Sanofi plots new production in China, Vietnam to fuel Asian growth

Sanofi CEO Christopher Viehbacher

Sanofi CEO Christopher Viehbacher is barnstorming Asia, spreading news of growth along the way. In Vietnam, he announced a new $75 million plant to boost supplies in the region. And in China, he said the French drugmaker ($SNY) would inaugurate four new plants this year, aiming for "double-digit" sales growth there.

Drug spending in Vietnam is growing lickety-split, with sales expected to mushroom at a rate of 20% a year. Currently, the drug market there is worth about $3 billion. Sanofi is looking at 25% growth there, the country's regional manager, Cyril Grandchamp-Desraux, told the news service. This year, he expects Sanofi's Vietnamese sales to amount to $125 million.

Plus, the new Vietnamese plant will allow Sanofi to export more of its products in nearby countries. Right now, the French drugmaker sells about 80% of its Vietnam-made products in the country. Its two existing plants are operating at full capacity. So, the new production facility "will serve as an export platform" to other Asian markets.

Meanwhile, in China, Sanofi already racks up some €1 billion per year (more than $1.28 billion). Sales there grew by 15% last year, the Wall Street Journal notes, and Viehbacher says he's expecting "double-digit" growth this year. That's partly because of the four new plants coming online, but it's also a sign of Sanofi's geographic expansion within China, to smaller cities and rural areas.

The Chinese government is building more hospitals and clinics in those areas, and as Viehbacher points out, "Every time there's a new hospital here, it's new access."

Plus, Sanofi just won government approval for its Eloxatin drug, as a treatment for liver cancer. It's the first market for Eloxatin in that type of cancer, and liver disease is prevalent there.

Like its Big Pharma brethren, Sanofi is betting on emerging markets as a key component of near-term sales growth. Companies have been investing in China, Brazil, and other fast-growing countries. But emerging markets are no panacea, as recent price controls in China and India show--not to mention today's Glivec patent ruling in India. Sanofi hopes that China will see the value of R&D investment and price drugs accordingly. "Ultimately, the Chinese government is pragmatic," Sanofi exec Jean-Luc Lowinski told the Journal. "We're convinced that quality will play a role in new pricing models."

- read the Bloomberg story
- get more from the WSJ (sub. req.)

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