Sanofi's dengue vaccine anticipated on profitability 'high end'

With its largest ever investment in a vaccine at stake, Sanofi ($SNY) is in the midst of rolling out the dengue fever vaccine it's worked on for 20 years at a cost of $1.5 billion. But through the launch, Sanofi hopes to recoup all of that expense--plus more.

Sanofi dengue head Guillaume Leroy

The French drugmaker's vaccines chief, Olivier Charmeil, told the Financial Times this week that the jab would be one on the group's "high end of profitability." By the end of the year, the company expects the vaccine to be licensed in 20 countries with a total population of 1 billion people, the FT reported.

And contrary to past launches--in which the pharma focused on the U.S. and Europe first to recoup development costs--Sanofi plans on "flipping the model" with an emphasis on dengue-stricken nations and favoring wide access, dengue chief Guillaume Leroy said in April. Charmeil told the FT the market potential for the vaccine ranges from 3 billion to 4 billion people, and analysts have predicted it would pull in up to €1 billion per year in sales.

Sanofi's Olivier Charmeil

But dengue is not solely impacting lower- and middle-income countries throughout Latin America and Asia. As the FT notes, it has increasingly moved into higher income nations such as Japan, a trend that could add to the Sanofi dengue vaccine's uptake and profitability. In anticipation of the launch, Sanofi spent €300 million on a manufacturing facility in Neuville-sur-Saône, France. Leroy said in April that the manufacturing capacity there is 100 million vaccines annually, expected to start early next year.

Also working on a dengue vaccine is Takeda, which could be battling for market share with its DENVax by 2020, analysts have predicted. The shot could feature a more convenient dosing schedule plus competitive pricing to help it fight off Sanofi's first-to-market advantage. Merck ($MRK) and GlaxoSmithKline ($GSK) are further off with their dengue candidates.

Though vaccines--a lower margin business than pharmaceuticals--sometimes fail to attract investor enthusiasm, some drugmakers have placed an emphasis on the field and its potential for a high volume of sales. GlaxoSmithKline in particular has made a big bet in the area: After completing the asset swap with Novartis ($NVS)--sending away its oncology portfolio and purchasing the Swiss pharma's vaccines--it'll focus on lower margin businesses that it thinks are on a growth path.

- here's the Financial Times story (sub. req.)

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