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Sanofi (France)

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Sanofi is France's national champion in the healthcare sector and now the overall #5 worldwide, with a portfolio led by top-selling diabetes drug Lantus. It was formed in 2004 from the hostile takeover of French pharmaceutical giant Aventis by smaller rival Sanofi-Synthelabo. The merged group retained the Sanofi-Aventis name until 2011. A key factor in the takeover was the controversial role played by the French government which successfully steered Aventis away from a combination with Swiss-based Novartis in order to create a local champion that could compete more effectively with American and other European rivals. There have been several small and medium-sized acquisitions since then. In 2007, the group was reported to have commenced merger talks with US group Bristol-Myers Squibb, which has local rights to Sanofi's Plavix drug, but no deal materialised. In 2009 the group established a presence in the consumer healthcare sector with the purchase of US company Chattem, and made an offer the following year to acquire biotech firm Genzyme. It added to its OTC portfolio in 2017 with a deal swapping its animal health division Merial for the consumer portfolio of German company Boehringer Ingelheim.

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Brands & Activities

Sanofi became one of the world's biggest drug companies following the Aventis takeover, and is the undisputed leader in France, strongly supported by its country's government as well as by two of its biggest corporate giants, L'Oreal and Total, both sizeable minority shareholders. But it still remains comparatively weak in the key US market, unquestionably the world's largest. Although its product pipeline looks promising Sanofi also faces generic challenges to two of its key products, and is over-reliant on co-marketing partnerships. However the future looks bright, provided the group can develop its North American profile.

Sanofi-Aventis was created from the merger, over a period of years, of France's three biggest pharmaceutical manufacturers. Following the combination of Aventis and Sanofi in 2005, this new national champion boasted a strong portfolio of five billion euro pharmaceuticals and is the world leader in the vaccines market. The Aventis tag was dropped from the corporate name in May 2011.

Pharmaceuticals

Combined sales from pharmaceuticals were €29.24bn in 2016. Key areas include diabetes (combined sales of €7.34bn), rare diseases (€2.78bn), multiple sclerosis (€1.72bn) and oncology (€1.45bn). It still has five blockbusters (in US$ equivalent revenue): Lantus, Lovenox, Plavix, Aubagio and Renagel.

Until recently, the group's single biggest product overall was the cardiovascular treatment Plavix/Iscover, which was the world's #2 best-selling pharmaceutical product in 2011, with total sales of $9.9bn. However, the largest proportion of this sum was generated in the US, where it was handled by co-developer Bristol-Myers Squibb. In recent years Plavix has come under consistent pressure from generic manufacturers in North America, well in advance of its expected patent expiry in 2012. In a disastrous slip-up during 2006, Sanofi's US partner mishandled negotiations with a Canadian generic manufacturer, creating a legal loophole which allowed the rival to flood the market with its generic copy for a few weeks. As a result, Plavix's US sales dropped by more than half in the last quarter of the year. Sanofi was reported in 2007 to be considering a full takeover of the US group to strengthen its profile in the US. However no such development took place. Instead, BMS and Sanofi agreed to alter the structure of their relationship from January 2013, with BMS retaining rights for the US and Puerto Rico, but surrendering other markets in return for a royalty structure. The expiry of Plavix' US patent in 2012 caused local sales to plunge by almost two-thirds. Sanofi's own revenues have held up reasonably well, at €1.54bn in 2016, with the largest share of revenues originating in China and Japan.

Sanofi has full control of another cardiovascular product, Lovenox (also known as Clexane), a leading treatment for deep vein thrombosis. However Lovenox has come under pressure from generic manufacturers, two of whom successfully challenged its patent in a US court in early 2007 and have since launched cheaper local alternatives. Having peaked in 2009 at over $4.0bn, sales have slipped back because of the slump in US sales following patent expiry. Like Plavix, though, sales outside the US have held up, especially in Europe, and revenues have remained reasonably steady at €1.64bn for 2016. Two additional treatments for thrombosis, Arixtra and Fraxiparine, were sold in 2004 to GlaxoSmithKline to appease merger regulators.

