Strategic Analysis - Sanofi Aventis

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Strategic Analysis of Sanofi Aventis and key recomendations.
Team work for Strategic Management course, SMIB 2011 (Essec Business School)

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Strategic Analysis - Sanofi Aventis

  1. 1. NingGuo<br />HéroïneNeou<br />Patrick Nesme<br />Bruno Rakotozafy<br />Antoine Rivet<br />STRATEGIC MANAGEMENT (SMIB 2011)December 2010<br />
  2. 2. CONTENT<br /><ul><li> History
  3. 3. PESTEL Analysis
  4. 4. 5 Forces Analysis
  5. 5. Value Chain
  6. 6. Resources & Competences
  7. 7. SWOT
  8. 8. Strategies
  9. 9. Strategic recommendations</li></li></ul><li>HISTORY<br />Global healthcare company<br />Six therapeutic areas<br />Net sales 2009: €29,306 million<br />Approximately 105,000 employees in 110 countries<br />10 blockbusters = 50% of the net sales<br />Sanofi+Synthélabo<br />Sanofi-Synthélabo<br />Dausse<br />+ Robert & Carrière<br />Synthélabo<br />Rhône Poulenc<br />+Hoechst <br /> Aventis<br />TODAY<br />1999<br />1970<br />2004<br />1973<br />Sanofi-Synthélabo<br />+Aventis<br />SANOFI AVENTIS<br />Elf Aquitaine buys the pharmaceutical group Labaz and creates Sanofi<br />
  10. 10. PESTEL ANALYSIS<br />POLITICAL<br />ECONOMIC<br /><ul><li>Political pressure on healthcare:</li></ul>- political reforms to cut healthcare reimbursement cost<br />- programs to support the generics market<br /><ul><li>Governments have approved many new medicines in different parts of the world
  11. 11. Strong impact of the economic downturn on the pharmaceutical market
  12. 12. The huge laboratories begin to reduce the staff
  13. 13. The decrease of purchasing power in the developed countries can affect the OTC market
  14. 14. Increase of the demand for medical products in the emerging countries</li></ul>SOCIOCULTURAL<br /><ul><li>Increase of self-medication with OTC’s
  15. 15. The ageing population results in greater demand for drugs</li></ul>TECHNOLOGICAL<br /><ul><li>Increase of the R&D costs</li></ul>ENVIRONMENTAL<br />LEGAL<br /><ul><li>The patent of some blockbuster drugs will expire in the coming years. High dependence on the blockbusters
  16. 16. The health industry is a highly regulated.
  17. 17. Low environmental requirements in emerging countries
  18. 18. Global epidemics such as Swine Flu have boosted activities</li></li></ul><li>5 FORCES ANALYSIS (1/3)<br />Potential entrants<br />Substitutes<br />Time-to-market: 10-12 years<br />Heavy facilities: R&D, Prod<br />Regulatory Affairs<br />Patented drugs: no threats<br />“Old drugs”: generics<br />World of giants<br />2 levels<br />Competitive rivalry<br />10 global competitors<br />R&D rush<br />M&A<br />Intense<br />Buyers<br />Suppliers<br />Lots of small suppliers<br />Pharma companies are giants<br />Hospitals + clinics<br />Physicians prescriptions<br />Weak<br />Important<br />
  19. 19. 5 FORCES ANALYSIS (2/3)<br />Very High : 4<br />Present Situation<br />Rivalry<br />0<br />Low : 1<br />Medium : 2<br />Threat entrants<br />Substitues<br />Public authorities<br />Regulatory Affairs<br />Governmental policies<br />5<br />Very High : 4<br />Very Low : 0<br />High : 3<br />Supplier Power<br />Buyer Power<br />
  20. 20. 5 FORCES ANALYSIS (3/3)<br />Very High : 4<br />Future Situation<br />Rivalry<br />0<br />Medium : 2<br />Medium : 2/3<br />Threat entrants<br />Substitues<br />Public authorities<br />Regulatory Affairs<br />Governmental policies<br />5<br />Very High : 4<br />Low : 1<br />Average : 2<br />Supplier Power<br />Buyer Power<br />
