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Jul 5, 2012

Sanofi Sharpens Axe for Massive Layoffs

  • Sanofi is preparing to lay off 1,000 to 2,000 of its French employees as the embattled pharma giant steps up cost-cutting efforts, according to a report in the French newspaper Le Figaro.

    Citing unnamed sources, the newspaper reported earlier today that the jobs to be eliminated are in the research and manufacturing operations of Sanofi’s Pasteur vaccines unit, as well as in some support operations at the company’s Paris headquarters.

    An unnamed Sanofi spokesman would not comment on the report, but did confirm that executives would meet today with the company's works council, an organization that supports employees.

    The reported layoff is not Sanofi’s first in France, where the company eliminated 4,000 jobs between 2009 and last year. In September, Sanofi announced plans to shrink its global R&D workforce from 13,000 to 10,000 staffers—but added that employees would be spared at Genzyme, the US rare-disease drugs company Sanofi snapped up last year for $20.1 billion.

    Late last year, Sanofi restructured its U.S. R&D operations in New Jersey and Massachusetts, and according to the UK newspaper Business Weekly, told 70 workers at the Genzyme research center in Cambridge, UK, that it may shut the newly-acquired facility for budgetary reasons and concentrate its research work in the Boston/Cambridge, MA, region as well as France, Germany, and Asia.

    Like other pharma giants, Sanofi is scrambling to make up for sales revenues it is set to lose due to the “patent cliff” expiration of brand-name drugs—notably Plavix, the blockbuster blood-clotting drug which saw its US patent exclusivity end on May 17. Plavix is sold under a partnership with Bristol-Myers Squibb (which markets the drug in the US); and Avapro, the blood pressure medication that lost exclusivity on March 30.

    During the first quarter, Sanofi generated net profit of €2.4 billion (about $3 billion), up 8.4% from a year earlier after accounting for changes in currency rates—but Q1 numbers were swelled, the company acknowledges, by the €505 million ($624.6 million) generated by sales of Plavix, almost flat (down 0.2%) from a year earlier at constant exchange rates. Avapro racked up €404 million ($499.7 million) during Q1, down 18.1% at constant exchange rates due to generic competition. That competition was especially strong in the US, where sales declined 37% year-to-year affecting the class. U.S. sales declined 37.0%, reflecting the loss of exclusivity on March 30.

    Sanofi has warned analysts that it expects its earnings per share this year to be 12% to 15% below 2011 results.

    FDA has not approved a new Sanofi treatment since June 17, 2010, when the agency okayed use of Jevtana on June 17, 2010, for hormone refractory metastatic prostate cancer.

    Sanofi suffered its latest R&D setback late last month, when an FDA advisory panel voted 14–1 to urge against recommending agency approval of semuloparin, saying the blood-clot drug didn’t provide enough of a benefit as a treatment for venous thromboembolism among high-risk patients receiving chemotherapy for some forms of cancer. The company has said it expects a decision by FDA later this year.

    Sources:

    Reuters (July 5)—http://in.reuters.com/article/2012/07/04/sanofi-layoffs-idINL6E8I4BJ120120704

    Bloomberg (June 20)—http://www.businessweek.com/news/2012-06-20/sanofi-blood-clot-drug-shouldn-t-gain-approval-u-dot-s-dot-panel-says

    Sanofi  (April 27; Q1 results release)—http://en.sanofi.com/Images/30273_20120427_Q1-2012-results_en.pdf

    Business Weekly (Nov. 5, 2011)—http://www.businessweekly.co.uk/biomedtech-/13027-genzyme-cambridge-r-a-d-faces-axe


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