Sanofi Sets Long-Term Growth Plan; Plans Costs Savings of $1.6 Billion
Sanofi held an investor relations seminar on November 6, 2015 to outline the company’s strategic roadmap for the period 2015-2020. Through a process of refocusing and reshaping the organization and investing in key launches and businesses, Sanofi expects to deliver a sales compound annual growth rate (CAGR) of between +3% and +4% over 2015-2020, with a target of mid-single digit growth in the second half of this period. The company also is continuing with a plan, first announced in July, to simplify its global organization, with a plan to achieve cost savings of EUR 1.5 billion ($1.6 billion) by 2018.
Sanofi plans to move to five global business units (GBUs) beginning in January 2016 following mandatory labor consultations. In addition, Sanofi plans to reshape its plant network to match business evolution with increased emphasis on its growing biologics portfolio. The simplification of the organization worldwide and and a more focused portfolio should allow cost savings of EUR 1.5 billion ($1.6 billion) by 2018, which will be largely reinvested to support growth initiatives. By 2020, Sanofi plans to increase its total annual R&D investments up to EUR 6 billion ($6.4 billion) at current exchange rates while maintaining financial discipline.
“The pharmaceutical industry is undergoing a transformation unlike anything we’ve previously seen. Continued consolidation in the sector has created a more competitive environment over the last few years and, at the same time, science has never been more exciting. In this context, I am defining new priorities for Sanofi. The company will remain diversified, but with a portfolio refocused on areas where we can win, and innovation driven to improve lives of millions of people,” said Olivier Brandicourt, chief executive officer, Sanof, in a company release. “Along with a more streamlined and accountable organization, we are taking clear measures to ensure success as we launch a strong set of new medicines across several therapeutic areas. By building on the successes of these products, we are confident that Sanofi will be well-positioned for sustained, long-term growth. Sanofi is also seeking exteis crnal opportunities to enhance its growth profile.”
Sanofi’s long-term strategy rests on four pillars: reshape the portfolio, deliver outstanding launches, sustain innovation in R&D, and simplify the organization. Sanofi’s portfolio will be reshaped in three different ways. The company will sustain its position in diabetes and cardiovascular, vaccines, rare diseases, and emerging markets. In diabetes, Sanofi plans to develop its insulin franchise, which includes Lantus, Toujeo, and LixiLan, strengthen its pipeline through external opportunities (e.g. in-licensing agreements with Lexicon and Hanmi) and lead the market shift to managing diabetes outcomes. The company said that its collaboration with Google Life Sciences is a good example of the latter.
Sanofi’s Touejo (insulin glargine [rDNA origin]. a basal insulin for treating Type 1 and Type 2 diabetes mellitus, was approved in 2015, and is is a next-generation, once-daily basal insulin based on a broadly used molecule (insulin glargine), which is the active ingredient in Sanofi’s best-selling product, Lantus. Lantus had 2014 sales of EUR 6.3 billion ($7.2 billion) which faced patent expiry, effective in February 2015 in the US and in May 2015 in the European Union. Touejo’s sales are estimated at nearly $1.3 billion. Touejo was approved in the US in February 2015 and the European Union in April 2015 and was recently approved in Japan. LixiLan is a fixed-ratio combination of insulin glargine and lixisenatide, for treating Type II diabetes.
In the cardiovascular space, Sanofi points to Praluent (alirocumab), an example of a new class of anti-cholesterol drugs, a human monoclonal antibodie that inhibit proprotein convertase subtilisin/kexin type 9 (PCSK9), a protein that reduces the liver’s ability to remove low-density lipoprotein cholesterol (LDL-C), or “bad” cholesterol, from the blood. Based on estimates for 2019 sales, a recent Thomson Reuters analysis puts potential revenues at Regeneron Pharmaceuticals and Sanofi's Praluent (alirocumab) at $4.4 billion.
In the vaccines field, the objective is to grow faster than the market through the company’s Dengvaxia, flu, pediatric, and boosters vaccines.
Lastly, in emerging markets, the company intends to retain its position through greater focus on priority countries. In those regions, resource allocation will be prioritized, the industrial footprint will be adapted and dedicated innovations will be specifically developed.
Sanofi also said it will build competitive positions in multiple sclerosis, oncology, immunology, and consumer healthcare. In oncology, Sanofi plans to rebuild a competitive position by regaining critical mass. In order to achieve this goal, the company intends to maximize clinical assets, such as isatuximab in multiple myeloma, and restore a competitive pipeline through its strategic collaboration with Regeneron in immuno-oncology. In immunology, sarilumab in rheumatoid arthritis and dupilumab in atopic dermatitis and asthma will be the two pillars of a new franchise. In consumer healthcare, Sanofi plans to build scale through new categories of products and bolt-on acquisitions.
The company also says it Sanofi will explore strategic options for its animal health and European generics businesses. In animal health, Sanofi says that Merial has successfully returned to strong growth over the past six quarters and is currently one of the most profitable companies in its sector. “Nevertheless synergies are limited with other Sanofi businesses. Strategic options will also be explored for generics in Europe where geographic synergies are limited and market complexity is increasing. All options will be considered for these businesses including retention in the Group,” said the company
Sanofi’s growth will be driven by the launches that are scheduled for the next five years. Up to 18 new products are on track to arrive on the market by 2020. Among these, Sanofi projects that six key launches (Toujeo, Praluent, Dengvaxia, sarilumab, LixiLan, and dupilumab) could generate aggregate peak sales of EUR 12 billion to EUR 4 billion ($12.9 billion to $15 billion) by 2025.
Sanofi announced plans to continue to strengthen its R&D pipeline and evolve its R&D model based on project teams and alignment with its GBUs. The organization will also foster its existing R&D collaborations and increase its capacity for external innovation.