Dig into Sanofi-Aventis' latest financials for more evidence that it needs Genzyme. The company saw net fourth quarter profits drop by 64 percent year over year, to €437 million (about $596 million). A restructuring charge of €880 million dragged the numbers down, as did the lack of a flu pandemic to drive up vaccine sales.
But it's the pharma sales numbers that really tell the tale. Nominally, they went up to €6.51 billion ($8.9 billion) from €6.26 billion, but when adjusted for currency effects, drug revenues dropped by 2.7 percent. That's because of new generic competition for the blood thinner Lovenox and cancer treatment Taxotere, not to mention European copycats for its top-selling clotbuster Plavix. That drug is scheduled to get U.S. rivals in May 2012.
In a video release, CEO Chris Viehbacher (photo) noted that 2010 "was the first year in which the patent cliff really became visible with generic competition for several of our products, notably Lovenox in the U.S." More of the same in 2011 prompted Viehbacher to predict a 5 to 10 percent drop in earnings for 2011. Bringing some harder-to-copy rare disease meds on board--such as Genzyme's--might make up the difference.
One bright spot--and a vindication of Viehbacher's emerging-markets push and diversification strategy--was that developing countries brought in more than €9 billion in sales, a 16.3 percent increase. Emerging markets now accounts for almost 30 percent of companywide sales. Consumer healthcare grew by 45.7 percent to €2.2 billion, and generics rose by 41.5 percent to €1.53 billion.