Sanofi-Aventis is slashing prices of some of its leading meds for patients in Southeast Asia, as it turns to emerging markets for growth. By making the medicines more accessible to poor patients, CEO Chris Viehbacher (photo) hopes to boost volume--and regional revenues--in the process.
The price cuts include the diabetes drug Lantus and the cancer drug Taxotere, Bloomberg reports. And for now they apply to Indonesia and the Phillipines, though the price cuts will be expanded to other countries in the region. Under a tier-pricing regimen, the poorest patients may save as much as half the usual price.
Jean-Louis Grunwald, Sanofi's regional chief, told Bloomberg that the idea is to lower prices enough to make medicines more accessible, but not so low that Sanofi cannot make money. "I'm not naive," he said. "Our initiative has to be sustainable. We cannot do it at cost."
Of course Sanofi's not alone. GlaxoSmithKline is pursuing a similar strategy in emerging markets, cutting prices in Asia and Africa to boost overall sales. Indeed, news of new price drops in Uganda, Tanzania and Kenya hit the African press today. And analysts said that the strategy is sound. Big discounts can lead to volumes doubling or even tripling. "There have been concrete examples of a massive uptick in volumes," said Deutsche Bank's Mark Clark. We'll have to wait and see how these price cuts do.