Sanofi will turn a corner in 2012 as it comes to the end of its own 'patent cliff', setting up a growth period for the increasingly diversified company, chief executive Chris Viehbacher told investors yesterday.
The last three years has seen Sanofi transformed along three strategic objectives: increasing the efficiency of its R&D function; using cash reserves to diversify and invest in external sources of growth; and reining in expenditures, he said.
As a result of these actions, sales and earnings will grow at 5% or more over the next four years, helping to offset the lingering effects of lost patent protection for top selling products such as cardiovascular drugs Plavix (clopidogrel) and Avapro (irbesartan) and Taxotere (docetaxel) for cancer.
A greater share of the company's turnover is coming from its so-called 'growth platforms' - emerging markets, diabetes, human vaccines, consumer healthcare, innovative products and animal health - reaching an estimated 66% of total revenues in 2011 and 80% in 2015.
Having already lived through four patent cliffs in his career, Viehbacher is now convinced that the key to avoiding another is reducing dependence on "small molecules which have limited patent lives," in favour of business with high barriers to entry such as consumer health.
Sanofi has been steadily diversifying its business over the last two to three years with the addition of not only consumer health but also animal health and generics businesses, spending a whopping 23 billion euros on 23 acquisitions since January 2009.
R&D has not been abandoned, however. The company has revamped its R&D processes since 2008 by cutting 12 facilities from its network, slashing researcher numbers by 22%, and stripping out less promising programmes from its pipeline.
Over the same period, 61 new licensing agreements were signed to enrich its portfolio, and this should start reaping rewards from 2012 onwards, said Viehbacher.
The result is an organisation that has more effective R&D but is less dependent on it, he said. All told, Sanofi has six new molecular entities to file within the next nine months, and 19 new projects that could reach the market between now and 2015.
"Even though we have been focusing on our growth platforms and making sure we were diversified, the investment we are making in R&D is putting us in a position where we can have nice accretion to an already growing company through the success of our pipeline," said Viehbacher.
An additional 2 billion euros in cost-savings is also expected, ontop of the 2 billion-euro cost-containment programme announced in 2009,thanks to the integration of Genzyme which it bought earlier this yearand other measures.
No details have been released about wherethe extra savings will come from, although the company's presentation toaccompany the announcement suggests headcount will reduce from 13,000to 10,000 by the end of the year.