Physicians' Financial News: April 2008

By Matthew Mahady
Published: Thursday, Jun 17, 2010
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Sanofi-Aventis Pushing Forward Pipeline, Products, and Profits

One of the world’s top-five largest drug concerns, Sanofi-Aventis, based in Paris, France, is steadily growing even larger on the strength of the company’s:
  • Formidably sized drug portfolio
  • Bulging future product pipeline
  • Resources, extensive networking capabilities, high visibility, and economics of scale gained by the existence of its immense, efficient, ends-of-the-earth spanning organization.
Sanofi-Aventis is publicly traded and is listed on both the Paris and New York stock exchanges. (For the purpose of uniformity when discussing Sanofi-Aventis stock, this article will refer exclusively to the Sanofi-Aventis’s New York Stock Exchange listing when citing trends, price points, per-share earnings, etc.)

The company, which employs more than 100,000 people and operates in more than 100 hundred countries, was formed in 2004 when Sanofi-Synthélabo (itself formed in 1999 when Sanofi merged with Synthélabo) acquired Aventis (a company that came into existence in 1999 when Rhône-Poulenc S.A. merged with Hoechst Marion Roussel).

In early 2004, Sanofi-Synthélabo made a hostile takeover bid worth €47.8 billion for Aventis. Initially, Aventis rejected the bid because it felt that the bid offered an inferior rate of compensation based on the company’s share value. The three-month takeover battle concluded when Sanofi-Synthélabo launched a friendly bid of €54.5 billion in place of the previously rejected hostile bid. French government intervention also played an active role in the process. The French government, desiring what it called a “local solution,” put heavy pressure on Sanofi-Synthélabo to raise its bid for Aventis. This was after it became known that Novartis, a megapharma company from Basel, Switzerland, was in the running to acquire Aventis.

Organization Segmented by Therapeutic Area, Cemented by Synergy

Sanofi-Aventis is organized—based on targeted key therapeutic areas of strategic focus— into seven separate business units, including: (1) cardiovascular disease, (2) thrombosis, (3) oncology, (4) metabolic disorders, (5) central nervous system, (6) internal medicine, and (7) vaccines. These separate units, however, do not function as stand-alone entities completely disconnected from the whole of the larger company. According to a Sanofi-Aventis spokesperson, the business units are designed to buttress one another, yielding mutually beneficial overlap, and synergies and cross-pollinations of knowledge, research, and resources.

For example, when explaining the philosophy of the oncology division, Wayne Pisano, President and Chief Executive Officer, in a research and development (R&D) presentation delivered in late 2007, pointed out that a basic component of Sanofi-Aventis oncology’s R&D involves leveraging interunit synergies to bridge new therapeutic areas. Elaborating upon how this theoretical outlook is put into practice, Michel De Wilde, Senior Vice President, R&D, Sanofi Pasteur, stated, “Oncology offers the unique opportunity to leverage vaccine and small-molecule synergies within Sanofi-Aventis.”

Corporation Makes a Firm Commitment Made to Research and Development

According to a Sanofi-Aventis spokesperson, “the foundation of Sanofi-Aventis’ worldwide growth is an industry-leading R&D organization.” With roughly 17,500 scientists working in more than 28 research centers on three continents, Sanofi- Aventis coordinates its R&D on a global scale.

According to the Sanofi-Aventis global website, the company’s annual R&D budget exceeds €4.5 billion (a 2.4% increase over the previous year) and ranks among the three largest budgets of the entire pharmaceutical industry. The substantial investment has not been without returns. The company, at its most recent R&D update in late 2007, disclosed that it currently has about 50 compounds, addressing a broad spectrum of disease states, in advanced stages of development.

In all, Sanofi-Aventis can claim a portfolio of 113 products in development, 54 of which are in late-stage (phase II or III) clinical trials and 59 of which are in an early-stage (preclinical or phase I) phase of study.

Major Products

The Sanofi-Aventis portfolio of marketed products contains many blockbusters as well as nearblockbusters. The company’s arsenal of FDA-approved products is too extensive to list everything here, thus, the following Table merely represents a broad overview of the company’s major nononcology products and what they are indicated for:

  Product   Indication

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