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Study case : Sanofi Aventis

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  1. Industry analysis
    1. Segmentation
    2. Competitors
    3. Strategic groups
    4. PEST trends
  2. Sanofi-Aventis' main strategic manoeuvres in the last 5 years
    1. From Sanofi-Synthélabo to Sanofi-Aventis (SA)
    2. The internationalization process
    3. Huge investment in Research and Development
    4. Targeting drug segments and blockbusters with strong growth
    5. Building a generic brand
    6. Ongoing cost-adaptation measures
  3. Business portfolio
    1. The Pharma Portfolio
    2. The Vaccine Portfolio
    3. The generic brand: Winthrop
  4. Competitive performance assessment and evolution
    1. Financial performance
    2. Research and Development
    3. Geogrophical presence
    4. Industrial reorganization and HR management
    5. Brand reputation
  5. Reccomendations

Over the past few years, Sanofi-Aventis' strategic decisions have enabled the company to reinforce its leadership in the international market. The company has grown by merging with competitors, it has increasingly invested in R&D, reinforced its presence in the major markets (the United States and Europe) and in all the major pharmaceutical segments such as generics and vaccines. The firm in 2007 was one of the world's leading research-based pharmaceutical companies and the biggest one in Europe.

Like all its major competitors such as Pfizer and Johnson & Johnson, Sanofi-Aventis is still engaged in ?mass-marketing? strategies based upon a portfolio concentrated around a small number of drugs meant for mass markets and reaching the highest levels of profitability. Indeed, Sanofi-Aventis' total sales highly depend on eight drugs presented as ?blockbusters?: Lantus (metabolism), Aprovel (cardiovascular), Lovenox and Plavix (thrombosis), Stilnox / Ambien and Copaxone (Central Nervous System), Taxotere & Eloxatine (Oncology).
But pressure from medicine agencies, practitioners, public opinion and also from the financial market is indeed increasingly powerful and is making long-term and uncertain research more difficult to finance. And the Federal and Drug Administration's refusal to commercialize Acomplia in the United States, a drug destined to obesity treatment, which was to become a new blockbuster, is an example of the difficulties that Sanofi-Aventis has to face. This must result in thinking of new competitive advantages that has to be built to deal with such uncertainty. However, even if not all strategic moves have been successful, Sanofi-Aventis' business portfolio is also composed of Sanofi Pasteur, the Vaccine Business Unit which has a growing importance in terms of sales (2007: €2.8bn+14.5%). And in 2005, Sanofi-Aventis launched its generic brand Winthrop, which currently exists in 14 countries.

The company has strong financial resources which enables it to compete within the industry's top 10 companies and to implement its strategy. With €4.5bn spent for R&D in 2007 (fourth place among the top 10 pharmaceutical groups), Sanofi-Aventis allocated both money and human resources mainly in the vaccine unit in order to remain the market leader. It also deserves specific attention regarding its pipeline evolution by enriching it with innovative molecules which would respond to unmet medical needs or improve already existing treatments. Sanofi-Aventis has also built its competitive advantage through its brand reputation which can make the difference especially in emerging countries, its industrial organization and human resource management which always supports its strategic orientations and makes the understanding of the economic environment easier, and its geographical presence with a leadership position in Europe and the emerging countries.

That's why we believe that Sanofi-Aventis has the resources and capabilities to implement a new strategy and benefit from the whole opportunities that are going to shape the new era of the pharmaceutical industry. Our recommendations will therefore be focused on: product differentiation by intensifying the development of generics and vaccines and a stronger geographical diversification especially in the emerging countries (BRICs).

[...] Besides being an organization established in different segments, Sanofi- Aventis is also an organization of business units. Its core business unit is blockbusters: in fact, the activity of Sanofi-Aventis is mainly based on eight blockbuster drugs. Each of these "blockbusters" realize more than a billion euros of turnover. They contribute to the growth and represent nearly half of the company's consolidated turnover. The role of these "blockbusters" is very important within the group's activities. In 2007, four blockbusters' sales increased by more than 10%. [...]


[...] The Pharma Portfolio Metabolism (Diabetes) : Lantus In the Metabolism category, Sanofi-Aventis' blockbuster is clearly Lantus, an anti-diabetic drug, which appears in top ranks in various markets: it ranks in the US market, in the European market and worldwide (in Sept 07). Five years after its launch, Lantus' sales are still growing fast with in 2007. By 2015, SA wants it to be the anti-diabetic in the world. However, within this category, SA's strategy is also aimed to develop a strong portfolio to assess all stages of diabetes and to increase sales in emerging markets. [...]


[...] Hence, we believe that Sanofi Aventis should continue to develop these growing markets and try to diversify in geographical scope; in this case, it can recompensate for the low growth in actual market and acquire new growth engine for the group: -Evaluate the local political and regulatory environments and assess local healthcare systems to formulate a strategy adapted to the local environment. -Construct local R&D development centres and local production sites for not only lowering the cost but also product localization. [...]

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