Sanofi-Aventis Banks on Vaccine Market, Plans to Double Vaccine Sales by 2013

Vaccine Business, Sanofi's Key Growth Driver

In a thematic investor relations seminar on the topic of vaccines, Sanofi-Aventis avowed its ambition to strengthen its vaccine business, worth 2.861 billion euro in 2008, to double its sales by 2013. While the global market was worth 15 billion euro in 2008, Sanofi-Pasteur, the vaccine division of Sanofi-Aventis, estimates it will jump more than 50% to reach 23 billion euro by 2013. The market is highly attractive for Sanofi since the high degree of innovation vaccines require exposes the company to few competitors while limiting generics competition. Sanofi-Aventis, which is already one of the leaders in the market, benefits from complex manufacturing and biological expertise acquired through a long-lasting presence in immunology as well as from established relationships with regulatory authorities and governments, particularly in developed countries. In terms of pricing and reimbursement, the vaccine business is relatively protected as regulatory authorities tend to be less stringent knowing that vaccines generally bring significant clinical benefits and innovation to patients.

With consolidated sales of 2.86 billion euro in 2008, up 9.6% year-on-year compared with 2007, Sanofi estimates that its vaccine division captured 21.8% of market share in 2008. The company benefits from a leadership in influenza, meningitis, paediatric, and travel and endemic vaccines, and counts several promising compounds in its pipeline including vaccines against Dengue and Clostridium difficile, a cause of antibiotic-associated intestinal infections—including diarrhoea and colitis. The vaccine against C. difficile infections (CDI) is currently under Phase II clinical trials in the United Kingdom and the United States. According to the European Centre for Disease Prevention and Control, in the European Union, healthcare costs related to CDI could be worth around US$4.4 billion per year. In the United States, annual costs are estimated to reach US$3.2 billion. If the vaccine is successfully developed and approved, cost-savings induced by the immunisation against CDI are likely to push regulatory authorities to issue advantageous recommendations in terms of pricing and reimbursement. The dengue vaccine development programme was initiated in the 1990s. So far, no specific treatment is available against dengue fever, the most common tropical disease after malaria. The vaccine has completed Phase I and II clinical trials in endemic and non-endemic countries—including the United States, Mexico and the Philippines and is currently under clinical development in Mexico, Colombia, Honduras, Puerto Rico, Peru, the Philippines, Vietnam, Singapore and Thailand.

Outlook and Implications

Sanofi-Aventis's key growth drivers include its over-the-counter business, the development of its market presence in emerging countries, its diabetes business and its vaccines division. The easiest way to develop and cement its presence in emerging countries will be to boost its OTC and vaccine business. In the short term, a range of collaborations or even acquisitions are expected to be announced by the company to boost marketing presence in these markets. Among emerging countries, Brazil, Russia, India and China, expected to become the second largest pharma market by 2020, represent major opportunities for Sanofi in coming years. Significant unmet demand remains in these countries characterised by a growing population and a low immunisation rate.

Future opportunities in developed countries lie in innovation and diversification as new diseases targets—including HIV/AIDS and congenital abnormalities—could contribute to boost growth. The vaccines market in developed countries is characterised by high immunisation rates and significant competition. In Europe, the challenge for Sanofi going forward will be to expand the recommendation and funding for the world's first cervical cancer vaccine Gardasil while strengthening its presence in national paediatric vaccination programmes with its rotavirus vaccine RotaTeq and Pediacel, indicated for the prevention of poliomyelitis, diphtheria, tetanus, pertussis and Haemophilus influenzae type B. The French pharma company banks on the development of a staphylococcus aureus vaccine and the future approval of its herpes vaccine Zostavax, expected to be launched at the end of 2010, to boost its European vaccine division. In parallel, the first-ever influenza intradermal vaccine, Sanofi-Aventis's Intanza, was granted marketing approval in February 2009 in Europe for the prevention of seasonal influenza in adults (see France: 26 February 2009: Sanofi-Aventis Gains Approvals for Apidra SoloSTAR and Intanza, Inches Closer to Buyout of India's Piramal). Its ease of use should help Sanofi secure valuable sales in a highly competitive market.

Globally, over 250 million doses of influenza A/H1N1 (swine flu) vaccine will be delivered by Sanofi for the 2009-10 epidemic campaign, including 87 million doses to the United States, 41 million to Brazil, 28 million to France and 18 million to Mexico. The French company has succeeded in capturing this unforeseen opportunity and is already preparing the 2010-11 campaign with A/H1N1 being part of the seasonal flu vaccine, expected to generate growing revenue in future as Sanofi plans to bring in 4 billion euro in vaccine sales next year.