07.17.08
#3 Sanofi-Aventis
174 Avenue de France, 75013 Paris, France
Tel: (33) 1 5377 4000 Fax: (33) 1 5377 4296
www.sanofi-aventis.com
Headcount | 100,000 | |
Year Established | 2004 | |
Pharma Revenues | $38,452 | +8/-1%* |
Total Revenues | $38,452 | +8/-1%* |
Net Income | $9,746 | +10/+1%* |
R&D Budget | $6,219 | +12/+2%* |
* Decline based on local currency (Euro)
Top Selling Drugs |
|||
Drug | Indication | Sales | (+/-%) |
Lovenox | thrombosis | $3,580 | +17% |
Plavix | heart attack, stroke | $3,323 | +19% |
Lantus | diabetes | $2,784 | +33% |
Taxotere | cancer | $2,569 | +17% |
Eloxatin | colorectal cancer | $2,085 | -2% |
Ambien | insomnia | $1,713 | -33% |
Avapro | hypertension | $1,480 | +16% |
Copaxone | multiple sclerosis | $1,123 | +22% |
Delix | hypertension | $1,016 | -17% |
Allegra | allergic rhinitis | $968 | +12% |
Menactra | meningitis vaccine | $569 | +87% |
Amaryl | diabetes | $569 | -5% |
Account for 57% of total pharma sales, up from 56% in 2006.
* SA earned $1.0 billion from flu vaccines and $905 million from vaccines for polio, whooping cough and Hib. However, the company does not break out sales of individual vaccines (except Menactra), so they are not included in our list of top sellers.
PROFILE
I know it’s a cliché to say, “This is a pivotal year for [company X],” but Sanofi-Aventis is looking at a couple of patent rulings that may be devastating to the company’s near-term results. On top of that, the weak dollar has been wreaking havoc on SA’s financials, since the U.S. remains its largest market. In local currency, the company’s drug revenues dropped 1% last year and fell another 3% in 1Q08. On the bright side, diabetes treatment Lantus is growing by leaps and bounds, and remains the most prescribed insulin in the world.
So far, the company hasn’t taken drastic measures to counter the sales slowdown. Restructuring costs in 2007 ($188 million) were only half of 2006 numbers, and were primarily tied to layoffs in Europe. In June 2008, the company fired 800 sales reps in France, but that’s still a small number in comparison to some of the firings we’ve seen from SA’s competitors. It doesn’t hurt that the company already began a significant retooling ($1.4 billion) when Sanofi and Aventis merged in 2005.
The Lowe Down: Sanofi-Aventis
Sanofi-Aventis has had some psychological adjustments to make, after it finally, agonizingly became clear that Acomplia was not going to roar into the market and become a multibillion-dollar success. It wouldn’t surprise me if some people had already started spending some of those billions in their head. It’s only natural, but coming back to earth isn’t easy, is it? The company’s main challenge now seems to be figuring out why they’re the size that they are, and if there’s any way to maintain things. One key to that latter task is for them to keep generic competition away from Plavix and Lovenox, their top two sellers, but is there an equivalent to the phrase “whack-a-mole” in either French or German? One generic company after another is making a run at that franchise, and one way or another, you have to figure that one or both compounds will eventually go down. If S-A has a good plan for what happens then, they’re not telling anyone about it. But then, they didn’t seem to have a plan for what happened to Acomplia, either, did they? --Derek Lowe |
Days in Court
In May 2008, a federal appeals court sustained a ruling that invalidates SA’s U.S. patent for Lovenox, opening the door for Amphastar and Teva to pursue a generic version of SA’s top-selling drug. On top of that, the appeals court’s three-judge panel ruled that SA had engaged in “inequitable conduct” in its defense of the Lovenox patent, with “intent to deceive.”
Fortunately for SA, Lovenox isn’t the easiest drug to produce, and one generic challenge (Momenta and Sandoz) has already been delayed because of Lovenox’s sheer complexity (not quite a biologic drug, but much more complicated than a standard small molecule, from what I gather). But if SA’s patent is unenforceable and the agency approves a generic version, SA is in for a wild ride.
As is, there are two major “Lovenox-busters” on the horizon. Bayer and J&J’s Xarelto appears to excel over SA’s drug in trial after trial, and BMS and Pfizer aren’t too far behind with apixaban. SA is pursuing its own successor for Lovenox, with Phase III trials ongoing for AVE5026, but those trials won’t be complete until October 2009 at the earliest.
