Sanofi: Betting On North American Pharmaceutical & Biopharm Industries

By Cliff Mintz, Ph.D.

French-owned Sanofi is one of the world’s largest pharmaceutical companies. However, over the next year or so, the company is facing patent expiry of some of its biggest blockbuster products. Further, unlike many of its competitors, Sanofi was slow to respond to the increasing importance of biologics and biotechnology products to address unmet medical needs.

To remedy this, Chris Viehbacher, who became Sanofi’s CEO in December 2008, decided to diversify the company’s portfolio and pursue a strategic focus based on three key principles: increasing innovation in R&D, seizing external growth opportunities, and adapting the company’s business model to meet future challenges. Moreover, Sanofi’s acquisition of Genzyme in 2011 for $20.1 billion signaled the company’s new focus on biotechnology and its entry into the orphan drug market.

Despite Big Pharma’s growing focus on emerging markets, Sanofi believes the North American market (most notably the U.S.) will continue to drive the direction of the global pharmaceutical and biopharmaceutical industries over the next few decades. To accomplish this, Sanofi recently appointed industry veteran Anne Whitaker as president of its North America pharmaceuticals business.

One of Big Pharma’s few female executives, Whitaker leads Sanofi’s pharmaceuticals business in North America and oversees all pharmaceuticals operations within the region including diabetes, oncology, cardiovascular and specialty care, biosurgery, renal, U.S. medical affairs, commercial strategy, planning and excellence, consumer healthcare (Chattem), and Canada pharmaceuticals.

Whitaker began her career at the Upjohn Company in 1991 as a metabolic disease specialist. She joined GlaxoSmithKline (GSK) in 1992 as a sales representative and held various leadership positions in the commercial organization. In 2007, she became GSK’s VP of critical and supportive care before being appointed senior VP of leadership and organization development from 2008 to 2009.

In 2009, Whitaker became senior VP and business unit head, cardiovascular, metabolic, and urology (CVMU) at GSK where she had full commercial responsibility for leading, developing, and managing strategic performance of the CVMU business. She was appointed to her present position at Sanofi in September 2011. Whitaker holds a bachelor’s degree in chemistry with a minor in business administration from the University of North Alabama.

I had an opportunity to chat with her about Sanofi’s new drug development and business strategies, the company’s growing focus on biologics and biotechnology products, and the role of women in the pharmaceutical industry.

Question: Sanofi, like other major pharmaceutical companies, has lost or will lose patent protection of some of its blockbuster brands over the next few years. What are some of the strategies being implemented to compensate for these losses?

Whitaker: To combat loss of patent exclusivity for some of our larger brands, we developed new strategic plans that will enable Sanofi to become more efficient and better able to effectively meet the total healthcare needs of the patients who use our products.

To that end, we have implemented a global diversification strategy (being brought to life in North America) that includes, in addition to our pharmaceuticals business, Chattem, a consumer healthcare business that Sanofi acquired in 2010; Merial, our animal health business; Genzyme, for rare diseases and MS; and of course, our vaccines division.

Chris Viehbacher and I strongly believe that a diversified healthcare company is the way to build a sustainable business going forward in the future. Furthermore, we are also shifting the organization to be very patient-focused. By looking at patients’ needs first, we are moving into new areas where we have not been active before, including medical devices, iPhone apps, and services for patients with chronic diseases like diabetes and some cancers. Because of this, we believe we are going well beyond simply developing new molecules and offering patients better health outcomes and solutions to help to improve their lives.

Another strategy that is being implemented to bolster new product development is expanding beyond our internal R&D capabilities via innovative partnership and alliances with external entities.

A good example is our investment in Warp Drive Bio, an innovative start-up company in Cambridge. In this case, we partnered with a venture firm to identify and invest in companies with novel ideas and technology platforms. More recently, we entered into collaboration with Harvard’s Joslin Diabetes Center, which will bring together Joslin’s expertise in diabetes research and Sanofi’s strengths in discovering and developing patient-focused products for diabetes management.

Finally, we are also leveraging social media, digital capabilities, and crowdsourcing to help us to better understand patient needs and more successfully commercialize our products. Moreover, there is an internal corporate commitment to expand our digital platform and to learn how to better engage, interact, and respond to customer and patient needs and expectations. This is definitely a learning process for us, and we are refining and tweaking it as we move these initiatives forward.

Question: In the past, other pharmaceutical companies like Sanofi have pursued a diversification strategy with limited success. Why will Sanofi succeed where others have not?

Whitaker: In the past, some pharmaceutical companies may have pursued diversification strategies simply because they could, hoping that expanding corporate capabilities in multiple areas like consumer and animal health would ultimately pay off. In contrast, our diversification approach has been carefully orchestrated by Sanofi’s executive team and is very strategic by design.

