Sanofi-AventisA North American reorganization at pharmaceutical company Sanofi-aventis could provide its manufacturing operations in Laval with new opportunities.

The Company’s sole manufacturing facility in the U.S., in Kansas City, is being closed. That will leave the Laval plant as the major supplier for North America, with potential to grow.

"It's an important manufacturing site. Whether that means we double it, we maintain it or we grow it has yet to be determined," said Sanofi Canada's president and chief executive, Hugh O'Neill. He recently took over as Canadian CEO after serving as head of business development for the French multinational in the U.S.

The Laval operation makes a variety of capsules, tablets, liquids and creams, including such brands as Altace, Glucophage and Lasix as well as products for the company's dermatology division.

Laval also serves as the head office location of the Canadian subsidiary of Sanofi-aventis, which is based in Paris. The firm employs about 2,000 people in Canada, including its vaccine division Sanofi Pasteur in Toronto and spent $211 million on research and development in this country last year.

"Quebec is a very important piece for us" and not just because of the obvious link with a French-language culture. "It's been very supportive of innovation," O'Neill said.

The North American reorganization comes at a time when the pharmaceutical industry is consolidating. Discoveries of blockbuster drugs have fallen short of expectations amid concern about safety in the drug industry.

And large pharma companies face the imminent loss of exclusivity on big-selling drugs whose patent protection will expire.

Health-care payers around the world, whether governments or private insurers, are trying to control the mounting costs of prescription drug use.

These shifts have caused Sanofi-aventis to rethink its business strategy, especially regarding "the perceived value" of its products, O'Neill said.

"There are constant pressures on how a drug should be used, how it should be messaged, what should physicians prescribe it for and how should it be paid for.

"Our strategy, and this comes from the global side as well, is to evolve from just a pharmaceutical company to a health-care company. That means providing things "that have value to customers," O'Neill said.

It is looking to work with other firms that can provide services, medical devices or products that patients need to manage their health.

O'Neill sees new opportunities in the Quebec government's biopharmaceutical strategy announced this month.
The government has promised to kick in funding to help preserve biotech and pharmaceutical assets in Quebec, through mergers, consolidations or partnerships.

The latter option is of particular interest to Sanofi-aventis, which could broaden its health-care offering by building alliances with companies in areas outside its direct expertise.

"The pharmaceutical product is the key," O'Neill said. But the problem for the industry has been getting other players "to see our products as an investment rather than a cost."

"We're kind of going backward and saying: What does a diabetic patient need? It's not just insulin, it's services, it's care, it's possibly other devices, it's other things (including education) that can add to the positive outcome of the patient."

While doctors might normally fill that role, they are increasingly pressed for time and may not be able to fully aid patients.

"One of the things we understand well is the disease state," O'Neill said. "We have the opportunity to educate not only physicians and care givers but also to give value to the patient" by helping a diabetic patient with such lifestyle issues as diet and exercise or with blood monitoring.

The change in corporate philosophy means that the sales force at Sanofi-aventis will not just be marketing drugs to doctors but potentially other goods and services, too.

"Quebec is a very ripe market for innovation, it always has been," O'Neill said. "The problem has been how to build that into a platform that's best available to the payers and the patients.

"We could partner with a biotech company or a device company," he added.

Outright acquisitions are unlikely, however, because Sanofi does not want to get stuck owning a business it doesn't completely understand.