The document provides a comprehensive strategic analysis of Sanofi-Aventis, highlighting its history, market position, and various strategic recommendations to enhance its operations in the global pharmaceutical industry. Key points include a PESTEL analysis, competitive landscape assessment through Porter's Five Forces, and SWOT analysis, along with strategies for diversification, restructuring, and increasing R&D effectiveness. The emphasis is on adapting to market challenges, especially the impending loss of patent protections for major drugs, and capitalizing on emerging market opportunities.

1. NingGuoHéroïneNeouPatrick NesmeBruno RakotozafyAntoine RivetSTRATEGIC MANAGEMENT (SMIB 2011)December 2010

2. CONTENT History

3. PESTEL Analysis

4. 5 Forces Analysis

5. Value Chain

6. Resources & Competences

7. SWOT

8. Strategies

9. Strategic recommendationsHISTORYGlobal healthcare companySix therapeutic areasNet sales 2009: €29,306 millionApproximately 105,000 employees in 110 countries10 blockbusters = 50% of the net salesSanofi+SynthélaboSanofi-SynthélaboDausse+ Robert & CarrièreSynthélaboRhône Poulenc+Hoechst  AventisTODAY1999197020041973Sanofi-Synthélabo+AventisSANOFI AVENTISElf Aquitaine buys the pharmaceutical group Labaz and creates Sanofi

10. PESTEL ANALYSISPOLITICALECONOMICPolitical pressure on healthcare:- political reforms to cut healthcare reimbursement cost- programs to support the generics marketGovernments have approved many new medicines in different parts of the world

11. Strong impact of the economic downturn on the pharmaceutical market

12. The huge laboratories begin to reduce the staff

13. The decrease of purchasing power in the developed countries can affect the OTC market

14. Increase of the demand for medical products in the emerging countriesSOCIOCULTURALIncrease of self-medication with OTC’s

15. The ageing population results in greater demand for drugsTECHNOLOGICALIncrease of the R&D costsENVIRONMENTALLEGALThe patent of some blockbuster drugs will expire in the coming years. High dependence on the blockbusters

16. The health industry is a highly regulated.

17. Low environmental requirements in emerging countries

18. Global epidemics such as Swine Flu have boosted activities5 FORCES ANALYSIS (1/3)Potential entrantsSubstitutesTime-to-market: 10-12 yearsHeavy facilities: R&D, ProdRegulatory AffairsPatented drugs: no threats“Old drugs”: genericsWorld of giants2 levelsCompetitive rivalry10 global competitorsR&D rushM&AIntenseBuyersSuppliersLots of small suppliersPharma companies are giantsHospitals + clinicsPhysicians prescriptionsWeakImportant

19. 5 FORCES ANALYSIS (2/3)Very High : 4Present SituationRivalry0Low : 1Medium : 2Threat entrantsSubstituesPublic authoritiesRegulatory AffairsGovernmental policies5Very High : 4Very Low : 0High : 3Supplier PowerBuyer Power

20. 5 FORCES ANALYSIS (3/3)Very High : 4Future SituationRivalry0Medium : 2Medium : 2/3Threat entrantsSubstituesPublic authoritiesRegulatory AffairsGovernmental policies5Very High : 4Low : 1Average : 2Supplier PowerBuyer Power

21. VALUE CHAIN (1/2)CLINICAL DEVELOPMENTMARKETING & DISTRIBUTIONR&DPRODUCTIONInternal reorganization in the R&D « the best R&D organization in the pharmaceutical area by 2013 »Entrepreneurial units  more focus on patient needs  increase the number of partnerships (academy and biotech communities)5 Scientific cores platforms  scientific expertise  high quality serviceFunctions support  organize and help the new structure and the governanceVALUE CHAIN (2/2)Clinical development  3 phasesProduction and raw material  3 main important stepsthe synthesis of the active molecules

22. transformation of those into drugs/medicines

23. packagingGeneral politicsActive molecule

24. Most of the drugs sold in the market Made internallyMarketing and distribution- wholesale drug distributors- independent and chain retail drug outlets- hospitals and clinics- managed care organizations - government institutionsOn the 31st of December 200934 300 medical sales representativesRepartition of sales representatives in 2009

25. RESOURCES AND COMPETENCESRESOURCESCOMPETENCESAbility to adapt its offerings to local market needs.Low-cost approach based on local know-how. Ability to innovate and to stabilize R&D costs thanks to partnerships. - 12 R&D projects in phase 3. Partnerships with Wellstat (diabetes), Exelixis (oncology)...