  21. 21. VALUE CHAIN (1/2)<br />CLINICAL DEVELOPMENT<br />MARKETING & DISTRIBUTION<br />R&D<br />PRODUCTION<br />Internal reorganization in the R&D<br /> « the best R&D organization in the pharmaceutical area by 2013 »<br /><ul><li>Entrepreneurial units  more focus on patient needs</li></ul>  increase the number of partnerships (academy and biotech communities)<br /><ul><li>5 Scientific cores platforms  scientific expertise</li></ul>  high quality service<br /><ul><li>Functions support  organize and help the new structure and the governance</li></li></ul><li>VALUE CHAIN (2/2)<br />Clinical development  3 phases<br />Production and raw material <br /> 3 main important steps<br /><ul><li>the synthesis of the active molecules
  22. 22. transformation of those into drugs/medicines
  23. 23. packaging</li></ul>General politics<br /><ul><li>Active molecule
  24. 24. Most of the drugs sold in the market</li></ul> Made internally<br />Marketing and distribution<br />- wholesale drug distributors<br />- independent and chain retail drug outlets<br />- hospitals and clinics<br />- managed care organizations <br />- government institutions<br />On the 31st of December 2009<br />34 300 medical sales representatives<br />Repartition of sales representatives in 2009<br />
  25. 25. RESOURCES AND COMPETENCES<br />RESOURCES<br />COMPETENCES<br /><ul><li>Ability to adapt its offerings to local market needs.</li></ul>Low-cost approach based on local know-how. <br /><ul><li>Ability to innovate and to stabilize R&D costs thanks to partnerships. </li></ul> - 12 R&D projects in phase 3.<br /><ul><li> Partnerships with Wellstat (diabetes), Exelixis (oncology)...
  26. 26. Ability to manage mergers and acquisitions, partnerships and joint-venture to capture new market opportunities.
  27. 27. Specialized knowledge and know-how in key sectors</li></ul> Ex: Diabetes (Lantus, Aprida, Amaryl, Insuman)<br /><ul><li>Global presence well balanced:</li></ul>- Products sold in 170 countries<br /><ul><li>Strong presence in the traditionalmarkets (Europe, North America and Japan)</li></ul>-Top multinational pharmaceutical company in Emerging Markets<br /><ul><li>Local manufacturing in Emerging markets (40 facilities and nearly 30,000 employees in the Emerging Market countries):</li></ul> -to partly overcome protectionism<br /> - to improve operating margins.<br /><ul><li>Strong financial resources allowing Sanofi-Aventis to have an aggressive acquisition strategy.</li></li></ul><li>SWOT<br />STRENGTHS<br />WEAKNESSES<br /><ul><li>Market leader in emerging markets (China, India, Brazil, Mexico, Russia)
  28. 28. Strong position in the diabetes care market (19% sales increase in 2009)
  29. 29. Good financial results (36% increase in Net Income)
  30. 30. High dependence on aging patent-protected blockbusters like Plavix and Lovenox
  31. 31. The patent of most of the blockbuster drugs will expire in the coming years
  32. 32. Low R&D productivity </li></ul>OPPORTUNITIES<br />THREATS<br /><ul><li>Population growth and significant increase in purchasing power in emerging countries
  33. 33. The ageing population will continue to form an important source of consumers
  34. 34. Increasing generic competition
  35. 35. Political reforms to cut government spending on healthcare
