PFIZER’S decision to close its British research facility, leading to the loss of around 2,000 British jobs, was last week held up as an example of the government’s failing industrial policy. But it was also a sign that the pharma industry is in ill-health. Sanofi’s decision to snap up US-based Genzyme tells a similar story.
As with Pfizer, and to a lesser degree GSK, Sanofi’s drugs pipeline is looking worryingly empty. Last summer, the French drugmaker failed in a last-ditch attempt to stop the approval of generic versions of Lovenox, the blood-thinning drug that accounts for some $4bn of group sales. The bulk of its other best-sellers will also lose their patent protection over the next few years.
That is why Chris Viehbacher, Sanofi’s acquisitive chief executive, has hit the buyout trail again. At first glance, Genzyme – a firm that is bedevilled by regulatory and production problems – seems an odd choice. But like Ireland-based Shire, it focuses of niche high-margin treatments for rare genetic diseases, which means patents are less of a headache. In that sense, the strategic rationale makes sense. Sanofi has the scale and expertise to help solve Genzyme’s manufacturing problems, while Genzyme has products that are relatively safe from generic insurgents.