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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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February 11, 2010

Sanofi-Aventis Cuts Back

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Posted by Derek

The company says that it cut 7% out of the R&D budget last year, and looks to keep on this same path this year. And that goes for merger and acquisition activity, although they seem to be staying away from the Great Big Deals. Here's a statement from their CEO in a recent interview:

“The best predictor of what we’ll do in 2010 is what we’ve done in 2009,” Viehbacher said in an interview in Paris. “When you do smaller to mid-sized deals, it is easier to search, complete a deal, and then hand it over to your line management and move on to the next deal. It’s when you do a big deal that the whole company gets bogged down in deciding whose e-mail system you’re going to use or where headquarters are going to be.”

All of this brings up a question. I've been hearing talk (which I haven't been able to verify) of re-orgs and layoffs in their US research sites recently. Anyone have any details?

Comments (16) + TrackBacks (0) | Category: Business and Markets | Current Events


COMMENTS

1. David P on February 11, 2010 11:18 AM writes...

I thought it interesting that he said they weren't getting out of research, though the way he then went on to talk about collaborations with academia didn't make it look like they were planning on doing much in-house.

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2. The Pharmacoepidemiologist on February 11, 2010 11:32 AM writes...

Did anyone notice Boston Scientific is cutting 1,000 jobs? Granted, it's in devices, but even so...

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3. SP on February 11, 2010 1:20 PM writes...

Is that 7% of the remaining 93%? Or 7% of the pre-2009 cut, leaving 86% of what they had in 2008? One path gets you to 0% faster than the other.

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4. Hap on February 11, 2010 2:02 PM writes...

Did they say anything about how they expect to improve research productivity, or they just cutting R+D to keep their stock analysts happy (and hoping that Harry Potter will conjure them up some products)?

I'm hoping that this isn't as randomly destructive as I understand it - otherwise, this is akin to hoping that giving a machete to the pizza delivery guy, telling him to do brain surgery on you, and hoping that his random sequence of slashes removes the tumor without turning you into compost will constitute an effective treatment for a brain tumor.

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5. PharmaHeretic on February 11, 2010 2:20 PM writes...

Who requires R & D when we can sell BS, lies, legalisms and procedures to each other. The problem is that pharma management is no longer trying to run companies with the goal of making drugs (which will provide a revenue stream).

Their goal is to engineer increases in share prices so that current shareholders and management can dump them on bigger fools. They would prefer glamorous press releases on new technology, paradigms and job cuts over real discoveries.

Think about it.. What will goose up the share price more?

Option 1: We are pursuing multiple projects of varying degrees of uncertainty, which may result in innovative drugs (often beyond our wildest dreams).

Option 2: We are 'world leaders' in (or have acquired) a 'cutting edge technology' that will change the 'paradigm' and open the pathway to treating (insert a few profitable disease conditions). Our ivy league educated MBAs, lawyers and analysts will show you lots of colorful charts and equations that will demonstrate the superiority of our business model.

We expect profits to increase infinitely (though they will make it sound more sensible).

Do you see the problem?

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6. wierdo on February 11, 2010 8:49 PM writes...

Another day, another major layoff anouncement. It saddens me. What was once a prestigious and desirable profession has become a commodity, ready to be outsourced to some third world country.

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7. lefscienceawhileago on February 11, 2010 11:45 PM writes...

6) Weirdo,
"some third world country" is where a decently large fraction of the world's population lives and calls home.

"some third world country" is also where we are seeing fantastic economic and a virtual elimination of the "divide" between it and "some western country". "some third world country" is expected to exceed the GDP of "some western country" in the very foreseeable future.

And why wouldn't you expect that? Where else do you think growth would occur in the world?

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8. juju124 on February 12, 2010 9:31 AM writes...

the problem with pharma is a self inflicted wound. For too long it has focussed on what is good for the share holder and wall street and not the patient. today we have 104 cardiovascular drugs 48 for diabetes and 18 for cholesterol control and yet no improvement in controlling chronic diseases. One can conclude that what the pharma is doing is not on the right track. To overcome diseases we need to build immunity and which is where all diseases begin and let the body heal thyself. Almost all drugs today weaken immunity by depleting essential nutrients like Coq10, Vitamins minerals etc and setting the stage for a secondary disease called as side effects. No clinical study by pharma ever discloses the effect on these biomarkers.
After all for the cell to work perfectly these nutrients have to be in balance, and we assume that all patient get these from their foods which may not be the case. WE need to pursue another path to achieve a more positive result

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9. TOSG on February 12, 2010 10:18 AM writes...

