L'Humanité in English
Translation of selective papers from the french daily newspaper l'Humanité
decorHome > Economy > Sanofi, profits are a bitter pill
 

EditorialWorldPoliticsEconomySocietyCultureScience & TechnologySport"Tribune libre"Comment and OpinionTranslators’ CornerLinksBlog of Cynthia McKennonBlog of Tom GillBlog of Hervé FuyetBlog of Kris WischenkamperBlog of Gene ZbikowskiBlog of G. AshaBlog of Joseph M. Cachia Blog of Peggy Cantave Fuyet
Economy

ORIGINAL FRENCH ARTICLE: Sanofi, la pilule amère des profits

by Alexandra Chaignon

Sanofi, profits are a bitter pill

Translated Sunday 26 September 2010, by Henry Crapo and reviewed by Bill Scoble

Behind the enormous profits of the pharmaceutical laboratory one finds the Influenza A, but not only that. The recipe is provided by two concepts: restructuring, and economic planning.

Among those companies whose shares are listed in the CAC40 index, Sanofi-Adventis is proud of being one of those to have registered a comfortable profit margin in the first quarter of the year 2010, up by 8%. This means that the pharmaceutical laboratory continues its forward thrust, having pocketed 7.8 billion in profits in 2009. Further proof of good health: stock in Sanofi-Adventis climbed from 43.24€ in December of 2008 to 49.10€ yesterday, for a 13.6% increase in a little over a year and a half.

The influenza A, which swelled the proceeds of the group by record sales of flu vaccine, does not in itself explain these strong results. Certain drugs (medicines) are flamboyantly successful. Thus, for animal health products, Merial, a Sanofi subsidiary since September 2009, did 593 million euros in business. Another example, the sale of Lovenox, its star anticoagulant, reached 3 billion euros in worldwide sales in 2009. Except that, in July, the United States approved the first generic version of this drug. It’s true that the source of these blockbuster drugs (generating more that a billion dollars in sales) is drying up. From now until 2012-2013, a certain number of patents for the prime products of the laboratory will fall into the public domain, and will thus be threatened with competition from the generic brands. In all, Sanofi-Adventis risks losing 6 billion euros in business between now and 2013.

To reply to these challenges, this world leader in the pharmaceutical industry has set out a severe economy plan. From now until 2013, the laboratory plans to save 2 billion euros. At the head of Sanofi-Adventis since 2008, Chris Viehbacher first warned that his project for diversification of the group "could have an impact on employment". In fact, lay-offs at Sanofi are no longer taboo, and multiply in waves. Since the arrival of the Anglo-saxon manager a year and a half ago, almost a third of the projects (18 out of 65) that constituted the research pipeline of the entrprise were halted, and four centers for research are in the process of being closed here in Metropolitan France. In all, nearly 4000 jobs will be eliminated between now and 2013, of which 1300 are in research, this being roughly 10% of the entire national potential for pharmaceutical research.

In parallel, the group is betting on a new strategy centered on external research and on the emerging markets. It has thus made some fifty acquisitions, alliances and agreements or partnerships in various domains, such as with generics, non-prescription drugs, veterinary products, and even bio-technologies. Just so many new domains in which Sanofi-Adventis has pledged to double its business between now and 2013.

In this context, the purchase of a bio-technical firm such as Genzyme, an American company specializing in rare diseases, for which Sanofi has offered 18.5 billion euros in cash, makes good sense. Genzyme will bring to Sanofi those new products it needs. This is an operation that will crown the lay-offs begun to the detriment of the wage-earners, for whom the "state of extreme tension", as the workers say, augments in proportion to the billions pocketed by the share-holders.


Follow site activity RSS 2.0 | Site Map | Translators’ zone | SPIP