Sanofi Rumored to Announce Job Cuts in U.S. Before Feb. 9
Published: Jan 27, 2016
January 22, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Paris-based Sanofi is rumored to be announcing layoffs soon. The cuts, if they are to happen, are expected to be announced on or before Feb. 9, when the company is scheduled to release its annual financial report.
Such a decision probably should not come as a surprise. On Nov. 6, 2015, Olivier Brandicourt, Sanofi’s chief executive officer, announced the company’s new strategy, which was focused on bolstering sagging diabetes sales, expanding into other markets, and evaluating the spinoff of its animal health unit, Merial, and its European generics business.
At the same time in November, Sanofi indicated that part of the strategy was to develop new partnerships and acquisitions. It announced a licensing deal with Seoul, South Korea-based Hanmi Pharmaceutical, Co., Ltd for $4.2 billion to develop diabetes treatments. It also inked a collaboration and license deal with The Woodlands, Texas-based Lexicon Pharmaceuticals, Inc. to develop and commercialize sotagliflozin, a potential diabetes treatment.
Part of the stated plan is to cut $1.63 billion in costs over the next five years. “I am defining new priorities for Sanofi,” Brandicort said at that time in a statement. “The company will remain diversified, but with a portfolio refocused on areas where we can win, and innovation driven to improve the lives of millions of people.”
At the J.P. Morgan Healthcare Conference held last week in San Francisco, Brandicourt expanded on the new strategy. He indicated there were four strategic priorities: reshape the portfolio, deliver outstanding launches, sustain innovation in research and development, and simplify the organization. One of the ideas floated was a potential exchange of Sanofi Animal Health (Merial) with some of Boehringer Ingelheim’s consumer health care (CHC) businesses. That transaction, he projected, might close in the fourth quarter of 2016.
Brandicourt also discussed three major product rollouts: Toujeo, Praluent and Dengvaxia. Taujeo is an insulin product for diabetes, Praulent is a new cholesterol medication, and Dengvaxia is the first ever vaccine for dengue fever.
Sanofi currently employs approximately 110,000 people worldwide, with about 17,000 of them in the U.S. If there are layoffs, which is certainly possible with major restructuring planned, some of those jobs may be in France, a notoriously problematic country to cut jobs in because of the power of French labor unions and the backing of the French government. Significant cuts, if they are announced, would likely be in the U.S.
On Jan. 5, 2016, Sanofi and Valencia, Calif.-based MannKind Corporation announced that the license and collaboration deal for inhaled insulin product, Afrezza, had been terminated. The drug had never really taken off, partly because insurance companies were placing it in Tier 3, which are typically for higher-cost prescription medications that often require patients to pay a higher co-pay and other restrictions.
“They’re facing a very difficult situation,” said David Kliff of Diabetic Investor to STAT. “Their top diabetes product is going away and replacement products are not doing well. They have no choice but to reorganize.”
Just yesterday, Jefferies Group set a $82.61 price target for Sanofi. It gives the shares a “neutral” rating. Societe Generale set a $127.17 price target and a “buy” rating back in October 2015. BNP Paribas set a $86.96 price target and a “sell” rating on Dec. 10, and Morgan Stanley set a $97.83 price target with a “neutral rating” on Dec. 2. Overall, two analysts gave the company a “sell” rating, nine a “hold” and five a “buy.”
Sanofi has been on a downward trend for a while, although it’s showing upward movement this week. Shares traded on Aug. 10, 2015 for $54.98, dropped on Jan. 15, 2016 to $38.61, and are currently trading for $41.28.