Markets

Layoffs Look Likely in Sanofi's Future

By Jim Edwards

Updated on: September 15, 2010 / 1:47 PM EDT / MoneyWatch

Staffers at Sanofi-Aventis (SNY) should brace for layoffs given a legal challenge that could allow a cheap generic competitor to the blood-clot preventer Lovenox onto the market. Lovenox currently earns $866 million a quarter for Sanofi, making it one of the company's tentpole products. If Sanofi fails to win its appeal of a court decision ending its marketing exclusivity rights then all that could go up in smoke.

Add to that the continued failure of Multaq, a new heart drug, to generate significant revenues and you have a situation where it's impossible to see how the company can do anything except reduce its staffing costs. (Multaq, which the company had hoped would be a blockbuster, made just $39 million in Q2 2010.)

Sanofi has already wielded the ax this summer. Four hundreds jobs went in Great Valley, Pa. Another 600 were cut in France. Those were part of a reduction in headcount of 1,400 jobs in the U.S. and another 400 in the U.S., according to Sanofi's Q2 results. (BNET predicted this round of layoffs given Sanofi's unfortunate history of scheduling job cuts over the holidays.)

Now Thanksgiving is looming and the rumor mill at CafePharma -- the gossip site for pharmaceutical sales reps -- is in full swing. Reps are probably being reassigned from Lovenox to Multaq and Sanofi's diabetes drug, Lantus, my sources tell me. That's an unsustainable situation unless Multaq suddenly takes off. There's already speculation that a national sales meeting for Multaq sales reps will be cancelled.

The future also looks rather bleak. The stroke-prevention drug Plavix will go off patent sometime around the end of 2011 or in 2012. The sales force associated with it is already living on borrowed time -- the drug lost one quarter of its revenues in Q2.

One potential light at the end of the tunnel is Genzyme (GENZ). If Sanofi does buy this company, it may create new opportunities for Sanofi staffers employed on declining franchises.

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