Wednesday, February 13, 2008

Sanofi Aventis: Sign of the Big Pharma Times?

Sanofi-Aventis’ 2007 results presentation on Tuesday provides a nice little snapshot of Big Pharma circa early 2008.

The company reported rather paltry sales growth (you can see all the numbers here), but boasted about its cost- and head-count cuts and its shareholder-sweetening dividend payouts (how else do you keep your investors, with top drugs going off patent and new ones not coming through fast enough?).

It also provided pointlessly hypothetical? useful? information such as what pharmaceutical sales growth in 2007 would have looked like (up 6.4%) excluding the impact of generic Ambien IR in the US, and Eloxatine in Europe (as if to day, “it’s not our fault; we weren’t expecting it.”).

More significantly, perhaps, Sanofi provided numbers to back up the growing importance of vaccines to the group’s current and future growth. Rarely before have so many of Big Pharma's slides been devoted to this once-unfashionable category. Vaccines sales were up 14.5% in 2007—over double even the buffed-up pharmaceutical growth figure--and now account for 10% of group revenues, the largest among any of the Big Five. (And these numbers aren’t thanks to the cutting-edge cancer vaccine Gardasil, marketed in Europe by the Merck/Sanofi JV SPMSD, since Sanofi doesn’t consolidate SPMSD’s sales. They’re driven by more pedestrian things: seasonal flu, pneumonia, travel vaccines…)

So, we’re reminded, vaccines are no longer a backwater, they’re a “strategic pole.” At Sanofi, they’re the only segment where headcount’s going up, not down, and they saw by far the largest growth in R&D spend at the French group in 2007 (and are unlikely to be the target of this year’s R&D budget freeze).

Elsewhere, entire slides were devoted to developing markets China and Brazil—another sign of the times. In China, sales were up 36% (including vaccines), and the company has certainly joined most other Big Pharma in its China investments, whose value we discuss in the February issue of START UP. Who used to care about Brazil? Never mind; the market will be worth over €11 billion in 2011 and Sanofi claims to be the number one international company there.

More telling perhaps is Sanofi’s highlighted new franchise in Brazil: Generics. Copycat drugs are no longer the domain of generics groups; Big Pharma is playing in this field too, even though to do so often blatantly contradicts all the talk of innovation and R&D investments. (It’s also playing in the large-molecule equivalent of generics, as you'll read in February's IN VIVO.) Indeed, authorized generics and price-adjustments in response to generics was the first example that EVP Pharmaceutical Operations Hanspeter Spek provided to illustrate how Sanofi is “anticipating and adapting to the increasingly complex pharma landscape.”

As for where Sanofi’s focusing its innovator efforts: Diabetes. Move over metabolic syndrome, then—since fat-buster Zimulti’s high-profile flop at the US regulators, the French group, it seems, is sticking to diseases that it can define. But since Sanofi doesn’t have an innovative new diabetes drug to highlight just yet, it stuck with an old favourite: insulin. Sales of long-acting Lantus, launched in the US in 2001, surpassed €2 billion in 2007 (and Sanofi is surely still gloating over its decision to sell its share of blighted Exubera for a cool $1.3 billion).

And to our last sign of the times message: Sanofi talked as much about life-cycle management for Lantus (earlier insulin usage and various combinations), manufacturing improvements and emerging market opportunities as it did about exciting new compounds. Still, waiting in the wings are a GLP-1 agonist (entering Phase III; not the first), an SGLT-2 inhibitor (still in Phase II), and, you guessed it….rimonabant.

We've seen that last one before, haven't we? The drug that’s still looking for its disease.


insider said...


Nice analysis. I too had noticed some of these themes in how Big Pharma is handling its big problem.

Anonymous said...

Sanofi vaccines business may be growing by headcount, but it continues to be a career-killing dead-end for women. Don't expect a promotion if you are female.