P.M. BRIEFING : French Sanofi, Kodak Subsidiary to Link Global Drug Operations

Sanofi SA said today it has agreed to combine most of its worldwide pharmaceutical operations with those of Sterling Drug, the pharmaceutical subsidiary of Eastman Kodak Co.

The alliance will create a major international presence for the French and U.S. drug companies and give them critical marketing and research clout, Sanofi Chairman Jean-Francois Dehe said. He said the transaction will not involve any exchange of cash between the two groups.

Under the agreement, Sterling and Sanofi will continue to exist as organizations, and their research and development operations will remain independent. However, certain development costs will be shared, as well as the profits from new products and joint acquisitions.

Sterling, which makes Bayer aspirin, Phillips’ Milk of Magnesia, Midol pain relievers and other over-the-counter products, was acquired five years ago for $5.1 billion by Kodak, based in Rochester, N.Y.

Sanofi, founded in 1973, has total annual pharmaceutical sales of about $1.3 billion. About 60% of its shares are owned by Elf Aquitaine, the French state-owned oil company.