Sanofi’s chief executive is confident that emerging markets will play a major part in offsetting sales lost to generics in the USA and Europe but the road to increased profitability may still be rough.
The French drugmaker already derives a third of its sales from emerging markets, selling more there than in the USA or Europe, and speaking at the Reuters Health Summit, Chris Viehbacher said the company has a competitive advantage, having had a presence in many of those markets for more than 50 years.
He told the news agency that Sanofi has “a range of tail products and production networks that six or seven years ago would have been seen as non-strategic by most pharma companies”. However, they have “now turned out to be hot properties because if you can produce locally you can achieve the same level of margins on an operating level as we do in Europe”.
Mr Viehbacher went on to say that “I was astounded to find that in emerging markets our margins are sometimes higher than in Germany or France.” He claimed these areas “are on a growth track…it’s not going to be all smooth, but over the next five to 10 years they will become a bigger growth driver.”
The company’s administrative network also gives it an advantage, Mr Viehbacher said, which is important “from the point of view of depth of management, distribution, government affairs”. Over the past two years the company added 10,000 people to its emerging markets business, bringing the total to 40,000.
He told Reuters that “you sit in Shanghai and see 1 billion in China, another billion in India and another billion in other parts of Asia. The numbers are mind-boggling.”He concluded by noting that Sanofi will make more acquisitions in emerging markets, but “the price of assets is clearly going up. We’ve been able to find some assets but you really have to hunt.”