Because of the split in revenues for Plavix, Sanofi's own top-selling drug has for several years been the slow-release insulin product Lantus, sales of which have grown dramatically since 2005. They hit a new high in 2015, rising almost 1% to €6.39bn. However that gain was caused by exchange rates, and sales at constant rates declined for the first time following the end of US patent protection. For 2016, the total slipped back to €5.71bn. For the time being it is still the world's best-selling insulin drug, sold in 120 countries, and named as Medicine Of The Year by Med Ad News in 2013. Sales have been particularly buoyant in developing markets such as Russia and Brazil. Another key benefit of the drug is the fact that it is biologic, making it hard to copy generically, thereby expanding its product life.

The group also markets fast-acting insulin products Apidra (€367m) and Insuman (€129m). Another diabetes treatment, Amaryl, suffered sharp declines in sales after 2008 as a result of generic competition, but have stabilised since then, at €362m in 2016. Another diabetes treatment, Lyxumia, was approved for launch in Europe in 2013, but the group withdrew its application for the US pending further test results. In 2006, following a dispute over terms, the group sold Pfizer worldwide rights to Exubera, a fast-acting inhaled insulin originally co-developed by Aventis and Pfizer, for $1.3bn. It proved a wise move; Exubera turned out to be a substantial flop. Rather more promising was another new insulin product, Toujeo, introduced in 2015 as a follow-up to Lantus. Sales tripled in 2016 to $649m. Soliqua/Souliqua is another new launch in this sector, approved in 2016.

In summer 2010, Sanofi-Aventis issued a friendly proposal to acquire US biotech developer Genzyme, a specialist in rare diseases, for around $18.4bn. The two companies began low-level negotiations, but the French group subsequently complained that its US-based target was not committing itself to constructive talks. As a result, it launch a more aggressive "bear hug" strategy in an attempt to force more the smaller company to engage in dialogue. That approach too had only limited results, prompting Sanofi-Aventis to launch a hostile takeover in October. It eventually sealed a deal for the smaller company in February 2011, with an improved offer of $20.1bn. Cerezyme, an enzyme replacement drug, is one of the more significant products in the Genzyme portfolio, with sales of €748m in 2016, supported by Myozyme/Lumizyme (€725m), Fabrazyme (€674m) for Fabry disease and Synvisc for osteoarthritis (€408m).

Another key product from Genzyme is multiple sclerosis treatment Aubagio, launched in selected markets in 2012 and 2013. It entered blockbuster territory in 2016 with a 49% year-on-year increase to €1.3bn. A separate product has been introduced in some markets under the name Lemtrada, but has only limited distribution in the US as a result of a black box warning on side effects mandated by the FDA. Global sales were €435m. Previously the group had European rights to another MS treatment Copaxone. However, sales have largely reverted to original developer Teva Pharmaceutical, which handles the drug in North America and other major markets.

Another new blockbuster (at least in US$ terms) is Renagel, a treatment for patients with kidney disease, known as Renvela in the US. Sales jumped more than a third in 2015, before declining slighting in 2016 to €922m. In the cardiovascular segment, the group has rights in Europe and some other markets to hypertension treatment Aprovel (also known as Avalide or as Avapro in the US, where it is marketed by BMS). It generated revenues of €681m for Sanofi in 2016, despite patent expiry in 2012. A promising new launch in the cardiovascular sector is Praluent, introduced in 2015, though first year sales were modest. In 2009, the group received approval to launch a new heart treatment, Multaq, in the US and other markets. It turned out to be one of the most successful new launches of that year, though sales have now plateaued at €353m in 2016.

The group also controls a strong group of oncology pharmaceuticals. Taxotere is a leading chemotherapy agent and formerly the world leader in the treatment of advanced breast cancer. However sales are now in decline, falling to €179m in 2016. Eloxatin / Eloxatine, a treatment for colorectal cancer, peaked in 2011 before falling in the wake of patent expiry to €170m in 2016. Lead brand in the oncology portfolio is now Jevtana, introduced in 2010 as a treatment for prostate cancer. It generated sales of €358m in 2016. Thymoglobulin is an antibody preparation designed to support organ transplantation. Sales were €281m in 2016.