While we will continue to be a leader in bringing new medicines to market, our new and ongoing patient focus allows us to bring solutions to patients beyond just supplying prescription drugs. For example, we are developing a line of diabetes care products in our consumer healthcare division that will offer persons with diabetes better tools to manage their illness and lives. Also, we are pursuing a similar approach in oncology. These healthcare solutions are consistent with what I am hearing from the FDA where there is a growing emphasis on OTC products to provide greater access to treatments for patients who must manage chronic diseases such as diabetes, cardiovascular disease, and cancer.

Finally, there are some synergies between our assets in human and animal health that we are leveraging to develop new treatments in both divisions, as well as our ongoing commitment to develop new prophylactic vaccines including one for Type 1 diabetes.

Question: Sanofi has been involved in 101 acquisitions and partnerships between 2009 and 2011. Is M&A a vital component of Sanofi’s new growth strategy?

Whitaker: Our CEO has made a commitment to Sanofi stakeholders to strengthen and grow the company, and M&A is part of that strategic plan. To that point, Genzyme, Sanofi’s largest acquisition to date, was a great strategic move and represents a key growth platform for the company moving forward.

The 2011 Genzyme acquisition gives Sanofi greater breadth in the biologics space, a more diversified portfolio with small- and large-molecule assets (today as well as in our pipeline), and an infusion of fresh innovation.

We have learned a lot from Genzyme’s patient-centric culture and hope to continue to draw on those characteristics as we move Sanofi forward. Also, the Genzyme purchase showed us the importance and benefit of looking externally, to complement our existing internal solutions.

Finally, Sanofi goes to great lengths to preserve what is good about its acquisition partners like Genzyme and Chattem and is very careful to not smother what is unique and beneficial about them as they are integrated into the Sanofi culture.

Question: What are your views on the current trend of outsourcing pharmaceutical R&D?

Whitaker: While R&D is not part of my purview, it is worth noting that Sanofi does and will continue to maintain its own strong inhouse R&D capabilities. It is important to point out that, although the company is actively pursuing more collaborations and partnerships, we are committed to our R&D functionalities. Our external R&D collaborations rely on the internal expertise of our R&D teams to evaluate opportunities and successfully work with our partners to develop patient-focused healthcare solutions and treatments.

Question: Much has been written on personalized medicine. Does Sanofi have plans to enter the personalized medicine market?

Whitaker: We believe personalized medicine will have a significant impact on patients who use our products. Diabetes is an example of a therapeutic area that we think personalized medicine can help to improve the lives of patients.

To that end, in 2010 Sanofi entered into a research alliance with Scripps Genomic Medicine and more recently announced an agreement with Joslin Diabetes Center to advance R&D in personalized medicine to address the challenges of insulin resistance faced by many people living with diabetes.

Question: Like other Big Pharma companies, Sanofi is eying opportunities in emerging markets like China, India, and elsewhere. What are your thoughts on growth opportunities in developed versus emerging markets?

Whitaker: Emerging markets are clearly part of Sanofi’s overall business strategy and represent a key growth opportunity for the company. However, while great opportunities exist in emerging markets in China, India, Brazil, and elsewhere, North America still represents about 30% of the world’s pharmaceutical market and will continue to be vital business and innovation hubs for us moving forward.

Chris certainly views the U.S. as a place that still rewards innovation, and we can continue to learn a lot in the U.S. and Canada to take to the emerging markets. Likewise, we can learn many things from emerging markets and take advantage of them in North America!

Thanks to our diversification strategy, unlike some of our competitors, North America still represents an enormous opportunity for Sanofi.

Question: Why do you think Big Pharma has lost the ability to innovate, and how will the industry innovate in the future?

Whitaker: When we talk about “innovation,” it’s tempting to only think in terms of drug development and filling pipelines. After all, historically, that’s what success has been based on in our industry. But, as we continue to move to become a company that places patients first, we will be forced to define “innovation” more broadly. To that point, we need to look beyond innovative new drugs to innovations in patient services and other healthcare products.

The demand for this kind of innovation is driven by our operating environment. For example, as our population ages and becomes more and more urban, incidences of chronic disease will increase. Technology will continue to drive consumers’ connectivity and their demand for medical information. Payers will increasingly look at outcomes to measure the value of their investments. And innovations in medical technology, not only drugs and biologics, will continue to expand what is possible for patients.

At Sanofi, our approach to healthcare is becoming increasingly patient-centric. To that end, Sanofi is constantly pursuing innovative, entrepreneurial, and commercialization partnerships and strategies that will help patients succeed in our new healthcare environment.