26. Ability to manage mergers and acquisitions, partnerships and joint-venture to capture new market opportunities.

27. Specialized knowledge and know-how in key sectors Ex: Diabetes (Lantus, Aprida, Amaryl, Insuman)Global presence well balanced:- Products sold in 170 countriesStrong presence in the traditionalmarkets (Europe, North America and Japan)-Top multinational pharmaceutical company in Emerging MarketsLocal manufacturing in Emerging markets (40 facilities and nearly 30,000 employees in the Emerging Market countries): -to partly overcome protectionism - to improve operating margins.Strong financial resources allowing Sanofi-Aventis to have an aggressive acquisition strategy.SWOTSTRENGTHSWEAKNESSESMarket leader in emerging markets (China, India, Brazil, Mexico, Russia)

28. Strong position in the diabetes care market (19% sales increase in 2009)

29. Good financial results (36% increase in Net Income)

30. High dependence on aging patent-protected blockbusters like Plavix and Lovenox

31. The patent of most of the blockbuster drugs will expire in the coming years

32. Low R&D productivity OPPORTUNITIESTHREATSPopulation growth and significant increase in purchasing power in emerging countries

33. The ageing population will continue to form an important source of consumers

34. Increasing generic competition

35. Political reforms to cut government spending on healthcare

36. Problem of counterfeit medicines especially in emerging countriesSTRATEGY 1: DIVERSITFY AND DEVELOP NEW BUSINESSESAcquisition of firms in other sectors Oenobiol  Nutritive complements for health and beautyAcquisitions of R&D firmsBipar sciences  new selective antitumoral therapy for different type of cancer Fovea pharmaceuticals SA  specialized in ophthalmology30 acquisitions in 2009Zentiva group  generic products adapted in Eastern and central EuropeLaboratorios Kendrick  main generic products in Mexico Medley  leader in generic products in Brazil Takeover bid on Genzyme (18,5 billion $)  leader in biotechnologies + rare illnesses Elaboration of the their own generic products

37. STRATEGY 2: RESTRUCTURE THE COMPANY TO SEIZE MARKET OPPORTUNITIES (1/2) Reorganization in Western areas (North Am & Europe)RECONVERSION OF INDUSTRIAL SITES AND EMPLOYEESLOGISTIC IMPROVMENTSCOST REDUCTIONCONCENTRATION OF SITESClosure of RomainvilleChemistry  BiotechRegional governanceR&D costs +Sales force costs1 billion $ savedAir  maritimeFiring of 3000 people in France700 people trained

38. STRATEGY 2: RESTRUCTURE THE COMPANY TO SEIZE MARKET OPPORTUNITIES (1/2)Focusing in emergingmarketsADAPTING PORTFOLIOCOST REDUCTIONINCREASING SALESLOCAL FACILITIES6.5  13 Bio $Specificdrug / areaIn-house factories30R&D centers15 sales force staffMore OTC, Vaccine & generics

39. STRATEGY 3: INCREASE R&D EFFECTIVENESS (1/2)Issue: blockbusters will lose their patents by 2016  genericsSolution: to find new blockbustersHow: by increasing innovation in R&DIn 2009: R&D = €4,6 bilions 15,6% of the net sales

40. STRATEGY 3: INCREASE R&D EFFECTIVENESS (2/2)Clinicaldevelopment: important costsReduce the costs and onlykeep the mostpromisingproducts. 30 projectsstopped49 projects in developmentDeveloppartenrshipsDevelopexternal R&DProjects in development

41. STRATEGIC RECOMMENDATIONSEnhance its presence in the biotechnology field (plants, staff and R&D)Develop a new business model(patient is the central element, customized medicine with a large portfolio of specialized products, more services for patients...)Promote innovation: multiply partnerships with small and innovative entities? strengthen links with academic laboratories, seek new technologies (nanotech, drug-food, medical devices, diagnosis...)Develop a more flexible organization: create a network with outsourced units (productions or sales), production "on demand”...Expand into new geographic areas: enhance local presence (factories, local workforce), develop region-specific drugs, enter into partnership with governments and local companies.

42. SOURCES Sanofi Aventis Official website, www.sanofi-aventis.com

43. Sanofi Aventis, Rapport annuel 2009

44. Sanofi Aventis, Document de référence 2009

45. Pharmaceutical Case Study - Sanofi-Aventis, Agility

46. Global Pharmaceutical: emerging markets should infuse badly needed revenue for years to come, Bernstein Research, 2009

47. Les groupes pharmaceutiques dans le monde, Xerfi Global, Alexandre Boulegue etVirginie Dessolin, 2009

48. Sanofi-Aventis, XerfiEntreprises, 2010

49. Six Sigma and the road to success, Dr IngolfStückrath, World Pharmaceutical Frontiers

50. Industry Audit, Bill Tombetta, Pharmaceutical Executives, 2009