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Is Sanofi Aventitis Moving Beyond the Challenges of Pharma?

As a global health leader will Sanofi Aventis create new sustainable markets of value for health?

By Lavinia Weissman

@WeCareHealth5252525252

New York, New York

Original date of publication on CSRWire Talkback, June 8th, 2011

Greenbiz.com, recently published two important reports by its Chairman and Executive Editor Joel Makower. The first report is an article titled, Green Marketing is Over. Let’s Move On. And the second is a video of Joel’s presentation on the State of Green Business 2011.

After reviewing the report and video, I decided to return to my study of Sanofi Aventis and ask, “Is Sanofi Aventis moving beyond the pharma business model; and will this create new sustainable value markets for health?”

To get at some answers to these questions, I captured a “quick and dirty short list” of Makower’s observations as a framework from which to assess the current state of Sanofi Aventis.

Makower observations:

1. For the most part business is still treading water to build a sustainable economy with out any remarkable progress.

2. While business is treading water, Greenbiz Group doubled its membership, approached by companies they did not know asking to become members. Greenbiz Group now has more than 50 members; Makower sees this as an indicator of hope.

3. Green marketing is in need of makeover. Green marketing initiatives and stories focus primarily on the consumer and what the consumer can buy rather than how companies can create new markets of impact.

4. The key to building new markets is about building new markets for healthy people to live in a healthy world.

Next step: I conducted a quick updated review of Sanofi Aventis to look at their progress over 2010 and what has occurred since the April 2011 completed acquisition of Genzyme. (Links to three previous Talkback posts).

My findings in brief:

With the publication of Sanofi’s 2010 Annual Review, CEO Christopher Viehbacher announced a change to Sanofi’s mission from “to improve the health of as many of the 6.8B people walking the planet as we can”  to focus on a new mission “to becoming a global health leader.”

Viehbacher has outlined three areas of strategy from which to balance its profits with sustainability by focusing attention to resources that:

1.    Increasing innovation as an approach for research and development. September 2010, Sanofi signed a partnership agreement with Dana Farber Cancer Institute’s Belfer Center for clinical trial research. Sanofi has committed an investment in this collaboration of $33M to DFCI over three years. With this investment, Dana Farber gains the right to preclinical, clinical and commercial milestone payment and royalties from sales of commercial products developed by Dana Farber with Sanofi Aventis.

2.    Adapting to future challenges. The company is focused on adapting to the change implied by ongoing translational research and new formats of health education to move beyond the structure of delivering OTC drugs to patients for common ailments and creating new responses to people who suffer from chronic and life threatening illness.

3. Pursuing external growth opportunities. Sanofi has set a goal to explore outside the pharmaceutical framework new forms of treatment platforms that are more affordable and accessible to patients, which opens a broader potential for them beyond the innovation of new drugs.

Sanofi has in recent months introduced a new generation of social media reporting for its Annual Reviews, Sanofi TV and links to Facebook. Within this media constellation, Sanofi offers regular updates on the company, health, professions, responsibility and what is new cross culture, country – and in English and French. Reports update followers from the perspective of all stakeholder interests in CSR, regulation, research, business and advancements for populations of people with specific health needs.

Sanofi through Chris Viehbacher’s leadership has bounded its investment in clinical trials, freeing funds to formulate new platforms of prevention, health education and the development of new, affordable products for the patient that can be easily accessed.

Is Sanofi building a new sustainable market that helps people to be healthy and live in a healthy world? Are they breaking the barrier to the idea that big companies have less success with innovation?

Perhaps Sanofi forging ahead of Novartis, which has accelerated its capability and success with clinical trials or GlaxoSmithKline who is addressing health and poverty in an old format of giving by returning a percentage of profit back to the country in which they do business for a total of $5.4M.

About Lavinia Weissman

Lavinia Weissman (@wecarehealth52525252494949606060) is a sustainable market capacity builder, coach and publisher/editor-in-chief of thestoryofmeaningfuluse.com. As a speaker she describes the new emerging patterns of markets shaped by sustainable market leaders and the social networks they work with and employ. As a coach, Lavinia works with all her clients to inspire a culture of change that builds healthy practices for people within healthy markets.

Talkback Readers: What do you think? Is Sanofi creating new markets for healthy people who want to live in a healthy world with sustainable value? How would you measure this? Weigh in on Talkback!

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What About the Patient?

Can sustainability practices bring about better patient care? – Post 3

By Lavinia Weissman

@WeCareHealth52525252

Boston MA

original date of publication in CSRWireTalkback 08 December 2010

The final thought on the potential Sanofi Aventis and Genzyme M&A – and what this could mean for sustainability practices in #biopharm. Click here for Post I and Post II.

The Sanofi Aventis bid of $69 per share for Genzyme expires on December 10, 2010. Genzyme responded to this bid, claiming a share value of perceived $89.

Part of the Genzyme valuation was based on projected sales for Campath, a drug that has just cleared five years of clinical trials with multiple sclerosis (MS) patients.

