As part of CEO Paul Hudson’s transformation plan for Sanofi, the drugmaker has set out to cut €2 billion in annual expenses by 2022. So far, it’s making quick progress as COVID-19 tests its global operations.
In the first half of the year, Sanofi cut €990 million ($1.16 billion) in expenses through dramatically reducing travel and events, printing fewer promotional materials, cutting suppliers, tightening up on training costs and more. Sanofi estimates about €110 million ($130 million) in savings are a result of the COVID-19 pandemic, CFO Jean-Baptiste de Chatillon told analysts.
Meanwhile, the company is engaged in talks with unions in France, Germany and other countries on how to “right-size” its operations, or cut jobs, de Chatillon added. On finishing those talks, the CFO said “the quicker the better.”
Aside from trimming expenses, Sanofi’s Dupixent—a key focus for Hudson—leapt in the first half of the year, posting a sales increase of 94% to €1.63 billion ($1.92 billion). Execs characterized the company’s specialty care franchise—including Dupixent, oncology, blood disorders and rare diseases—as “resilient” amid the pandemic. That group’s first-half sales increased 24% to €5.4 billion ($6.36 billion).
Elsewhere, though, Sanofi faced challenges. Sales for general medicines, which includes diabetes, cardiovascular and established medicines, declined by 8.2% in the first half. Vaccine sales fell by 2%, and consumer health revenues slipped by 1.6%.
Overall, Sanofi's first-half 2020 sales grew 1.6% at constant exchange rates. Sales in the second quarter, when lockdowns peaked, were down 3.4% versus the same period last year.
But in vaccines, the company is prepping for a big second half. Sanofi has begun shipping the first of 80 million flu vaccine doses to the U.S., and Hudson said on Wednesday’s call that the company is expecting a “record” flu season. The drugmaker and its COVID-19 vaccine partner GlaxoSmithKline also on Wednesday entered a contract with the U.K. to provide 60 million doses if their program succeeds.
Sanofi is meanwhile in “very late” stage negotiations with Europe and the U.S. over COVID-19 vaccines, Hudson said. While much of the focus has been on the most advanced programs, Hudson said he’s confident Sanofi will “play a part” in global vaccination efforts.
Hudson has been Sanofi’s CEO for nearly a year and late last year unveiled his vision for the French drugmaker. The company is moving away from areas where it’s struggled in recent years, including diabetes and cardiovascular disease, and is instead doubling down in fields where it thinks it can succeed. The company is focusing on either “first-in-class" or “best-in-class" drugs, and it has a particular emphasis on Dupixent, which Hudson says is on track to generate €10 billion or more per year.
Sanofi has launched Dupixent in 44 countries and has 54 more rollouts planned this year, execs said. The company just introduced the drug in China, where Hudson said 150,000 patients or more could be eligible for treatment. Right now, about 150,000 patients are taking the medicine worldwide, he said.