Sanofi’s New CEO Expected To Announce Long Term Plan Next Month

Sanofi’s new CEO – Oliver Brandicourt – is expected to present his five-year strategic plan for the company’s future, on November 6. The company has been plagued by lagging diabetes drug sales, and is facing tough times with new drug launches and patent expirations.

Brandicourt – who’s most recent position was as head of the German-based Bayer HealthCare – officially began his new job as CEO of Sanofi in April. This closely followed the dismissal of previous head of Sanofi, Chris Viehbacher.

The company’s diabetes division – a major profit stream for the company – continues to face competition in the global marketplace, and particularly tough competitors in the US market. This past April, Sanofi projected that sales of its diabetes drugs would drop this year.

Brandicourt also faces the seemly paradoxical need to balance shareholder interests – including maintaining company diversification and keeping spending under control – while pursuing potential acquisitions. The company also expects that the recent US launch of its next-generation insulin drug – Toujeo – following patent expiration of its blockbuster diabetes medication Lantus, will also affect profitability.

Outside of its diabetes drug division, Sanofi has high hopes for other commercial pharmaceutical launches. Among these newly-developed drugs are Praluent – an anti-cholesterol drug – and dupilumab – a monoclonal antibody to be used in the treatment of asthma and certain skin conditions.

As Brandicourt is expected to propose changes aimed at revitalizing the pharmaceutical giant, analysts say they expect the CEO to both cut costs and invest in Sanofi’s drug pipeline. As investors await Brandicourt’s detailed plans on November 6, many believe that some announcements may be made alongside publication of Sanofi’s third-quarter earnings later this week.

According to a note released by Morgan Stanley analysts, “We see upside potential from new CEO Brandicourt’s first strategic update, for which market expectations remain moderate but which could bring potential cost savings in the new, simpler organization.” In July, Sanofi announced that starting in January 2016, it would be following a simplified business structure, which will focus on five global business units (GBU).

“If the company still wants to remain diversified, the model needs to be agile,” said a partner from consulting firm Alcimed, Vincent Genet. To date, sales in Sanofi stock are up nearly 21 percent.

“We expect … Brandicourt to elaborate on how and which types of deals could be done, and envisage a continuation of company’s current strategy of mid-size acquisitions rather than one larger acquisition,” added Morgan Stanley analysts.

According to industry analysts, Brandicourt’s plan could include the liquidation of some non-core business sectors – including animal health and generics – in order to free-up additional capital to invest in other areas, such as oncology. Sanofi shareholders want the company to remain diversified and to bolster its cancer drug offerings, the pharmaceutical developer recently announced its collaboration with US-based Regeneron.

• Sanofi’s new CEO set to deliver revival plan after falling diabetes sales – http://www.reuters.com/article/2015/10/26/sanofi-strategy-idUSL8N12L5JM20151026