By November 22, 2010, Genzyme had begun internal discussion about structuring a ”contingent value right” (CVR), based on future benchmarks, as a possible gesture indicating they may accept less than $89 per share. Filing of a CVR insures shareholders can receive benefit from future achieved sales and regulatory targets that exceed expectations at the time of a merger.

Fan of Nassim Nicholas Taleb’s Black Swan could easily mark out an explanation of why nine Wall Street financial analysis of sales projections for Campath were inaccurate. These nine analysis also included predictions by Sanofi’s of $700M and Genzyme’s of $3.5B in annual sales in the range of $350M and $1M offered by other analysts. I perceived one critical loophole in this analysis, which is pivotal to authoring a sustainable merger acquisition strategy:

Has Sanofi or Genzyme consulted with MS patients regarding their needs?

According to the World Health Organization, there are over 2.5M people globally diagnosed with MS. The United States population is the largest country population, now estimated at 1.5M patients. Every hour someone is diagnosed with MS.

MS symptoms occur as result of symptoms to a patient’s myelin sheath. When the myelin sheath is attacked by autoimmune disorders, the patients central nervous system is compromised and the patients nervous system stops communicating clear signals. Autoimmune disorders can be activated by al toxins or genetic defects due to the same. MS patients then find themselves living with pain, muscle spasms, speech impairment, bladder control problems and increased susceptibility to allergens.

The rapid increase in frequency of occurrence of this disease is related in part to increased number of cases and an improved capability in diagnosing the disease, which was first diagnosed 150 years ago. It is not clear how many cases in the past year were undiagnosed. There is no cure for MS; drug treatments focus on treatment of the symptoms and can result in the development of more symptoms or potential harm to circulation, kidney and liver functioning and more.

There is no drug to cure or prevent this illness. It is estimated it would take a $1B+ investment to find a cure. In the past the growth economy claimed it was hard enough for high-mid cap firms to raise those kind of funds without a 60X rate of return. In the emerging eco-growth economy, it is not possible for one biopharm company to raise this kind of investment.

What are patient views of experience with MS and what kind of unmet need now exists for these patients?

Emmy award winner, Montel Williams is one of the most well-known MS patients to date that has articulated the situation and need of his co-patients.

Williams was diagnosed with MS over 10 years ago, when someone threatened to make this information public. In response to this threat, Williams (a talk show host and actor) arranged to be interviewed by Dr. Mehmet Oz on the Oprah Show to make his diagnosis and experience public.

Montel has made known the challenges of depression and suicidal tendencies that patients may experience as a result of learning to come to grips with two major threats:

  • the potential of losing ones ability to be independent and a breadwinner;
  • the fear that you meet every morning that you may wake up and not be able to walk.

Since this first appearance on Oprah, Montel has dedicated a significant amount of time to advocate for MS patients. He also educates patients about new treatments involving alternative medicine and use of medical devices. As a former Naval Intelligence Officer, he advocates and visits with veterans who suffer from MS and other injuries and illnesses that result in the need for myelin repair.

Montel established a foundation to raise money for MS medical research. He recognized as a result of his experience how critical it has become to raise money for more holistic research, which is the only way research will be conducted for prevention and cure.

What is the agenda for myelin repair?

Scott Johnson, an Ernst and Young Awarded Entrepreneur was diagnosed at age 20 with MS. In 2002, using his skills as a Silicon Valley entrepreneur and business person, Scott established the Myelin Repair Foundation (MRF).

By 2004, through Scott’s leadership, MRF established as a goal to license the first myelin repair therapeutic target for commercial development within five years. To achieve this, Scott authored the Accelerated Collaborative Research™ (ARC) methodology. By constructing a collaboration with four principle investigators, MRF and team have:

  1. identified over 150 novel potential targets;
  2. developed 24 new research tools for broad application to other neurological disease;
  3. filed two US patents and applied for 16 more;
  4. published 50 peer review articles;
  5. begun broad collaboration with pharma companies;
  6. extended this research base for benefit to 70 other disease categories.

Has Sanofi Aventis or Genzyme talked to MRF?

When I began investigating the practice of sustainability and its relevance to pharma, I was moved to do so after listening to a speech by Matthew Emmens, CEO of Vertex Pharmaceuticals, about his perceived future for pharma in today’s economy. Emmens has established a mission for Vertex to “seek treatment for a profound change in serious disease.”

The index to the Vertex website draws a pattern of strategy, action and methods on how every stakeholder tied to this company works toward that mission.

It would appear if the basis for acceptance of any Sanofi Aventis bid for Genzyme depends on an understanding of the what the implications of the drug Campath to the MS market, that it is incumbent on both companies to form a working group and open the conversation to a much wider group of stakeholders. This form of stakeholder engagement may represent a new format because of the complexity of issues entailed in creating profound change in serious disease.