In 2016, Sanofi attempted to woo US oncology developer Medivation with the aim of acquiring the business. However its several approaches were spurned, prompting Sanofi to launch a hostile takeover worth $9.4bn. The target company eventually accepted an offer from Pfizer. A similar attempt to acquire Swiss developer Actelion came to nothing in 2017 when the target company accepted an offer from Johnson & Johnson. Sanofi finally secured a key bolt-on in 2018 with the acquisition of haemophilia specialist Bioverativ for a whopping $11.5bn. Bioverativ's top-selling drugs are Eloctate and Alprolix. However, Sanofi will gain rights to them only in North America and Asia. Rights in the EMEA region are already owned by another company. That was followed by a €3.9bn deal to acquire Belgian biotech developer Ablynx, which specialises in drugs to combat rare blood diseases using the unusually small antibodies found in camels' blood that can reach human cells that would otherwise be inaccessible.

The former best-seller in the old Aventis portfolio was Allegra, marketed in France and other international markets as Telfast. A non-sedating antihistamine, Allegra overtook the previous market leader, Schering-Plough's Claritin, during 2002, and had amassed a 35% share of the US market by 2003. However sales have dipped since then as a result of competition from non-prescription formulations of Claritin. Prescription revenues for 2016 were €186m, mainly from Japan. Sleeping pill Ambien, marketed in Europe as Stilnox and in Japan as Myslee, was acquired in 2002 from Pharmacia. As a result of the launch of a controlled-release version of the drug (Ambien CR), sales jumped by a third in 2006 before declining sharply the year after because of generic competition to the original immediate release formulation. Sanofi's share of sales for 2016 was €304m. Depakine is a treatment for epilepsy, generating sales of €416m.

Sanofi also has a very busy research pipeline. Its most important new product was at one time considered to be Acomplia, a treatment for obesity which also worked as a smoking cessation product. The group had extremely high hopes for this drug, which was widely expected to become a major blockbuster by the end of the decade, with sales even as high as $5bn annually. Significantly it did not appear to share the side-effects experienced by obesity drugs currently on the market. It was launched in more than 20 world markets during 2006 and 2007, including the UK, Germany and France. However the group received a huge blow when the US FDA denied regulatory approval. As a result, first full year sales for Acomplia were very disappointing at just €79m. Subsequent research appeared to indicate that, although the drug was effective at promoting weight loss, it also appeared to double the rate of suicidal thoughts and behaviour. Those developments led European regulators to reconsider their position, and they too ordered the withdrawal of Acomplia in 2008. Although it was not mentioned at the time that Sanofi launched its hostile bid for Aventis, the group has since acknowledged that rimonabant was a key factor in encouraging Sanofi to seek a merger with a larger partner able to market its product effectively in the US without sacrificing a significant chunk of potential revenues, as it has had to do in its agreement with Bristol-Myers Squibb.

Generics

The group manufactures generic pharmaceuticals in several countries in Europe, Latin America and Africa, originally under the name Winthrop Pharmaceuticals. In 2008, it agreed to acquire Czech generic manufacturer Zentiva, whose name was adopted by the merged business. Combined group sales from generics in 2015 were €1.92bn. In 2018, it agreed the sale of the generics division to private equity firm Advent for €1.9bn.

Vaccines

Sanofi Pasteur is the world’s leading vaccine manufacturer with a one-quarter global market share by value, and 2016 sales of €4.58bn. The company produced more than 1bn doses of vaccines, protecting more than 500m people against 20 serious diseases. Its biggest products are the meninigitis vaccine Menactra, influenza vaccines FluZone and Vaxigrip/Mutagrip, the booster vaccine Adacel and various paediatric vaccines for children. It also produces vaccines against polio, measles, mumps, rubella, rabies, typhoid and yellow fever. A new launch in 2016 was Dengvaxia, against Dengue fever.