Oh, and a company in Germany is filing to sell a generic version of Plavix in that market and thinks it can begin that before this issue sees print. SA contends that its patents on Plavix will remain in force till 2013. If either one of these two drugs sees major generic competition, SA will be in boatloads of trouble.
As is, the company’s #3 seller in 2006 fell back to #6 in 2007 and will plummet further this year. Ambien sales dropped 33% last year due to generic competition. While a 62% drop in 1Q08 looks bad, the drug wasn’t generic in 1Q07, and 1Q08 Ambien sales actually posted a slight rise against 4Q07. While I can attest to the effectiveness of SA’s line extension, Ambien CR, it looks like most U.S. consumers can sleep just fine with the generic version of the main drug. (That said, I’m willing to try out SA’s Ambien followup, eplivanserin (generic name), which the company plans to file sometime in 2008.)
Czech, Please!
With news like that, it’s no wonder that SA is looking to expand its role in generics! In June 2008, SA made a $2.0 billion bid to take control of Czech-based generic drug company Zentiva. SA already owned 25% of the firm, and its bid appears to be in response to a buyout offer from PPF Group, a privately held fund also based in the Czech Republic. Picking up Zentiva, which markets generics of Glucophage and Zocor, would give SA entrée into several eastern markets, including Slovakia and Romania, as well as the large market of Turkey.
I’m interested in seeing how major pharma companies can run their own generics companies. While I understand the principle that “there’s money to be had in generics,” it seems culturally antithetical to the R&D-based, long-term development model of pharma companies. I suppose they can be run as utterly separate units, but I’m not sure what synergies can arise from that sort of relationship. Plus, the margins are a lot tighter, especially if you’re not the company that gets in with that 180-day exclusivity filing.
Mission: Acomplia!
SA still has hopes for obesity and smoking cessation wonderdrug, Acomplia. Rejected soundly by an FDA advisory committee in June 2007 because of suicide and depression side effects, the drug is making its way through the EU and several other markets. The company is hoping that additional trials, plus post-market studies, will sway the FDA when the NDA gets resubmitted in a few years. In the EU, the drug is approved for treatment of obesity, but hasn’t gained a label expansion for smoking cessation. In June 2008, Britain’s healthcare regulatory agency pointed out five deaths and 720 adverse events among Acomplia users in the two years it has been on that market. A recent clinical trial of Acomplia demonstrated improvement in glucose control for diabetes patients who are on insulin. The drug posted $108 million in 2007 sales and $30 million in 1Q08. |
House of Vax
Vaccines comprise SA’s other action to reduce its focus on branded pharmaceuticals. The company’s Sanofi Pasteur unit has made significant strides of late. In October 2007, SA was granted an expanded label for its meningitis vaccine, Menactra. Originally approved for patients 11 to 55 years old, the vaccine can now be given to people as young as two years old. Revenues for the vaccine nearly doubled in 2007, to $569 million, and were up 48% in 1Q08 to $137 million.
In June 2008, SA gained approval for Pentacel, a combo vaccine covering diphtheria, tetanus, whooping cough (pertussis), polio, and influenza type B. The company contended that Pentacel can help cut the number of injections children receive (from 23 to 16) before they reach 18 months of age.
In July 2007, SA finished construction of a $150 million flu vaccine facility intended to double manufacturing capacity in the U.S. The site is designed to make more than 100 million doses and should come online by early 2009.
In June 2008, the company inaugurated a $140 million vaccine facility in Val de Reuil, France. The site is designed to produce vaccines against 20 diseases, and to be switched over to pandemic flu vaccine quickly, just in case. The site should be up and running by the end of 2008 and can fill 200 million syringes and vials annually.
The company is also planning to a flu vaccine facility in Shenzhen, China, where SA already operates a facility. In a press statement, the company said that the new site will be operating by 2012 and will be designed for easy expansion to accommodate growth in the Chinese vaccine market.
Of course, it’s not all about manufacturing. You still need to develop new vaccines. To that end, SA recently decided in April 2008 to invest $100 million in a new vaccine R&D facility in Toronto, Canada. The 165,000-sq.-ft. site is planned to open in 2010 and targets will include pediatric combination vaccines, pneumococcal protein vaccines, and cancer vaccines, according to a company statement.
SA is doing its best to diversify with generics and vaccines, but the company’s patent challenges could lead to desperate times at France’s national champion.
For the full profile, including pipeline and patent information, download the PDF.