Sanofi Announces $2.2-Bn Cost-Savings Plan and Growth StrategyBy
Sanofi’s Chief Executive Officer (CEO) Paul Hudson and Executive Committee members have announced a cost-efficiency initiative of EUR 2 billion ($2.2 billion) and strategic growth plan with an emphasis on certain key commercial products and pipeline candidates. The company also plans a reorganization of its main business units to support this strategy.
The company’s plan focuses on four main priorities: (1) prioritize key growth drivers, namely Dupixent (dupilumab), a drug to treat eczema, and its vaccines business; (2) accelerate its R&D focus for six specific medicines; (3) improve operating efficiencies to fund growth and expand business operating income margin; and (4) align to support its new strategy with three core businesses and a standalone Consumer Healthcare unit.
Among its growth priorities, Sanofi stressed the importance of Dupixent (dupilumab) for which the company says it expects peak sales of more than EUR 10 billion ($11.1 billion). It also emphasized the strategic importance of its vaccines business, which it expects will deliver a mid-to-high single-digit net sales growth rate from 2018 to 2025 through differentiated products, market expansion and new launches.
In its pipeline, the company identified and prioritized six drug candidates as key future growth drivers. They are (1) fitusiran, a RNAi therapeutic in treating hemophilia A and B with or without inhibitors with the potential to provide once-monthly dosing convenience; (2) BIVV0013, a Factor VIII therapy designed to extend protection from bleeds with prophylaxis dosing of once weekly for people with hemophilia A; (3) venglustat, an oral therapy in development for several rare diseases in the category of lysosomal storage disorders (Gaucher Type 3, Fabry, Tay-Sachs disease) and also showing promise for more common disorders, including autosomal dominant polycystic kidney disease and some sub-types of Parkinson’s disease; (4) SERD (‘859), a selective estrogen receptor degrader for treating hormone-receptor-positive breast cancer; (5) nirsevimab for treating respiratory syncytial with an initial focus on protecting infants; and (6) BTKi (‘168)5, an oral medicine for treating multiple sclerosis with potential to be the first disease-modifying therapy to address inflammation and disability drivers in the brain.
As part of its enhancing its pipeline, the company also announced its pending $2.5-billion acquisition of Synthorx (see related story) to bolster its immuno-oncology (IO) pipeline with both a proprietary IO platform synergistic with Sanofi’s existing therapeutics platforms and a lead IO candidate (THOR-707) being explored across multiple solid tumor types both alone and in combination with immune checkpoint inhibitors and other future IO combinations.
Additional core drivers for growth noted by the company include treatments for oncology, hematology, rare diseases, neurology, and geographically, China.
Cost-savings initiative and reorganization
Sanofi also set a goal to expand its business operating income (BOI) margin to 30% by 2022, with a goal for its BOI margin to exceed 32% by 2025. To realize that objective, the company announced efficiency initiatives that are expected to generate EUR 2 billion ($2.2 billion) in savings by 2022. The company says that these savings will fund investment in its key growth drivers and accelerate priority pipeline projects as well as support the expansion of the BOI margin.
The efficiency savings are expected to result primarily from limiting spend on de-prioritized businesses, from smart spending (procurement) initiatives and from operational excellence in manufacturing and organizational productivity. Regarding de-prioritized businesses, Sanofi is announcing a discontinuation of research in diabetes and cardiovascular (DCV) and will not pursue plans to launch efpeglenatide, an anti-diabetes medicine. The company will also optimize the commercial model for DCV and rheumatoid arthritis, including right-sizing the resources deployed behind Praluent (alirocumab), an anti-cholesterol drug, and Kevzara (sarilumab), a drug to treat moderately to severely active rheumatoid arthritis.
To align its growth strategies organizationally, Sanofi said it will restructure with three core global business units to support the company’s strategy: Specialty Care (immunology, rare diseases, rare blood disorders, neurology and oncology), Vaccines, and General Medicines (diabetes, cardiovascular, and established products). Consumer Healthcare will be a standalone business unit with integrated research and development and manufacturing functions.