Over the past few years, Sanofi-Aventis strategic decisions have enabled the company to reinforce its leadership on the international market. The company has grown by merging with competitors, it has increasingly invested in R&D, reinforced its presence on the major markets (the United States and Europe) and on all the major pharmaceutical segments such as generics or vaccines.... The firm in 2007 is one of the world's leading research-based pharmaceutical companies and the biggest one in Europe.
Like all its major competitors such as Pfizer or Johnson & Johnson, Sanofi-Aventis is still engaged in « mass-marketing blockbuster » strategies based upon portfolio concentrated around a small number of drugs meant for mass markets and reaching the highest levels of profitability. Indeed, Sanofi-Aventis total sales highly depend on eight drugs presented as “blockbusters”: Lantus (metabolism), Aprovel (cardiovascular), Lovenox and Plavix (thrombosis), Stilnox / Ambien and Copaxone (Central Nervous System), Taxotere & Eloxatine (Oncology).
But pressure from medicine agencies; playing organisms, practitioners, public opinion and also from financial market is increasingly powerful and is making long-term and uncertain research more difficult to finance. And the Federal and Drug Administration refusal to commercialize in the United States Acomplia, a drug destined to obesity treatment, which was to become a new blockbuster, is an example of the difficulties that Sanofi-Aventis has to face.
[...] The Vaccine Portfolio Under the name of Sanofi Pasteur, SA is the leader of vaccine market. Its Vaccine Business Unit has a growing importance in terms of sales (2007: + 14.5 offers and then strategy sales repartition by type of product is as follows (in million euros): Source: Information Meeting (February 12th 2008) SA's main vaccines products are: - Adacel: a booster which growth can be attributed to sustained launch momentum. A strong growth is also expected for 2008. - Gradasil: developed within a JV with Merck & Co, this new vaccine is a strong leader in Europe market share) with sales reaching 341M€ - Menacra: meningitis vaccine with strong sales and growth and 2-10 years license in the US. [...]
[...] We haven't got the turnover for 2007 yet, but we know that in 2006, it increased by compared with 2005. Ongoing cost-adaptation measures To reinforce the competitive position, Sanofi-Aventis is undertaking cost- adaptation measures. It's about some measures to cut cost by reduction in selling and general expenses, especially in mature market. For example, according to Reuters, Sanofi-Aventis has slashed 11% of its U.S. sales team since 2005, in the wake of generic competition, while cost-containment measures have also been undertaken in Europe “November 2006, Sanofi-Aventis Follows Up French Job Cuts with 320 More in Germany” and “March 2007, Sanofi-Aventis Ireland Plant Falls Victim to Cost-Containment Measures” in consequence, ratio of selling and general expenses to net sales down to for the 9 months to end September 2007, versus for the comparable period of 2006. [...]
[...] Huge investment in R&D Drug's life cycle For pharmaceutical industry, the R&D is a key factor. It allows introduction on new drugs markets. To understand better the importance of let's take a look at drugs' particular life cycle as following: From the discovery of a new drug, laboratories need to make an application for a patent. The duration of protection is about 20 years to 25 years from the date of your application. Once finish the phase of research and development, the laboratories have to make a demand of authorization of Launch on the market to be able to commercialize the drug. [...]
[...] For instance, Sanofi Pasteur, which is SA's vaccines specialized division, finalized several alliances and partnerships to create R&D positive synergies: - Sanofi Pasteur MSD is a 50/50 Joint Venture with Merck & Co, for R&D collaboration on Vaccines in 19 European Countries - Sanofi Pasteur concluded a key partnership with Acambis, a leading biotechnology company in the UK, in order to jointly work on Japanese Encephalitis and West Nile Virus vaccines - Sanofi Pasteur set up an alliance with the Institut Pasteur (France) to seize the unmet medical need for Malaria vaccine Hence, these new partnerships attest of the company's eagerness to support its biotech strategy and remain the market leader in vaccines. [...]
[...] We think Sanofi Aventis should continue to develop these growing markets and try to diversify in geographical scope; in this case, it can re- compensate low growth in actual market and to get new growth engine for the group: -Evaluate the local political and regulatory environments and assess local healthcare systems to make a local adapted strategy. -Construct local R&D development centre and local production site for the reason of not only lowering the cost but also product localization. At the same time, take advantage of existing resources in the group: cooperation with [...]
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