Healthy Skepticism Library item: 7366

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Publication type: news

Olson P.
Sanofi Boss Bashes Generics Of Developing Nations
Forbes.com 2007 Jan 2
http://www.forbes.com/2007/01/02/sanofi-aventis-dehecq-face-cx_po_0102autofacescan01.html?partner=yahootix

Full text:

London – Most manufacturers in advanced economies are used to the fact that cheap exports from developing nations sell like hotcakes on their turf. But it’s still a new and somewhat terrifying concept for the big players of the pharmaceuticals industry.

That’s perhaps one reason why Jean-Francois Dehecq, chairman of French drugs leviathan Sanofi-Aventis (nyse: SNY – news – people ) would like the Indian, Indonesian and Thai makers of generic drugs to focus on selling to their domestic markets.

In a newspaper interview, the chairman who stepped down Monday as chief executive, said he was “scandalized” by generics makers in the developing world that produced medicine to sell to patients in rich nations, often using workers on low wages.

“They make drugs very cheaply and bring them to the north for people who can already pay,” he told The Financial Times. “It’s a scandal. They are exploiting people in the south. They should deal with their own countries first.”

But generics makers aren’t just Dehecq’s bête-noir for “exploiting” their workers. They’ve also been gradually gnawing into his market share and rivalling his patents, along with those of major branded rivals Pfizer (nyse: PFE – news – people ) and Britain’s GlaxoSmithKline (nyse: GSK – news – people ). (See: “The Generic Onslaught”)

U.S. sales of Sanofi’s bloodthinner Plavix have faced stiff competition from the cheaper generic version produced by Canada’s Apotex. (See: “Plavix Pain”)

Research by healthcare consultancy IMS showed generics accounts for around 15% of drugs sales, while Express Scripts, one of North America’s biggest pharmacy benefit managers, predicted that the U.S. generic fill rate would grow to 59% in 2007. It was at 48% in 2003.

Generic drugs are chemically equivalent to patented drugs, the only difference being that the companies which produce them have far lower costs for research and development, marketing and regulatory approval.

Dehecq defended the higher prices of the big pharmaceutical companies, and warned that the pressures from generics makers to lower prices would stifle innovation.

His rallying cry may have been aimed at supporting his successor, Gerard Le Fur, who took the Sanofi reins on New Year’s Day. Le Fur will face a tough time dealing pushing through obesity treatment Rimonabant, expected to go on sale in the U.S. this year. It’s already been beset by delays.