Sanofi is out to make all the world's creatures a little healthier. The company, formerly known as Sanofi-Aventis, develops and manufactures prescription and over-the-counter drugs and vaccines for mankind and man's best friend. Sanofi's pharmaceutical division is its biggest revenue generator with top sellers that include blood thinners Plavix and Lovenox, cancer drug Taxotere, and insulin brand Lantus. US consumers will recognize at least one of the brands produced by subsidiary Chattem (Gold Bond, Icy Hot, and Selsun Blue, to name a few). Sanofi also operates Merial, one of the world's largest animal health firms. Subsidiary Sanofi Pasteur makes vaccines while its Genzyme unit makes biopharmaceuticals.
The company operates worldwide, marketing its products through direct sales representatives and through partnering firms. For example, Sanofi co-markets cardiovascular drugs Plavix and Aprovel with Bristol-Myers Squibb (BMS). It also has agreements with Warner Chilcott to market osteoporosis drug Actonel and with Teva Pharmaceuticals for Copaxone. Products are distributed via large wholesalers and to retail chains and health care organizations. Europe and North America are the firm's largest markets.
Sanofi has worked hard to diversify its operations in the wake of and ahead of patent expirations for some of its biggest sellers. Its allergy blockbuster Allegra and sleep aid Ambien have both lost their patent protection in recent years (as has Lovenox), clearing the way for generic competition. Another top seller, Plavix, lost patent protection in the US in 2012 (resulting in reduced royalties from marketing partner BMS), as did blood pressure drug Avapro. Sanofi's diversification strategy hinges mainly upon making strategic acquisitions in its core therapeutic areas, as well as in new markets and emerging regions poised for growth.
To boost offering of delicate biopharmaceuticals, Sanofi acquired prescription drug firm Genzyme in 2011 for some $20.1 billion after months of negotiation including a lower, hostile bid failed. The deal included an additional $3.8 billion that is contingent on the future performance of Genzyme's lead drug candidates (including multiple sclerosis candidate Lemtrada) and its manufacturing facilities. The purchase of Genzyme gives Sanofi a portfolio of products focused on rare inherited disorders, kidney disease, orthopedics, transplant and immune disease, cancer, and diagnostic testing. Its top product is rare disease treatment Cerezyme for Gaucher's disease. Following the acquisition, Genzyme became the headquarters of the parent's rare disease program. Once Genzyme was formally part of its structure, the company chose to simplify the collective organization's identity by shortening its name from Sanofi-Aventis to simply Sanofi.
Another area in which the company has been particularly focused on growing is the worldwide OTC market, largely through its US Chattem division, which converted Allegra to an OTC product in 2011 following its patent expiration. Also in 2011 Sanofi acquired BMP Sunstone, a US-based firm that markets vitamins and mineral supplements and cough and cold medicines in China, for about $520 million. Through its majority owned India unit, Aventis Pharma, Sanofi also expanded its portfolio by buying the marketing and distribution business of Universal Medicare, which makes more than 40 branded nutraceutical formulations in India.
Not one to miss an opportunity, Sanofi decided it too would take advantage of patent expirations by growing its generics business, especially in the European generics market where it maintains the Winthrop brand. It has also established a generic presence in emerging markets (another growth area for the company) in the Middle East, Latin America, and Asia.
In 2010 Sanofi took its plan to reduce its reliance on prescription drugs one step further by entering the market for medical devices. The company joined forces with medical equipment maker Agamatrix to develop blood sugar monitoring devices for diabetes patients. Sanofi already has a solid presence in the diabetes market with its insulin products, Apidra and Lantus. The blood glucose monitoring systems, designed to work in conjunction with the company's existing diabetes treatments, were launched in European markets under the BGStar and iBGStar brands in 2011.
The next year Sanofi agreed to acquire Pluromed, a medical device company that developed proprietary polymer technology used in injectable plugs for improving the safety, efficacy, and costs of medical interventions. The company also makes LeGoo gel, a product used in surgery for temporary endovascular occlusion of blood vessels in the US and Europe.
While it has been growing some operations, the company has taken a different approach to its research and development business. Beginning in 2009, Sanofi began cutting back on its pipeline of drug candidates in an effort to save on R&D costs, narrowing its focus on the most promising candidates in targeted areas including cancer, diabetes, cardiology, neurology, vaccines, and biologics. As of early 2011, it had about 55 candidates in its drug pipeline, with about a dozen of them in late stages of clinical development. In 2009 it successfully launched a new atrial fibrillation (irregular heart beat) medicine, Multaq, and in 2010 it introduced prostate cancer drug Jevtana.
The company is also increasingly relying on partnerships and licensing agreements with other firms and academic institutions to support its research efforts. For instance, in 2010 Sanofi formed a major outsourcing agreement with contract research organization (CRO) Covance. The deal, worth up to $2.2 billion, included Covance's purchase of two Sanofi R&D facilities in Europe. Covance will provide drug development services to the company through a ten-year contract.
Though it is streamlining its internal development operations, the company still pursues acquisitions to bolster its late-stage pipeline in core research areas. In 2010, the company boosted its pipeline with treatments for leukemia and certain blood disorders by buying privately held TargeGen for $75 million (plus up to $485 million in potential future milestone payments).
In the vaccines market, Sanofi's biggest sellers include pediatric combination vaccines and the cervical cancer vaccine Gardasil (marketed through an agreement with Merck). Subsidiary Sanofi Pasteur is also a top maker of flu vaccines, and has received a boost from growing concerns over the possibility of an influenza pandemic. While its vaccine business only makes up about 10% of the company's sales, Sanofi has made small acquisitions to keep its pipeline pumping.
Sanofi's animal health operations are conducted through its Merial subsidiary, which was formerly a 50-50 joint venture with Merck. Sanofi acquired Merck's share of Merial (as Merck prepared for its acquisition of drugmaker Schering-Plough) in 2009 for about $4 billion. The two exercised an option to strike a fresh venture early the next year and announced plans to combine Merial with Merck's animal health business, Intervet; however, after spending a year planning the merger, the two companies ended the agreement in 2011, citing complexities arising from anticipated divestitures to satisfy antitrust regulators. Sanofi has stated that it will instead grow its animal health operations through smaller bolt-on acquisitions.
While the company has been aggressively expanding its product offerings and R&D pipeline of potential blockbusters to help ward off the threat of generic competition, it has also been pursuing cost-cutting measures as a means of offsetting future patent losses. In 2011, for instance, Sanofi announced that it was reviewing options to divest its US dermatology business, Dermik, and later that year it sold the unit to Valeant Pharmaceuticals for some $425 million. In addition, in 2010 the company downsized certain manufacturing and sales operations to reduce inefficiencies and prepare for lower production and sales volumes of selected products going off-patent. It has also conducted some layoffs.