Sanofi Q2: $2.8B in Cuts Planned; More Layoffs on the Way?

Last Updated Jul 29, 2009 5:01 PM EDT

Sanofi-Aventis' Q2 2009 earnings releases seem to indicate that more layoffs are on the way. They also gave clues to the company's Multaq marketing strategy. The basics: revenues were €7.4 billion, up 11.2 percent; net income was €2.3 billion, up 29.4 percent.

The investor presentation that accompanied the release indicates that management's "Transforming" initiative may require job cuts. That plan used to call for $1.3 billion in cuts. Now it calls for €2 billion (about $2.8 billion). Here are some of the bullet points cherry-picked from the slideshow:

  • Cost savings - Planned initiatives will lead to annual cost savings of €2.0bn for 2013 vs. 2008 at CER - Restructuring charges amount to €899m in Q2 2009
  • Cost savings will involve all parts of the company - Industrial Affairs - R&D - Commercial Operations - Support Functions
  • R&D Project - Plan for voluntary departures and early retirement under discussion
  • Commercial Operations - Further improve efficiency in the U.S. organization
  • Support Functions (IS, HR, Finance, Purchasing, Legal, Communication) - Realize productivity improvements from cost-effectiveness measures
The plan seems to be under way already in Great Valley, Pa. The U.S. rep force seems resigned to losing more staff. There's a discussion of ongoing layoffs on CafePharma here. This thread speculates on specifics:
At some point, the "look" at other areas within the company will occur. The current structure within the sales groups is not sustainable as it currently exists. Way to many AVP's and RD's. Districts with few reps (6 to 7) does not provide a good ROI in having a DSM for so few reps. Look for announcements in November (thanksgiving time) that the sales group will go through a restructuring as business units consolidate and get smaller.
Chris V. to meet with Key Players (USA) in August. Should see some restructuring within areas. Hard to really tell who will feel it the most though. General Therapuetics Division and Oncology are fat right now with the current portfolio. This Company needs to buy someone or something very soon or it could see a 20% reduction in personal by years end.
Separately, Sanofi gave some details on how its Multaq heart drug launch will work. The drug is being priced higher than analysts expected. Here are the bullets from the PowerPoint:
  • Multaq - Broader product label than expected by most financial analysts - Around 400 fully-dedicated U.S. sales professionals - Targeting U.S. specialist physicians at launch: - 19,000 cardiologists, 7,000 internists and 2,000 electrophysiologists - Ongoing regulatory review in the EU - Expected CHMP opinion in H2 2009