#2 Sanofi-Aventis

174 Avenue de France
75013 Paris
France
Tel: (33) 1 5377 4000
Fax: (33) 1 5377 4296
www.sanofi-aventis.com

Headcount	97,181
Year Established	2004
Pharma Revenues	$28,288	9%
Total Revenues	$32,373	9%
Net Income	$7,890	26%
R&D Budget	$5,036	2%

Drugs Approved/Launched
Drug	Indication
aprovel	type 2 diabetic nephropathy
delix/tritace ramipril	prevention of CV events & hypertension
plavix	unstable angina; prevention of thrombotic events after MI, stroke and PAD
lovenox	DVT prophylaxis DVT treatment
stilnox/ambien	insomnia
depakine	bipolar disorders
rilutek	ALS
ambien CR	insomnia
eloxatin	metastatic colorectal cancer
fasturtec/elitek	malignancy/chemotherapy-associated hyperuricemia
taxotere	breast, lung, prostate, gastric, head & neck, ovary, esophagus, endometrial cancer
amaryl	type 2 diabetes
lantus/apidra	type 1 or type 2 diabetes mellitus
xatral	BPH; AUR adjuvant
ketek	respiratory tract infections, community-acquired pneumonia; chronic bronchitis
actonel	osteoporosis
allegra	seasonal allergic rhinitis
arava	rheumatoid arthritis
flisint	intestinal microsporidiosis
pediacel	D,T,P, Polio, Hib
menactra	meningitis in 11 to 55 years
adacel	DTP booster 11-64 Years
decavac	preservative-free tetanus and diphtheria

Drugs Pending Approval
Drug	Indication
dronedarone	atrial fibrillation
lovenox	VTE prevention in high risk surgery
depakine	epilepsy & BPD
rimonabant	smoking cessation, obesity, cholesterol
taxotere	gastric cancer
allegra	pediatric usage
alvesco	asthma
ketek	skin and soft tissues infections, cervicitis
actonel	primary osteoporosis in male OaW
menactra	meningitis in 2-10 years
zolpidem MR	insomnia

Drugs in Phase IIb and Beyond
Drug	Indication
xrp0038	peripheral arterial disease
ssr 149744	atrial fibrillation
ave7688	hypertension, diabetic nephropathy
sl 65.0472	peripheral arterial obstructive disease
idraparinux	DVT/PE atrial fibrillation
otamixaban	ACS
r 123781	prevention of major CV events in ACS
sr 58611	depression, anxiety
ssr 591813	smoking cessation
xaliproden	Alzheimer’s disease
teriflunomide	multiple sclerosis
saredutant	depression
eplivanserin	insomnia
sr 57667	Alzheimer’s, Parkinson’s diseases
tirapazamine	head & neck cancer
xrp9881	breast cancer
eloxatin	pancreas cancer
sr  31747	prostate cancer
rimonabant	type 2 diabetes, dyslipidemia, atherosclerosis
ave0010	type 2 diabetes

Drugs Coming Off Patent
Drug	Indication
allegra	allergic rhinitis
amaryl	type 2 diabetes
arava	rheumatoid arthritis
DDAVP	decongestant

Top Selling Drugs
Drug	Indication	Sales	(+/- %)
lovenox	thrombosis	$2,669	13%
plavix	heart attack, stroke	$2,523	20%
taxotere	cancer	$2,004	12%
eloxatin	colorectal cancer	$1,948	28%
ambien	insomnia	$1,892	7%
allegra	allergic rhinitis	$1,675	-10%
lantus	diabetes	$1,512	44%
delix	hypertension	$1,257	4%
copaxone	multiple sclerosis	$1,123	22%
avapro	hypertension	$1,111	13%
amaryl	diabetes	$843	-1%

Account for 55% of total pharma sales, up from 52% in 2004

PROFILE

Sanofi-Aventis climbed to the #2 spot in this year's Top Pharma rankings, with a pair of products climbing into the billion-dollar ranks. The company is neck-and-neck with GlaxoSmithKline, and a little tweak in exchange rates (we use the average rate of the entire fiscal year, rather than the rate on the closing day) could send SA back to #3 next year.

