Sanofi ($SNY) expects much of its future growth to come from emerging markets and is rolling out more capacity across Asia to get there. It is opening four plants in China this year and has kicked off another facility in Vietnam.
During a trip across Asia, Sanofi CEO Chris Viehbacher said the plants in China will expand its network there to 10, The Wall Street Journal reported. Without providing details, Viehbacher said the company would add capacity for vaccines, animal health and consumer products. The drugmaker also will invest $75 million in a third plant in Vietnam, which it expects to have operating in 2015. The Vietnamese facility will turn out 90 million units a year, Bloomberg reports, but could be expanded to 150 million units annually if demand calls for it.
Sanofi racked up sales of more than €1 billion ($1.28 billion) in China last year, a 15% improvement. The new production will push that higher, Viehbacher told WSJ. It also sees tremendous growth potential in Vietnam and southeast Asia. It is already selling 80% of its production in Vietnam, and sales there are slated to exceed €100 million ($128 million) this year. The new plant will give it capacity for growth there and for expansion in markets like Indonesia, and China. Asian markets continue to grow and seem to be less affected by the economic difficulties that have dampened demand in Europe, has said.
Vietnam, with a robust economy and expansion of its national healthcare system, is the fastest growing pharmaceutical market in southeast Asia. A recent report from Ames Gross, president of consulting firm Pacific Bridge Medical, pegs that growth at 20% a year through 2017. His piece in pharmaphorum says average drug spending per person was $104 annually in 2010, twice that of India. By 2020, 90% of Vietnamese are expected to be covered by the national health system, up from 65% today.
Viehbacher has identified Vietnam as a market in which he would like to make an acquisition. While the company likes emerging markets and is open to the right acquisition opportunities worldwide, it is scouting countries outside the so-called BRIC block, (Brazil, Russia, India and China), which have better valuations, he said earlier this year.