Transforming Sanofi-Aventis

            
 
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : BSTR358 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges

Themes

Growth strategy / Diversification / Transformation
Case Length : 18 Pages
Period : 2008-2009
Pub Date : 2010
Teaching Note : Not Available
Organization : Sanofi-Aventis
Industry : Healthcare / Pharmaceuticals
Countries : France; Global

Abstract:

This case study is about Sanofi-Aventis, the world's third-largest pharmaceutical company by global sales. Christopher A. Viehbacher (Viehbacher), a GlaxoSmithKline veteran, took over as CEO of Sanofi-Aventis on December 1, 2008, when the company was going through a difficult phase. It was faced with patent expiries of a number of its key drugs through 2013, threatening more than one-third of its revenues. Despite having a costly research and development (R&D) operation, its new drug pipeline was almost dry with few drugs that could compensate for the loss of sales due to patent expiries. Moreover, experts felt that Sanofi-Aventis was being run like France's national treasure, making it incapable of keeping up with the rapid changes in the pharmaceutical industry.

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After taking charge, Viehbacher took some bold initiatives, restructuring top management and the R&D function in a bid to transform Sanofi-Aventis from a Europe/US-centric research-based pharmaceutical company into a global diversified healthcare leader. The new strategy focused on a total overhaul of the R&D function and enhanced focus on emerging markets and diversification into other healthcare segments (non-prescription drugs segments). Unlike some of its rivals, Sanofi-Aventis focused on bolt-on acquisitions that created value rather than opting for multi-billion dollar mega-mergers.

The company's performance in 2009, particularly its second-quarter results, was strong. Its stocks also grew at a faster rate than those of its peer group - a complete reversal of fortunes for a company whose stocks had been considered as the worst-performing among its peer group barely a year earlier. Analysts appreciated Viehbacher's strategy and leadership but some felt that he faced some serious challenges going forward. The biggest challenge, according to Viehbacher himself, was how to adapt the Sanofi-Aventis model to suit the rapidly changing pharmaceutical environment and create more sustainable growth.

Issues:

To understand the issues and challenges faced by an established player operating in a high-innovation/high-risk industry in driving growth, particularly at a time when the industry is witnessing significant changes.
To examine some of the reasons for Sanofi-Aventis' problems in 2008.
To analyze Sanofi-Aventis' strategy to transform itself from a Europe/US-centric pharmaceutical company to a global diversified healthcare company.
To examine some challenges that Sanofi-Aventis may face in the immediate future.
To explore strategies that Sanofi-Aventis could adopt in the future to adapt its business model to suit the changing demands of the pharmaceutical environment.

Contents:

  Page No.
Introduction 1
Background Note 2
Enter Viehbacher 4
Overhauling R&D 5
Emerging Markets 6
Diversification 6
Disciplined Acquisitions 7
Looking Ahead 8
Exhibits 9

Keywords:

Growth strategy, Transformation, Diversification, Mergers and acquisitions, Mega-mergers, Bolt-on acquisitions, Change management, Leadership, Research and development, Restructuring, Regulatory and economic constraints, Emerging markets, Creativity, Innovation, Healthcare, Pharmaceutical, Sanofi-Aventis, GlaxoSmithKline, Pfizer, Merck

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