  36. 36. Problem of counterfeit medicines especially in emerging countries</li></li></ul><li>STRATEGY 1: DIVERSITFY AND DEVELOP NEW BUSINESSES<br />Acquisition of firms in other sectors <br />Oenobiol  Nutritive complements for health and beauty<br />Acquisitions of R&D firms<br />Bipar sciences  new selective antitumoral therapy <br /> for different type of cancer<br /> Fovea pharmaceuticals SA  specialized in ophthalmology<br />30 acquisitions in 2009<br />Zentiva group  generic products adapted in Eastern and central Europe<br />Laboratorios Kendrick  main generic products in Mexico<br /> Medley  leader in generic products in Brazil<br /> Takeover bid on Genzyme (18,5 billion $)  leader in biotechnologies + rare illnesses<br /> Elaboration of the their own generic products<br />
  37. 37. STRATEGY 2: RESTRUCTURE THE COMPANY TO SEIZE MARKET OPPORTUNITIES (1/2)<br /> Reorganization in Western areas (North Am & Europe)<br />RECONVERSION OF INDUSTRIAL SITES AND EMPLOYEES<br />LOGISTIC IMPROVMENTS<br />COST REDUCTION<br />CONCENTRATION OF SITES<br />Closure of Romainville<br />Chemistry  Biotech<br />Regional governance<br />R&D costs +<br />Sales force costs<br />1 billion $ saved<br />Air  maritime<br />Firing of 3000 people in France<br />700 people trained<br />
  38. 38. STRATEGY 2: RESTRUCTURE THE COMPANY TO SEIZE MARKET OPPORTUNITIES (1/2)<br />Focusing in emergingmarkets<br />ADAPTING PORTFOLIO<br />COST REDUCTION<br />INCREASING SALES<br />LOCAL FACILITIES<br />6.5  13 Bio $<br />Specificdrug / area<br />In-house factories<br />30<br />R&D centers<br />15 sales force staff<br />More OTC, Vaccine & generics<br />
  39. 39. STRATEGY 3: INCREASE R&D EFFECTIVENESS (1/2)<br />Issue: blockbusters will lose their patents by 2016  generics<br />Solution: to find new blockbusters<br />How: by increasing innovation in R&D<br />In 2009: R&D = €4,6 bilions <br /> 15,6% of the net sales<br />
  40. 40. STRATEGY 3: INCREASE R&D EFFECTIVENESS (2/2)<br />Clinicaldevelopment: important costs<br />Reduce the costs and onlykeep the mostpromisingproducts. <br />30 projectsstopped<br />49 projects in development<br />Developpartenrships<br />Developexternal R&D<br />Projects in development<br />
  41. 41. STRATEGIC RECOMMENDATIONS<br />Enhance its presence in the biotechnology field (plants, staff and R&D)<br />Develop a new business model(patient is the central element, customized medicine with a large portfolio of specialized products, more services for patients...)<br />Promote innovation: multiply partnerships with small and innovative entities? strengthen links with academic laboratories, seek new technologies (nanotech, drug-food, medical devices, diagnosis...)<br />Develop a more flexible organization: create a network with outsourced units (productions or sales), production "on demand”...<br />Expand into new geographic areas: enhance local presence (factories, local workforce), develop region-specific drugs, enter into partnership with governments and local companies.<br />
  42. 42. SOURCES<br /><ul><li> Sanofi Aventis Official website, www.sanofi-aventis.com
  43. 43. Sanofi Aventis, Rapport annuel 2009
  44. 44. Sanofi Aventis, Document de référence 2009
  45. 45. Pharmaceutical Case Study - Sanofi-Aventis, Agility
  46. 46. Global Pharmaceutical: emerging markets should infuse badly needed revenue for years to come, Bernstein Research, 2009
  47. 47. Les groupes pharmaceutiques dans le monde, Xerfi Global, Alexandre Boulegue etVirginie Dessolin, 2009
  48. 48. Sanofi-Aventis, XerfiEntreprises, 2010
  49. 49. Six Sigma and the road to success, Dr IngolfStückrath, World Pharmaceutical Frontiers
  50. 50. Industry Audit, Bill Tombetta, Pharmaceutical Executives, 2009</li>

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