwhelming response mainly because they brought down the cost of treatment in the recipient countries.

The Shanvac-B vaccine was priced at Rs50 compared to a comparable vaccine from a multinational priced at Rs780. The story of the pricing differential for its second product Shanferon (Interferon Alpha-b) had been similar.

Shantha works with supranational organizations like UNICEF and PAHO to supply major international markets, including Asia-Pacific, Africa and Latin America. In 1997, Shantha launched Shanvac-B, the first recombinant Hepatitis B vaccine produced in India.

Shanvac-B, Shantetra (combination vaccine of Diphteria, Pertussis, Tetanus and Hepatitis B), Shan (combination vaccine of Diphteria, Pertussis, Tetanus, Haemophilus influenza B and Hepatitis B) and Shantt (Tetanus toxoid vaccine) are prequalified by the World Health Organisation for supplying to United Nation agencies globally. Shantha also has an important portfolio of vaccines in development.

Shantha Biotech employs over 700 people and markets a range of vaccines in India and global markets. It also provides contract research and manufacturing (CRM) services, and has a wholly-owned subsidiary in the US.