French drug maker Sanofi-Aventis is establishing an OTC division and plans to double revenues from nonprescription drug products within five years.

During a Feb. 11 call with analysts, CEO Chris Viehbacher laid out plans to augment the OTC business, currently the sixth largest worldwide with $1.4 billion in sales. The planned growth serves the firm's strategy to diversify the firm beyond Rx drugs.

OTC sales grew 8 percent in Sanofi's fiscal 2008 fourth quarter. The firm's portfolio includes the Maalox brand, and products added with the acquisition of Australia's leading vitamins and supplements company, Primary Health Care's Symbion Consumer (¹ Also see "Sanofi-Aventis Nurtures Supplement Interest With Symbion Consumer Buy" - Pink Sheet, 28 July, 2008., p. 17).

Sanofi's OTC sector also will include the Czech pharma firm Zentiva, which the company plans to acquire following recent approval by the European Commission. Zentiva markets OTC drugs and supplements in emerging markets in Central and Eastern Europe (² 'The Tan Sheet' Feb. 9, 2009, In Brief).

Viehbacher said that in establishing the OTC segment, Sanofi will restructure its management of the brands, which currently are overseen as part of a product portfolio within each country.

"Let's bring in some expertise, people who can help us to decide intelligently which products we can take into other markets, which opportunities we can buy," he said.

As part of that goal, Sanofi announced in a same-day release that it has tapped former CFO Laurence Debroux as senior VP and chief strategy officer, a new position in which the exec will oversee growth of OTCs as well as the expansion of other Sanofi brands into emerging markets.

His appointment underpins the fact that the company's business development strategies are not something it is doing "on an ad hoc basis," according to the CEO.

Debroux will oversee expansion of the company's OTC and other brand categories, into new markets beyond the U.S. and Europe where growth traditionally has been concentrated.

Expansion is necessary to build a big enough OTC base to make acquisitions, the exec said, noting, "You're not going to buy a 20 million euro OTC company if you've got nothing."

Sanofi-Aventis plans to shop around for "bolt-on" OTC acquisitions in the 100 euro million range, additions that could double growth of Sanofi-Aventis' non-prescription business by 2014, according to the CEO.

He added the company will not seek major deals similar to Pfizer's pending $68 billion acquisition of Wyeth (³ Also see "Pfizer/Wyeth Merger Would Offer Diversification, Switch Outlet" - Pink Sheet, 26 January, 2009., p. 3).

R&D Overhaul

Though Sanofi has strong leadership positions in vaccines and major biological products, the company said it needs new growth drivers in light of patent expirations and a slower R&D pipeline in pharmaceutical drugs.

The firm aims to become a diversified global health care leader by reassessing the allocation of its resources in research and development and undergoing a product rationalization effort that will continue in the first half of this year.

The firm has created two new positions: Jean-Pierre Lehner will assume the role of chief medical officer, and former National Institutes of Health head Elias Zerhouni is scientific advisor. For the year, research and development spending was up 0.8 percent to $5.9 billion (1 euro = $1.28).

Sanofi-Aventis' net sales in the quarter grew 3.6 percent to $9.13 billion. However, net income plummeted 76 percent to $234.5 million due to the discontinuation of the development of two cancer drugs. Adjusted net income increased 14 percent to $2.22 million.

For the year, the company's net revenues increased 3.7 percent to $35.49 billion and net income was up 3.2 percent to $9.26 billion.

The analyst meeting marked the first time Viehbacher, who previously worked at GSK, presented his plan since assuming the helm in December (⁴ Also see "People In Brief" - Pink Sheet, 15 September, 2008., p. 11).

- Eileen Francis

Sanofi-Aventis Acquisitions Could Double OTC Sales By 2014

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