The stakeholder map and landscape is far more complex than an industry-based view of supply chain, consumers and distributors in a product-based market. The stakeholders include patients, medical research think tanks, drug companies, clinicians who treat patient of all kinds, insurance companies, benefit administrators, human resource employees, disability experts and more.

This certainly could result in authoring a collaborative, intelligent and quality sustainability business practice for pharma.

Readers: What do you think – can this potential merger lead to greater sustainability in the biopharm industry, and help patients?

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Authors bio:

Lavinia Weissman is an sustainable market leadership coach, journalist, and publisher of thestoryofmeaningfuluse.com. As a speaker she describes the new emerging patterns of markets shaped by sustainable market leaders and the social networks they work with and employ.  As a coach, Lavinia works with all her clients to inspire professional development that assures a person the opportunity to embed sustainability as a leader into the network and culture of people they work with.

Factoring Sustainability in an M&A Scenario

Regarding Sanofi-Aventis and Genzyme: how do you construct a sustainable valuation of pharma? – Post 2

By Lavinia Weissman

@WeCareHealth52525252

Boston MA

original date of publication in CSRWireTalkback 08 December 2010

The Sanofi-Aventis and Genzyme merger and acquisition dance continues. As I continue to monitor the press, I built out my own research to find an answer to this question, “How do you factor sustainability into a biopharm merger and acquisition?”

On October 7, following my last post on the Sanofi and Genzyme merger dance, Genzyme’s board unanimously declined the SA bid of $69 per share, asserting that Genzyme was worth $89 per share. Sanofi views their offer as realistic and Genzyme views their valuation as what “the company is worth.”

How is #pharma stock valued?

Of the numerous articles cited on Twitter, I found an analysis by Jim Edwards. Edwards, a former Knight-Bagehot fellow at Columbia University’s business and journalism school and drug marketing journalist for BrandWeek, provided a news analysis questioning the validity of both valuations and the basis for the predicted EPS (earnings per share).

Edwards’s analysis assumed both companies are dancing around inaccurate information. Edwards, who is versed in #pharma investment valuation, identified a similar scenario that resulted in Goldman Sachs creating errors in the calculations related to the Roche acquisition of Genetech.

Is Investment Analysis Sustainable?

Last week, Genzyme’s auditor, Deloitte, released two articles on its website regarding the implications of sustainability in M&A scenarios and how sustainability relates to business today.

Deloitte pointed out sustainability is not about the usual due diligence performed during M&A. This assessment is based on the recognition that sustainability as an agenda has expanded beyond the focus of environmental issues.

Today’s sustainability agenda factors in regulation, finance, reputation and any “social impacts” from the point of view of all stakeholders. This goes beyond the assumptions used to calculate projected shareholder value.

What do we know currently?

Genzyme is hedging its bets, based primarily on a report that describes their improvements, further cost reductions and a plan to market the drug Campath (alemtuzumab) for multiple sclerosis.

Campath is already sold for the treatment of chronic lympocytic leukemia (CCL) cancer. With the completion of five years of clinical trials testing this drug as a replacement for Interferon, Genzyme is projecting a presales market for MS by 2011 that will bring $3.5 billion in annual sales as a basis for an EPS of $4.30 to $4.60. SA is projecting a peak of $700 million in annual sales.

There are seven other Wall Street analysts providing data on Campath peak annual sales ranging between $370 million – $1 billion.

Is there a #pharma business model that will project accurate sales projections?

Vertex Pharmaceuticals CEO, Matthew Emmens, perceives a future for biopharm that will focus on innovation, research and development of drugs that treat and sustain the chronically ill.

Emmens views treatment for the majority of ailments, e.g. acid reflux, has and will continue to grow over the counter. Hence, the future is about creating a biopharm industry that is responsive to challenging disease by addressing the 150 different types of cancer and growing number of systemic ailments.

Historically the challenge to this direction has been the excessive cost of innovation and research to discover these drugs for the treatment of complicated diseases. Is there a new method of innovation and research that can lessen the cost and reduce the amount of investment, or are there other options?

How do you construct a sustainable valuation of #pharma?

Given the range from $370 million – $1 billion by seven Wall Street analysts and the gap between Sanofi’s projection of $700 million with Genzyme’s $3.5 billion, how do you ascertain a business value based on sustainable assumptions?

Perhaps Sanofi has this question in mind: Sanofi asked Genzyme to convene a team to produce the analysis on the value of Campath.

Next in this series: How do you predict #pharma consumption patterns for presales, when the consumer is a patient? What variables have to be considered when the consumer is a patient and the sale is not an over-the-counter sale? Stay tuned!

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Authors bio:

Lavinia Weissman is an sustainable market leadership coach, journalist, and publisher of thestoryofmeaningfuluse.com. As a speaker she describes the new emerging patterns of markets shaped by sustainable market leaders and the social networks they work with and employ.  As a coach, Lavinia works with all her clients to inspire professional development that assures a person the opportunity to embed sustainability as a leader into the network and culture of people they work with.