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In little over three years Sanofi has moved from a highly concentrated, mega-brands business to a diversified healthcare company providing “holistic solutions focused on patients’ needs”. Photos by Magnus Rew

Value through transformation: Sanofi’s diversified offering

Healthcare Writer Peter Mansell | Edited by Jenny Hone/Claire Bowie

Managing change is commonplace in any business. For the traditionally slow-

moving pharmaceutical industry, though, the challenges of the past few years have required an unusual degree of agility, ingenuity and conviction. So it is no exaggeration when Steve Oldfield, general manager of Sanofi UK & Ireland, talks about the company’s “transformation” both at corporate and affiliate level.

Sanofi’s long string of acquisitions and partnerships under chief executive officer Chris Viehbacher – some 100 deals, including 27 acquistions, at a cost of nearly €23 billion (2009-11) – underlines the group’s determination to be fit for purpose in this exacting new environment. At the same time, it has worked hard on optimising existing businesses and overhauling its internal structure and culture to deliver what Oldfield calls “holistic solutions with drugs at the heart”.

Like most of big pharma, Sanofi was forced into a radical reassessment of its business model with the demise of the blockbuster era. US patents on its €7 billion blood thinner Plavix (clopidogrel bisulfate), for example, expire this month. The strategy which has been in place since 2009 has taken Sanofi from a highly concentrated ‘mega-

brand’ business with “great” yet finite R&D resources, to a highly diversified healthcare company, both in its interests and – importantly – its risk platform.

In the UK & Ireland the transformation process has been underway for the past three years and will run through 2012. After that, Oldfield says, Sanofi will start to reap the rewards.

The business now spans a range of offerings from innovative medicines for life-threatening diseases through to vaccines addressing major public health issues (Sanofi Pasteur MSD), rare-disease treatments (Genzyme), generics (Zentiva), consumer healthcare and an animal health business (Merial) that encompasses both companion and, increasingly, production animals.

Strategic ambitionIn articulating the transformation

of Sanofi, Oldfield explained the

three pillars of the corporate strategy, “increasing innovation in research and development; seizing external growth opportunities; and adapting the group to the future challenges and opportunities”.

With respect to R&D, Oldfield acknowledged that the group had been “rather myopic” in its dependence on internally sourced programmes, but this is moving to new models of ‘open innovation’, enhancing the value of external partnership. In a local context, while Sanofi traditionally maintained a “not insignificant” R&D presence in the UK, these days it is less about “bricks and mortar” and more about academic partnerships and clinical trials, Oldfield observes.

In terms of adapting the group’s structure, organisation and working methods to the company vision, at a corporate level this revolves around seven platforms for sustainable growth: emerging markets, diabetes solutions, human vaccines, consumer healthcare, animal health, innovative products and the New Genzyme with rare diseases and multiple sclerosis.

Since mid-2011 Oldfield has also had responsibility for Sanofi Ireland, an important part of the business that has brought different challenges and learnings. Integrating Genzyme and Merial in the UK and Ireland during late 2011-early 2012 has also brought

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❝There has to be a payback for R&D or manufacturing investment in the UK beyond tax and other fiscal incentives that largely benefit UK-domiciled companies

❞

considerable value to the UK & Ireland offering, Oldfield says, while Genzyme’s focus on rare conditions addressing smaller numbers of patients carries a sense of mission that chimes with Sanofi’s commitment to corporate social responsibility. This feeds back into staff engagement and performance: people have a “greater sense of purpose” when they can see clearly the value they

bring to their end-customers, Oldfield comments.

Whole-solutions approachRare diseases also involve dealing

with patients in a “very intimate way”. This has helped Sanofi to understand how a whole-solutions approach can apply not just to a very limited patient population, where an intense awareness

Steve Oldfield, General Manager, Sanofi UK & Ireland

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of daily needs is a given, but to a “broad population” condition such as diabetes. These insights are being leveraged across a diabetes portfolio that includes the world’s number one insulin brand, Lantus (insulin glargine).

