IHS Global Insight Perspective | |
Significance | To ensure a successful switch towards biotech and vaccines, the French pharma company committed to invest 150 million euro (US$203 million) in its French industrial plants. |
Implications | Under the terms of the settlement, Teva (Israel), Fresenius Kabi (Germany) and Sandoz (Switzerland) all agreed to cease selling their generic versions of Eloxatin (oxaliplatin) until August 2012. |
Outlook | The settlement will come as a temporary relief for Sanofi-Aventis which will see its traditional portfolio face challenging pressure in the short term on the generic side. These upcoming challenges have pushed Sanofi to rethink its overall strategy, leading to an upgrade of its traditional chemical industry to include biotechnology capabilities, notably in France. |
A Switch Towards Biotech and Vaccines
French pharmaceutical giant Sanofi-Aventis yesterday announced major changes to adapt and upgrade its chemical and biotechnology manufacturing facilities in France. As part of the project, Sanofi-Aventis committed to invest 150 million euro in its industrial facilities, including 90 million euro for the creation of a new biosynthetic process in two French plants to improve corticosteroid production. The strategic switch will see the group's production facilities gradually change towards biotechnology and vaccine production, while reducing chemical production as demand for former major drugs will decline following patent expiries. A new plant near Lyon, France, will house vaccine production including the production of Sanofi's dengue vaccine, currently under Phase II clinical development at Sanofi Pasteur (see France: 13 May 2009: Sanofi Pasteur to House Production of Dengue Vaccine at Home in France). The French leading pharma firm planned to invest 350 million euro in the dengue vaccine production plant, before the approval of the vaccine, which is still in clinical trials.
Settlement over Eloxatin Patent Litigation in U.S.
Meanwhile, Sanofi announced it has settled patent lawsuits with generic drug makers Teva (Israel), Fresenius Kabi (Germany) and Sandoz (subsidiary of Novartis, Switzerland) related to its colorectal cancer drug Eloxatin (oxaliplatin). Under the terms of the settlement, the generic producers have all agreed to cease marketing copycat versions of Eloxatin in the U.S. market. The marketing hold is effective on 30 June 2010 and will run until 9 August 2012, from when the three companies will be authorised to sell the product under a licence to re-enter the market.
Outlook and Implications
The settlement signed with the three generic drug makers is a relief for Sanofi, whose former blockbuster Eloxatin suffered from deep losses in 2009 due to generic entry in the U.S. and European markets. With a reported 34.7% year-on-year decline in 2009 sales, Eloxatin is no longer a blue chip for Sanofi which will lose the last U.S. patent on its drug in January 2013. The fierce battle Sanofi is set to face on the generic front drove changes in Sanofi-Aventis' strategic focus, bringing attention on its vaccine, diabetes, generics and over-the-counter businesses. Biotech capabilities are obviously valued as many upcoming approvals will see a growing number of biotech products hit the pharmaceutical market. While research is increasingly conducted in highly specialised biotech firms or academic bodies, development and commercialisation are generally under the responsibility of the pharma industry, which by upgrading their production and development capabilities towards biotech products increase their ability to bring new generation of drugs in the market. This long-term strategy will gradually see Sanofi balance its capabilities between biotech and vaccine, on one side, and chemicals on the other to cope with patent expiries and growing interest towards biotech products.
Sanofi's plan to strengthen its vaccine business is not a secret anymore. In a thematic investor relations seminar on the topic of vaccines held in December 2009, Sanofi unveiled its plan to double vaccine sales by 2013 (see France: 18 December 2009: Sanofi-Aventis Banks on Vaccine Market, Plans to Double Vaccine Sales by 2013). For the full year 2010, the French company expects to bring in 4 billion euro of vaccine sales at a global level. The announcement of the creation of a new dengue vaccine production plant in May 2009, before any certainty over the vaccine's approval, seemed risky at that time. Since then, the spread of the influenza A/H1N1 virus has proven how flexible production capacities are essential in case of epidemics. Banking on the vaccine business appears rational, when the global vaccines market is expected to reach 23 billion euro (US$31.04 billion) in value by 2013. With significant investments in vaccine production facilities, Sanofi-Aventis gradually increases its capacities and its ability to respond quickly and effectively in case of future epidemics.