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

1. NingGuo HéroïneNeou Patrick Nesme Bruno Rakotozafy Antoine Rivet STRATEGIC MANAGEMENT (SMIB 2011)December 2010

3. PESTEL Analysis

4. 5 Forces Analysis

5. Value Chain

6. Resources & Competences

7. SWOT

8. Strategies

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

16. The health industry is a highly regulated.

17. Low environmental requirements in emerging countries

19. 5 FORCES ANALYSIS (2/3) Very High : 4 Present Situation Rivalry 0 Low : 1 Medium : 2 Threat entrants Substitues Public authorities Regulatory Affairs Governmental policies 5 Very High : 4 Very Low : 0 High : 3 Supplier Power Buyer Power

20. 5 FORCES ANALYSIS (3/3) Very High : 4 Future Situation Rivalry 0 Medium : 2 Medium : 2/3 Threat entrants Substitues Public authorities Regulatory Affairs Governmental policies 5 Very High : 4 Low : 1 Average : 2 Supplier Power Buyer Power

22. transformation of those into drugs/medicines

24. Most of the drugs sold in the market Made internally Marketing and distribution - wholesale drug distributors - independent and chain retail drug outlets - hospitals and clinics - managed care organizations - government institutions On the 31st of December 2009 34 300 medical sales representatives Repartition of sales representatives in 2009

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

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

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

37. STRATEGY 2: RESTRUCTURE THE COMPANY TO SEIZE MARKET OPPORTUNITIES (1/2) Reorganization in Western areas (North Am & Europe) RECONVERSION OF INDUSTRIAL SITES AND EMPLOYEES LOGISTIC IMPROVMENTS COST REDUCTION CONCENTRATION OF SITES Closure of Romainville Chemistry  Biotech Regional governance R&D costs + Sales force costs 1 billion $ saved Air  maritime Firing of 3000 people in France 700 people trained

38. STRATEGY 2: RESTRUCTURE THE COMPANY TO SEIZE MARKET OPPORTUNITIES (1/2) Focusing in emergingmarkets ADAPTING PORTFOLIO COST REDUCTION INCREASING SALES LOCAL FACILITIES 6.5  13 Bio $ Specificdrug / area In-house factories 30 R&D centers 15 sales force staff More OTC, Vaccine & generics

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

40. STRATEGY 3: INCREASE R&D EFFECTIVENESS (2/2) Clinicaldevelopment: important costs Reduce the costs and onlykeep the mostpromisingproducts. 30 projectsstopped 49 projects in development Developpartenrships Developexternal R&D Projects in development

41. STRATEGIC RECOMMENDATIONS Enhance 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.

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