In Europe, the business operated until recently through Sanofi Pasteur MSD, a joint venture established in 1994 with Merck, which has local rights to the cervical cancer vaccine Gardasil. At the end of 2016, Sanofi and Merck dissolved their partnership and each took back direct control of their own vaccines in the region.

Consumer Healthcare

In France and some other markets, the group has a small portfolio of OTC products including analgesic Doliprane, Aspegic and NoSpa, liver supplement Essentiale, gastrointestinal Enterogermina, antacid Maalox, cough and congestion medicine Rhinathiol, Lactacyd feminine hygiene products outside Europe (GlaxoSmithKline has it in Europe), and Mitosyl healing ointment. In 2008, it launched an offer to acquire Australian company Symbion, which makes a range of OTC vitamin and nutritional supplements. That was followed a year later by French nutritional supplement manufacturer Oenobiol.

At the end of 2009 it set about establishing an OTC presence in the US with the purchase of Chattem Inc for $1.9bn. Products include Gold Bond, Icy Hot, ACT, Cortizone-10, Selsun Blue and Unisom. The US company launched an OTC version of Sanofi's Allegra in 2011. In 2012, Sanofi established a joint venture with Coca-Cola in France to develop a range of functional health drinks under the Beautific Oenobiol banner. At the beginning of 2013, the group also acquired the antacid brand Rolaids from Johnson & Johnson. An OTC version of respiratory allergy spray Nasacort was launched in the US in 2014, and another allergy spray, Xysal, was launched in 2017.

Combined sales from consumer healthcare in 2016 were €3.33bn. Top-selling products were Allegra OTC (sales of €417m), Doliprane (€309m), Enterogermina (€159m) and Essentiale (€145m).

In July 2016, Sanofi agreed terms to acquire the OTC healthcare division of German rival Boehringer Ingelheim. This includes a significant collection of European respiratory and intestinal brands such as Buscopan, Dulcolax and Mucosolvan and Pharmaton vitamins, as well as Zantac OTC in the US. Sanofi's enlarged consumer healthcare division would have sales in excess of €4.9bn. In return, Sanofi transferred to Boehringer its leading animal healthcare business, Merial. (Boehringer will also pay Sanofi €4.7bn in cash). The deal completed in January 2017.

Merial is one of the world's leading animal health companies, producing a wide range of pharmaceuticals and vaccines to keep livestock and pets healthy and productive. However, the business has been marked for divestment for several years and was no longer included in reported group results. It was originally a joint venture with Merck, but in 2009 Sanofi bought out its partner for $4bn to take full control of the business. However it also took an option at that point to bolt on the Intervet division of Schering-Plough, then about to be acquired by Merck. In 2010, the two companies announced plans to re-establish Merial as a joint venture by merging Merial and Intervet. The combined business would have had sales of around $5bn. However those plans were scrapped in 2011 as a result of opposition from regulators. Merial's key products include the anti-parasitics Frontline, Heartgard and Ivomec. Merial reported sales of €2.71bn in 2016. In 2014, it ranked as the global #4 in the market, with 12% share.

For many years, Sanofi controlled an investment stake in French cosmetics manufacturer Yves Rocher. It sold its last remaining shares in 2012 to the Rocher family.

Financials

After several years of steady financial growth, Sanofi suddenly appeared to hit a wall in 2013, dented by patent expiries and the lack of new launches. Group revenues peaked in 2012 at €34.95bn, before slipping back in 2013 to €32.95bn. Reported revenues have been further dented by the decision to remove Merial from results pending its disposal. Revenues for 2015 gained 9% on a reported basis to €34.54bn, excluding any contribution from Merial. Net income excluding Merial was €4.51bn, up 3%. Revenues including Merial were €37.06bn.

For 2016, net revenues excluding Merial slipped back slightly to €33.82bn. Attributable net income was €4.71bn. The US accounted for 37% of total group sales.

L'Oreal has 9% of equity and almost 17% of voting rights. Oil group Total retains a shareholding of just over 3% of equity and almost 6% of voting rights.

