Sanofi's New CEO to Deliver Revival Plan After Being Hit by Lagging Sales and Rumors of Boardroom Rows
October 27, 2015
By Mark Terry, BioSpace.com Breaking News Staff
With Paris-based Sanofi to release its third quarter financial results on Thursday, Oct. 29, analysts are anticipating clues to the company’s strategy that won’t be officially released until Nov. 6.
Sanofi’s chief executive officer, Olivier Brandicourt, took over the company in April, six months after the board fired his predecessor, Chris Viehbacher. Analysts have been wondering what exactly Brandicourt plans to do to bolster the company, whose sales in the diabetes market have been sagging.
In September, company insiders were saying Brandicourt was considering selling off the company’s bio-surgery and renal units, as well as its Merial animal health division. In addition, the same sources indicated that the company was considering selling Oenobiol, its nutritional, health and beauty supplements unit. Other rumors have been spreading that Sanofi was considering buying Mexican generic-drug maker Representaciones e Investigaciones Medicas SA, better known as Rimsa. Other companies possibly competing for it include Pfizer Inc. , Abbott Laboratories , and Israel-based Teva Pharmaceutical Industries Ltd. .
In August, Sanofi announced it was partnering with Google Inc./Alphabet’s Life Sciences on diabetes monitoring and treatment.
In the company’s second quarter financial release, Brandicourt said, “Recently, we announced a new organizational structure which will be implemented beginning in January 2016 and will simplify and focus Sanofi to optimize future growth.”
Sanofi’s primary revenue drivers include Lantus, Plavix, Aubagio, and its vaccines and animal health divisions. Market Realist noted that, “The company’s top line rose ~4.9 percent at constant currencies, mainly driven by the increased sales of the above-mentioned products, partially offset by a few of the established products.”
The company has at least two major launches, the anti-cholesterol drug Praluent, which was approved earlier this year and will battle Amgen ’s evolocumab, and dupilumab, a monoclonal antibody to treat skin diseases and asthma.
Investors undoubtedly hope Brandicourt will give some clue as to what the company’s strategy will be regarding its relationship with MannKind Corporation and its inhaled insulin, Afrezza. On Oct. 23, rumors were reported that Sanofi was freezing its sales team hiring for Afrezza, although MannKind’s chief financial officer, Matt Pfeffer, refuted the rumors, saying, “We have seen no indication that they are faltering in their commitment to the product — quite the contrary, in fact. The only changes [in sales force numbers] I am aware of have been increases.”
Sales of Afrezza have been slower than expected, although some analysts believe it’s only a matter of time. Improvement depends a lot on Sanofi’s ongoing negotiations with insurers in getting the drug changed from a Tier 3 listing to a Tier 2 listing, which would make it available to more patients with a lower co-pay and fewer restrictions.
“We see upside potential from new CEO Brandicourt’s first strategic update,” Morgan Stanley analysts wrote in a recent research note, as reported by Reuters, “for which market expectations remain moderate but which could bring potential cost savings in the new, simpler organization.”
The analysts went on to say Sanofi has the ability to raise $40 billion in debt if it wasn’t to make a major acquisition. “We expect … Brandicourt to elaborate on how and which types of deals could be done, and envisage a continuation of company’s current strategy of mid-size acquisitions rather than one larger acquisition.”
If this week’s financial statements don’t provide enough information, investors and analysts will have to wait for Brandicourt’s Nov. 6 announcements.