Healthy Skepticism Library item: 11772

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Publication type: news

Jack A.
Sanofi chief urges price caps on new drugs
Financial Times 2007 Oct 15
http://www.ft.com/cms/s/0/a44f5244-7aa9-11dc-9bee-0000779fd2ac.html

Full text:

Pharmaceutical companies must in the future limit the rising prices of new medicines to boost sales, according to the new chief executive of Sanofi-Aventis.

In his first interview since taking over in January, Gérard Le Fur told the Financial Times the trend of ever-higher prices for new drugs “cannot continue” and predicted that “volume will dominate over price”.

Mr Le Fur expressed optimism for Sanofi’s future, with the larger, younger, more international and more female senior executive team he has appointed in recent months.

He also hinted at cost-cutting and an appetite for fresh acquisitions in the months ahead.

Referring to the high price of biological, protein-based drugs such as those for cancer, Mr Le Fur said that, with greater volumes, “the price of biotherapies will reduce towards that of more classic drugs”.

He said a shift towards lower prices to boost volumes as pharmaceutical companies increasingly focus on the world’s fast-growing emerging economies was one of the biggest changes in the drugs industry. “For me, the future is in the South,” he added.

He refused to comment on speculation that Sanofi-Aventis would buy BMS of the US, but played down such a deal, saying: “It has been talked about for a year and nothing has happened. It was supposed to be imminent.”

Mr Le Fur highlighted Japan as a potential market for acquisitions, but stressed they would not be “at any price” and would take time. He indicated that biotech purchases would happen far more quickly, and said in-licensing of products in development from other companies would increase from 15-20 per cent of the pipeline currently to 25-30 per cent in the coming years.

He said there was “no fat” in the company but added: “We will pay more attention to our costs … in a more difficult environment.”

Mr Le Fur said drug prices in poorer countries should be lower than those in the west, but vowed to fight the decision this year by Thailand to break the patent of Sanofi-Aventis’ antiblood-clotting drug Plavix.

He said: “If states no longer recognise patents, how do you want us to do research?”

He called for a single, centralised system across Europe to negotiate prices, in place of the cumbersome country-by-country approach that exists now.

He denounced “parallel imports”, by which intermediaries exploit differences in drug prices across the European Union, as “a real gangrene” that raised the risk of counterfeits and “benefits patients in no way”.

He argued that vaccines were a central part of the company’s strategy, offering governments a cost-effective way to prevent and treat disease. He said Sanofi planned to double vaccine sales from the current 10 per cent of total group revenues in the next few years.

Mr Le Fur also expressed his confidence in the continuation of his company’s long-standing joint venture with Merck of the US for the sale of vaccines across Europe. “We have no desire to change and nor do they,” he said.