Sanofi also sees itself as the leading provider of diabetes solutions, offering not just new, patient-friendly medicines but novel devices and support systems such as its range of blood-glucose monitors, launched in the UK at the start of the year. The range includes the iBGStar monitor, which can be connected to an iPhone or iPod Touch so patients can manage their condition on the go, tracking and storing data as well as sharing information with family members or healthcare professionals. The next stage, Oldfield says, will be to work with primary care trusts or clinical commissioning groups in the UK on supplying a “bigger part” of their diabetes services.

He is realistic about the residue of “natural scepticism” towards private business involvement in the NHS, although some elements of the government’s health bill will leave segments of the service with “no option” but to partner, Oldfield believes. Moreover, diabetes is a national epidemic and a major public health priority. Sanofi is already talking to a number of PCTs and has found some individuals within the NHS “very receptive” to engagement.

NHS engagement is also pivotal to Sanofi’s activities in oncology. These are diseases with a “very significant” pathology in the UK but also a “very restrictive” payer environment, Oldfield

notes. “In recent years a high percentage of new cancer drugs have been rejected outright by the National Institute for Health and Clinical Excellence, and NICE’s own recently-released figures indicate in the first quarter of 2012 there were more than double the number of rejections than positive recommendations, 71% versus 29%”.

Oldfield characterises NICE’s cost-benefit requirements in oncology as “virtually impossible to achieve”, even with a £50,000 end-of-life threshold. And while the Cancer Drugs Fund is good for industry and patients, it is administered regionally with “little to no consistency” in either assessment or approval procedures.

Fighting hardIn the UK Sanofi is “fighting very

hard” against these conditions, with “a lot of audit-based work”, re-evaluation of evidence from clinical trials and mining of real-life data to show that evidence is borne out in practice. Ultimately, though, there has to be a payback for R&D or manufacturing investment in the UK beyond tax and other fiscal incentives that largely benefit UK-domiciled companies with intellectual property registered in this country, Oldfield argues.

Oldfield believes Sanofi’s diabetes and oncology portfolios are now “unprecedented”. The group also has a range of new cardiovascular therapies coming through in the next two to three years, targeting unmet medical needs such as the genetic basis of hypercholesterolaemia.

Complementing these efforts are Sanofi’s generics and consumer healthcare operations. Unifying Sanofi’s international generics interests under the Zentiva banner as of April 2011 has given the group a much broader

portfolio, as well as corresponding benefits in sourcing, production, supply-chain management and first-to-market capacity, Oldfield notes.

“Our ambition is not to be Teva or Sandoz,” he comments. Rather, Zentiva in the UK is a niche generics player, launching new products where it can be first to market or has a unique level of expertise to offer – in analgesics, for example, where Sanofi is a leading supplier of paracetamol to the NHS. In Consumer Healthcare, too, Sanofi is looking to do more and is actively assessing external growth opportunities for the affiliate, Oldfield says.

Supply-side factors are a prime consideration for Sanofi’s commercial division (generics, consumer health and mature brands), which makes up more than 50% of the UK business. The affiliate has now created a key account management structure, focused on developing partnerships with key customers.

Sanofi is fortunate to have the cushion of volume-based businesses, Oldfield acknowledges. Unlike some other companies, though, it has not simply “managed their decline” but has proved “incredibly successful” at injecting new growth into these operations.

What all of these activities add up to, Oldfield says, is an ability to find creative, context-specific solutions in a cost-sensitive environment in the UK & Ireland. “Either you sit back and watch it happen or you do something about it.”

Not that business transformation can happen without a “significant amount of pain”, and the UK & Ireland has been no exception. This is where the resilience and continuing engagement of the workforce have been invaluable. “I’m in awe of people’s ability to roll with the times,” Oldfield comments.

The new, diversified group in the UK & Ireland is well placed for the future, with a strong portfolio, particularly in diabetes and oncology, and some exciting innovative products on the way. The restructured commercial division is also a critical part of the growth strategy for the UK & Ireland. And this foresight has been recognised by the markets: “They react well if they see you are delivering on your promises,” says Oldfield. “We have ridden through a significant transformation of the business, and are now in great shape for the future.”

❝Sanofi has an ability to find creative, context-specific

solutions in a cost-sensitive environment

❞