Management

CEO Chris Viehbacher was abruptly sacked in Oct 2014 after six years in his role, following growing boardroom tension over his strategy for the business. Non-executive chairman Serge Weinberg was named as interim CEO, until the arrival of former Bayer Healthcare chief Olivier Brandicourt, appointed as CEO of Sanofi in Mar 2015.

Alan Main joined the group in 2016 from Bayer to become EVP, global consumer health. Other members of the senior executive committee include Olivier Charmeil (EVP, general medicines & emerging markets), Jean-Baptiste Chasseloup de Chatillon (EVP & CFO), Peter Guenter (EVP, diabetes & cardiovascular), Muzammil Mansuri (EVP, strategy & business development) Carsten Hellman (EVP, Merial), David Meeker (EVP & CEO, Sanofi Genzyme), David Loew (EVP, Sanofi Pasteur), Ameet Nathwani (EVP, medical affairs) and Elias Zerhouni (EVP, research & development). Jez Moulding is president, North America pharma.

Marketers include Sarah Burke Mullins (senior marketing director, diabetes), Ross Goldberg (senior marketing director, Lantus), Cathryn Gallagher (marketing director, Toujeo), Kristin Miller (associated VP, Lantus, Apidra) and Nick Cutrone (senior director, franchise & global marketing, Sanofi Pasteur). Zan Guerry is chairman & CEO of Chattem. Marketers include Richard Spangler (VP, marketing), Shermon McMillan (marketing director), Lucas Mininger (marketing director).

Background

Synthelabo was formed in 1970 from the merger of two of France's oldest pharmaceutical companies: Laboratoires Dausse (founded in 1834) and Robert & Carriere (founded 1899). Three years later, cosmetics group L'Oreal acquired a controlling stake in the business. That same year, another French giant, industrial group Elf Aquitaine, acquired rival drug company Labaz and merged all of its various healthcare subsidiaries into a new business which it named Sanofi. For the next 25 years the two French groups competed against each other, as well as with their larger compatriot Rhone-Poulenc, later to become Aventis. Sanofi launched its first major product in 1978, Ticlid. Synthelabo introduced sleeping pill Stilnox and Xatral in France in 1988, and then took a major step into the US in 1993, launching Stilnox there under the name Ambien. Within a year it had become the leading treatment for insomnia.

In 1994, Sanofi also took a leap into the US market, acquiring the Sterling Winthrop healthcare business from Eastman Kodak. Three years later it introduced Avapro, followed by Plavix in 1998, both through a partnership with Bristol-Myers Squibb. That same year, the French pharma industry was shaken up by the news of Rhone-Poulenc's acquisition of German drug-maker Hoechst to create Aventis. Wary of being left too far behind by their rival, Sanofi and Synthelabo, then France's #2 and #3 respectively, agreed to join forces, merging to form Sanofi-Synthelabo. Shortly afterwards, to concentrate on the drug business, the enlarged group sold off its various non-pharmaceutical interests. These included the Yves St Laurent fragrance business, which Sanofi sold to retail group Pinault Printemps Redoute. It is now managed by Gucci.

Yet although the group continued to expand strongly, it remained primarily a European company with only limited expertise in other important international markets, especially in the US and Japan. As a result, Sanofi sought the approval of its main shareholders Total (formerly Elf Aquitaine) and L'Oreal to go after Aventis. Sanofi's initial offer valued Aventis at just under €48bn, but the latter company was not at all keen to be targeted by what it perceived as a junior rival. Instead it sought a better offer from more established Swiss company Novartis. This, however, raised the prospect of ownership of Aventis moving out of France. The French government intervened at this point in order to block any such deal. Sanofi sweetened its offer to €55bn, and the Aventis board finally accepted the offer in April.

Gerard Le Fur, the group's chief scientist, became CEO in 2007. However, he left the company in December 2008, in part at least because of his failure to secure US approval for Acomplia. He was replaced by Chris Viehbacher, poached from GlaxoSmithKline.

Last full revision 17th June 2016

* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *


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