Or, if Acomplia gets approved, it could solidify its hold on this position and start thinking about moving on up to the top ($10 billion is quite a gap to make up, of course).

Acomplia is a first-in-class (CB1 blockers) weight-loss drug that, as we put it last year, "reduces waistline and abdominal fat, improves cholesterol levels, regulates blood sugar, and helps smokers quit their habit." SA filed this wonder-drug with the FDA in June 2005, but approval is still pending. In February 2006, the FDA granted an "approvable" letter for weight loss and "not approvable" for smoking cessation. SA made a terse statement consisting solely of the words, "Sanofi-aventis will continue to work in close collaboration with the FDA," but hasn't made any more statements about the drug's regulatory status in the U.S.

Nobody wants to see another Fen-Phen disaster occur, but it sure would help if SA would come out and say what the FDA's misgivings about Acomplia are, because the EMEA doesn't seem to have the same issues. In June 2006 the European Commission approved the drug in all 25 EU countries for weight loss in patients who are obese and have risk factors for diabetes and/or high cholesterol. The drug will be launched in the UK, followed during the second half of 2006 by launches in Denmark, Ireland, Germany, Finland and Norway.

Pending

SA had significant patent issues this year, but they could've been worse. Allegra, Amaryl and several other drugs faced expirations that opened up generic competition. Allegra dropped 10% in 2005 sales and its 1Q2006 sales dropped 56%. Amaryl was down 1% for the year, but 26% for 1Q2006. Delix/Tritace, which went generic in some countries, grew only 4% in 2005, and only 2% in 1Q2006.

Still, the company dodged a bullet when it (and partner Bristol-Myers Squibb) forged an agreement with Apotex to hold off a generic of that multi-billion dollar drug till 2011. SA and BMS are negotiating with Dr. Reddy's Laboratories about a similar Plavix accord. In the meantime, the companies submitted an sNDA for Plavix in the treatment of a particular type of heart attack (ST-segment elevation myocardial infarction). The FDA granted a priority review for that indication.

SA also won an appeal in a patent infringement case for its top seller, Lovenox. The ruling returned the case to its District Court, which will proceed on issues of infringement, validity and enforceability of Lovenox's reissued patent. Amphastar and Teva are the companies trying to get the patent overturned. Obviously, the loss of Lovenox would be a major hit for SA, but the company has built a broad base of billion-dollar drugs in a number of therapeutic classes.

SA knows there's something to be said for generics; in 2005 the company consolidated its own generic operations into the Winthrop Pharmaceuticals group. In company's annual statement, SA says the generic market "is a combined source of growth in value and increased volume to fill the Group's manufacturing capacity." Unfortunately, SA doesn't break out Winthrop's results anywhere in its financial statements. (Presumably this means that it's still a fledgling business and doesn't have extensive revenues. I hope so, since it would be unfair to count SA's generic revenues while I cut out Novartis' Sandoz unit.)

Vaccines A-Plenty

On the other hand, the vaccine division is one segment in which SA is quite proud to tout sales figures. The company posted a total of $2.6 billion in vaccine sales in 2005. In March 2005, SA launched Menactra, a meningitis vaccine, and saw it post $223 million in about nine months. Decavac, an adult booster against diphtheria and tetanus, launched in the U.S. in January 2005 and posted $225 million in net sales.

SA is the world's top producer of flu vaccine, which put it at the forefront of the pandemic panic. The company had a record year in 2005, with flu vaccine revenues growing 29% to $836 million. SA signed deals with the U.S. Department of Health and Human Services, the Australian government, and the French Ministry of Health to produce "pre-pandemic" vaccine against the avian flu.

By February 2006, SA delivered $150 million in bulk-concentrate vaccine to the U.S. (manufactured at its Sanofi Pasteur site in Swiftwater, PA). The company said that it will gain additional fees for formulation, filling and storage. SA is making major investments in expanding its production capacity in the U.S. and in its Val de Reuil facility in France.

Shortly before press time, however, it was revealed that SA discovered quality issues at its 1,700-person Swiftwater site in March 2006, prompting an FDA visit the next month. SA's response to its 483 letter was not enough to satisfy the FDA, so the Agency sent a seven-page warning letter to the company in July 2006.