^^ Yes, because a Centrum will cure all your ails, you woo-woo.

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10. abud on February 12, 2010 10:58 AM writes...

to lefscienceawhileago:

no need to make it a war against the words 'third world country'. The problem is that these CEOs use those words as if all the world's needs can be met by the research going on in the labs/colleges/universities of [your favourite developing country here]. Begs the question if that's indeed the case, why are those countries not using those fantastic results for their own good? So one smells someone trying to smell some snake oil here.

These days shareholders expect that the research in the developed world to be stopped and handed over to the diamonds in the rough waiting in India and China. CEOs see this as an opportunity to make some statements along those lines, pupm the share price, and collect their parachutes and go home to Bahamas.

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11. juju124 on February 12, 2010 11:10 AM writes...

In a few months you will see a new U.S patent/ and or publication that seems to work on these lines of boosting immunity and mitigating disease

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12. anon on February 12, 2010 8:50 PM writes...

I don't know...I wonder if one of the big pharma houses isn't going to figure out the code sequence for genetalia and then try to charge everyone for a use pattern everytime they have sex. I can just imagine the royalties Trojan and other condom makers would have to pay, never mind the companies marketing oral contraceptives.

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13. Troy on February 19, 2010 12:51 AM writes...

It is my opinion that if you were to look at the profit or cash nest eggs of each of the laying off companies..you might find that there is a bidding war going on for a hidden Gem..pharma company that all the Major Pharma want..they are laying off R&D to get money quickly..why because they are in a bidding war..clearly..imo speculating..They say small buys..they are not going to be able to buy whatever it is..they might get some slice of a sales partnership..nothing more..even if they want more..the bidding is already up to $12-$14 Billion..in my estimation..and it is not enough..so they are looking to get dollars..everywhere...I can not tell you a company..it just smells like that is what they are up to..otherwise..why would they need all that money so quickly??? They are on the hunt during a recession..but this company they are after..is not in a recession..they are as their pipelines are emploding around them..speculating all!

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14. Sad man on February 19, 2010 11:29 PM writes...

Over 100 employees in the Pharmaceutical Operations division at 55 Corporate Drive in Bridgewater were dismissed over the last 2 days (Feb 18 and 19). There are many more to come. s-a management has proven that they don't believe in their own values.

Hey Greg Irace what was that about high performing employees need not worry about having a job. Those were your words.

You sir are a bold face liar. I wish I could sue your ass for that BS you fed your employees at your last laughable town hall. Unfortunately for me, I need to feed and keep my family.

God knows you will never know how that feels.

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15. anonymous on February 20, 2010 7:54 PM writes...

About half the Cambridge staff were given 8 weeks to find a new position within the company. At the same time, many from CNS and some from Onc and Internal Medicine at Bridgewater were told the same thing. Also, some from BW and Cambridge have transferred to Tucson.

In Paris, about 1000 have been told they work at the Chilly site instead of the Vitry site. Some will Discovery at Montpelier is closed down, as well. Not sure what's going on in Frankfurt or Hungary.

More layoffs to come at the end of 2010.

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16. Anonymous on July 17, 2010 1:29 PM writes...

More lay-offs this week, July 15th, at Sanofi R&D in Bridgewater. They shut down their pilot plant eliminating most of the operators and researchers in Chemical Development. They are focusing their efforts on increasing their animal health care division and moving to a more biotechnology model. (novartis twin).

Their Great Valley site will be defunct of operations later this year, leaving only clinical packaging left to hold the fort.

Chemists are being hit the hardest in this round of lays offs. What use to be fully functional wings and corridors of the "proud" sanofi-aventis will be rented out to joint-venturing and partnering companies like Merial.

Couple hundred people were affected with many more likely to come in September. From what I hear, this will continue on for the next few years until they mold the new model together while cutting operating expenses to improve the bottom line.

Meanwhile, not many people are getting hired, no raises, no promotions, moral is completely shot, no job security for at least 5 years into the future...and I can't imagine outsourcing research to "3rd world nations" will look good on the FDA charts.

Research from conception to market is extremely time consuming and burns a lot of money. This new model weighs the risk of either keeping everything in house and saving all our dimes, or to burn money now to through investing in partnerships and acquisitions to find that gem that will lead the company back to the straight and narrow.

I for one like the idea of going after more desirable markets like cancers, diabetes, and thrombosis. Not to mention Aventis holds a strong footing in their vaccine programs. My job is as risk and I'm just about scared as anyone else at the moment.

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