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Growing up Genzyme

How Bioverativ solidifies Genzyme as Sanofi’s growth engine

The proposed acquisition of Bioverativ Inc. ticks multiple boxes on Sanofi’s to-do list for transforming itself into a top tier pharma, and solidifies the position of its Genzyme unit as the pharma’s growth engine.

Olivier Brandicourt became Sanofi’s CEO in April 2015 after Christopher Viehbacher’s ouster in the wake of flagging diabetes sales and moribund EPS performance. By August that year, the new CEO had outlined his plan to return the company to growth by 2020: get to and maintain positive EPS, replace declining Lantus insulin glargine revenues, and focus the company on disease areas and businesses where it could be a top-three company.

He reorganized the pharma business and focused Sanofi on four therapeutic areas -- rare disease, cancer, immunology and diabetes/cardiometabolic -- putting the Genzyme unit in charge of all except diabetes.

That decision was driven by Genzyme’s success at building its own rare disease franchise prior to its 2011 acquisition by Sanofi, and the growth the unit has overseen for Sanofi’s multiple sclerosis drugs. It has also been Sanofi’s only business to show consistent double-digit growth since 2012.

Brandicourt also jettisoned Sanofi’s low-performing Merial animal health business in a 2016 asset swap with Boehringer Ingelheim GmbH, while doubling down in an area that has also delivered growth for the pharma -- consumer health. Sanofi gained Boehringer’s €6.2 billion ($6.8 billion) consumer health business in the transaction.

“We won’t let temporary headwinds distract us from our long-term visions.”

Olivier Brandicourt, Sanofi

These moves resulted in non-GAAP EPS growth of 4% for 2016, and 2% for the first nine months ended Sept. 30, 2017 at constant exchange rates. The pharma has guided for EPS to be “stable” for full year 2017. Sanofi will report its 2017 earnings on Feb. 7.

However, two of the six new drugs Brandicourt had pegged as growth drivers when he started have stumbled. Hypercholesterolemia agent Praluent alirocumab has struggled to gain uptake due to payer pushback, and long-term safety issues that arose in November for Sanofi’s Dengvaxia dengue vaccine are expected to hamper future

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