Sanofi layoffs expected as reorganization goes into effect
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As part of a new “strategic roadmap” unveiled recently, Sanofi plans to announce layoffs that are being described as “sizable” and that will affect a broad swath of company operations in various locations, according to sources familiar with the matter.

Some cuts are expected to be felt in France, where the drug maker is headquartered, although extracting concessions from French labor unions is notoriously difficult. As a result, a disproportionate number of job losses may occur in the United States. A layoff notice, in any event, is expected to be filed shortly with state officials in New Jersey, where Sanofi maintains a large corporate campus.

A Sanofi spokeswoman declined to comment. The drug maker, by the way, employs about 110,000 people worldwide, including roughly 17,000 people in the US.

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The move, which could be disclosed on or before the drug maker releases its annual financial results on Feb. 9, comes as Olivier Brandicourt closes in on his first year as chief executive and attempts to revamp the struggling drug  maker.

He arrived at Sanofi last April, shortly after Chris Viehbacher was sacked amid unusually public boardroom tumult, notably a conflict with Sanofi chairman Serge Weinberg. His departure followed an unexpected strategic setback as the drug maker dialed back sales forecasts for its all-important diabetes business, which is about 21 percent of overall sales.

In particular, Sanofi encountered price discounting in the long-acting insulin market, a business the company has dominated in the US. This was thanks to its Lantus product, which generated about 18 percent of sales in the first half of last year, but faces pressure from payers seeking discounts.

Meanwhile, a follow-on product is not showing signs of generating needed replacement revenue and a biosimilar version of Lantus will become available at the end of this year. And a deal to sell the MannKind inhaled insulin product known as Afrezza was just ended due to terrible sales.

“They’re facing a very difficult situation,” said David Kliff of Diabetic Investor, who expects the cuts to be significant. “Their top diabetes product is going away and replacement products are not doing well. They have no choice but to reorganize.”

Sanofi is also facing pricing pressure on a new cholesterol treatment, which was developed by Regeneron Pharmaceuticals. Praluent, which is a new type of injectable medicine, was deemed overpriced by the Institute for Clinical and Economic Review, and pharmacy benefits managers are extracting discounts since they can opt for an equally new rival medicine from Amgen.

A reorganization featuring layoffs, consequently, would not be surprising. In fact, Brandicourt has been telegraphing the likelihood in recent announcements.

In November, he revealed plans to save about $1.6 billion by 2018 by “simplifying” the global organization, reshaping its network of manufacturing plants, and reworking the product portfolio. Toward that end, Sanofi may dispose of its generic drug business and is in talks to swap its Merial animal health unit for the consumer health care business run by Boehringer Ingelheim.

A broad outline for his plans was reiterated last week at the J.P. Morgan health care conference in San Francisco.

And last July, Sanofi signaled it would change its business structure by creating new global business units: general medicine and emerging markets; specialty care; diabetes and cardiovascular; and the Sanofi Pasteur vaccines operation. The new structure goes into effect this month.

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