At press time, SA and the FDA disagree over the cause and remedy of the problem, which involved the discovery of contaminated batches of flu vaccine bulk concentrate. SA contends that the affected concentrate was never refined into flu vaccine, no subsequent batches showed are contaminated, and the problem stemmed from a piece of filtration equipment. The FDA contended that the source of the problem was unconfirmed, and cited a number of cGMP violations at the facility.

THE LOWE DOWN The Sanofi-Aventis story, if you believe what you read in the press, is all about rimonabant (Acomplia). Of course, that ignores several multibillion-dollar drugs that the company is already selling, but none of them are headline-grabbers like a new obesity therapy. (And none of them are suddenly going to infuse several billion dollars more into the company, either.) Well, who knows? By the time you read this they may actually be selling the stuff. It's hard to say, since the company's been so amazingly uncommunicative about the FDA "approvable" letter it got earlier in the year. At any rate, I hope that the launch goes well, although I'll reiterate that I'm glad I'm not the one watching millions of people take my first-in-class drug that works through a new CNS mechanism. But Sanofi-Aventis is more than obesity. SA has a strong hand in oncology, CNS, and vaccines: all underserved markets. Even in cardiovascular therapy, which you'd think would be rather more crowded, they're in some of the good parts rather than the overworked ones. In its public statements, the company often sounds like it doesn't have a worry in the world, which should make them stand out in this industry, shouldn't it?  --Derek Lowe

The letter, signed by David Elder, director of the FDA's office of enforcement, harshly states, "The deficiencies described in [. . .] this letter are indicative of your quality control unit not fulfilling its responsibility to assure the identity, strength, quality, and purity of your drug product."

David Johnson, SA's director of scientific and medical affairs at the plant, said, "We think we have isolated it and have taken appropriate corrective action." Both parties contend that the problem will not hold up delivery of SA's 50 million flu vaccine doses for the upcoming season.

In addition to its work on flu vaccines (recent issues notwithstanding), SA is also helping out on another front in the flu war. In March 2006, SA signed on to manufacture shikimic acid, a key raw material for Roche's Tamiflu antiviral. Production will be done at the company's Saint-Aubin-les-Elbeuf plant, in France

Employment Up

When the SA merger occurred, I assumed (as did other more knowledgeable sources) that the new company was bound to shed workforce in its first year or two. And, given that so much of its employee-base is in countries with notoriously strict labor laws (think France and Germany), I assumed workers in the U.S. would be the first to go.

Looks like I was wrong (so far). In 2005, SA added almost 800 net employees. The company says the vaccine unit added 900 people to deal with the rapid growth, while the sales force picked up 4,000.

Unfortunately for Contract Pharma, senior vice president of industrial affairs Gilles Lhemould noted in a discussion of its supply chain that SA has been bringing in-house work that was previously outsourced. He added that his group's objective is to "run all existing manufacturing facilities at full capacity," rather than force closures.

This year, SA has made moves to expand its R&D. In April, the company bought 11.5 acres of land in Innovation Park in Oro Valley, AZ, which will house a 100,000-sq.-ft. facility, double the size of its nearby R&D site. Construction is slated to begin in early 2007, with employees moving in at the end of 2008.

In May, SA signed a long-term lease in Cambridge, MA for a building more twice the size of its current genomics R&D facility there. The company plans to move into the building around the middle of next year.

ACQUISITION Target: Zentiva Pharmaceuticals Price: $530 million for 20% of shares Announced: March 2006 What they said: “This acquisition is a strategic move in the development of SA in Central and Eastern Europe. It will create relationships with a company which has successfully developed strong positions in East European countries and has recently expanded in Romania.” —company statement

Also, in November 2005, the company signed an agreement to move its U.S. headquarters to a new facility in Bridgewater, NJ, near the existing HQ. "The new site was chosen because it can accommodate our business needs for a more flexible and integrated space," said Tim Rothwell, president and chief executive officer of SA U.S.  "In addition, we wanted to remain in the Bridgewater vicinity to accommodate our 3,800+ SA employees from various divisions who currently work in the area."

Barring major setbacks in court with its patents, SA is in a good position for the near-future. If the company had been able to hold onto marketing rights for Exubera (see Pfizer), we might even think about its prospects of being in the #1 spot within a few years . . .