The agreement, designed as an "open-innovation model," will combine the financial and human resources of both companies in the interest of developing new solutions for patients, including drug-device combination products and services to help improve patient care.
"The alliance will pair Sanofi’s extensive insulin portfolio and drug development expertise with Medtronic’s expertise in insulin pumps and continuous glucose monitoring," according to a press release. "One of the priorities of the alliance will be to deliver novel drug-device combinations, including new form factors that are affordable, convenient and easy to-use to increase therapy adherence and deliver better outcomes. These efforts will focus on improving the management of Type 2 diabetes, especially for people who cannot achieve glucose control even with multiple daily injections of insulin."
The companies are already allied on another European initiative to develop an implantable insulin delivery system for patients with Type I diabetes. Pending negotiations on a definitive agreement between Medtronic and Sanofi, that project will be absorbed by the larger initiative.
"Medtronic is committed to taking a broader approach, expanding beyond our core strength in Type 1 diabetes, to co-develop an array of technologies and patient services that will deliver superior clinical outcomes at an affordable price," Medtronic chairman & CEO Omar Ishrak said in prepared remarks. "We also know we can’t do it alone – so we are particularly excited to join in this effort with Sanofi who, like us, is committed to exploring new avenues and approaches to solving the challenges associated with diabetes."
Medtronic is making some major moves in a variety of interest, including in the hospitals market with the newly announced blockbuster acquisition of Covidien (NYSE:COV). The deal, slated to cost $43 billion, would create the world’s largest pure-play medical device company with enough scale to rival Johnson & Johnson‘s (NYSE:JNJ) medtech operation (the combined entity’s annual revenues would be about $27 million, compared with J&J’s medtech top line of roughly $28 million).
Medtronic also announced a 9% increase in its cash dividend, brining its annual amount to $1.22 per share, according to a company announcement.
"This dividend increase brings the company’s current dividend yield to 2 percent and expected fiscal year 2015 dividend payout ratio to approximately 30%," the company reported. "Today’s announcement marks the company’s 37th consecutive year of increased dividend payments."