5:40 PM
Jan 26, 2018
 |  BioCentury  |  Strategy

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 growth.

The Jan. 22 proposed acquisition of Bioverativ provides an immediate revenue stream and is expected to be immediately accretive to EPS.

Sanofi will gain marketed hemophilia therapies Eloctate efmoroctocog alfa and Alprolix eftrenonacog alfa, which had combined sales of $780.7 million in the first nine months of 2017, and 2016 annual sales of $846.6 million.

It will also give the pharma a commercial platform in the U.S. from which to launch fitusiran, a Phase III hemophilia candidate to which Sanofi gained worldwide rights this month via the restructuring of a deal with Alnylam Pharmaceuticals Inc.

The business will reside within the Genzyme unit, and reflects Brandicourt’s increasing confidence in this business to deliver improved revenue growth for much of its pipeline.

Sanofi expects to submit regulatory filings for four new products over the next 18 months: two from the Genzyme unit, and one apiece from the diabetes and vaccines units. Its BD activity since Brandicourt came on board also favors the Genzyme unit over diabetes/cardiovascular and vaccines (see “Stocking Genzyme”).

Figure: Stocking Genzyme

Including the proposed acquisition of Bioverativ Inc. (NASDAQ:BIVV), the lion’s share of pipeline-building deals announced by Sanofi (Euronext:SAN; NYSE:SNY) since Olivier Brandicourt became CEO add assets or discovery research to therapeutic areas contained within the Genzyme unit.

The chart includes acquisitions, in-licensing and discovery deals. A discovery partnership with Warp Drive Bio Inc. covering cancer and antibiotics is counted in cancer only. “Other” includes one deal in CNS disorders including Alzheimer’s disease, one deal in unspecified metabolic disorders, four that did not disclose an indication and two that span all of Sanofi’s research interests. Source: BCIQ: BioCentury Online Intelligence.

Brandicourt’s vision

Brandicourt is a physician by training and hails from big pharma.

He was CEO of Bayer AG during 2013-15. Prior to that, Brandicourt was president and general manager of the Emerging Markets and Established Products units at Pfizer Inc. during 2013-12 and global head of that pharma’s primary business unit over 2009-12.

When he...

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