Sanofi

R&D chief Elias Zerhouni

Finding it hard to cut - Sanofi

2012: $6.4 billion
2011: $6.24 billion
Change: Up 2.5% (Down 3.6% at constant exchange rates)
As a percentage of revenue: 14.1%
R&D chief: Elias Zerhouni

If Sanofi ($SNY) CEO Chris Viehbacher had had his way, 2012 would have been the year that he accomplished another big recalibration on the R&D side of the business. Ever since his $20 billion Genzyme buyout in early 2011, the pharma giant has been focusing more time and attention on its U.S. operation. Its French R&D group hasn't been competitive in years. And for the CEO who has made the most of ridiculing the unsustainable math behind R&D empires for the past decade, it was clearly time to cut the dead wood.

Unfortunately for Viehbacher, his cost-cutting notions weren't accepted by the new socialist regime in government. And with the conservatives out, he found himself going toe to toe with a government minister. Viehbacher may have blinked, backing off many of the threatened cuts, but he didn't entirely give up either. In the long run, that will likely mean a growing role for the expanding Boston hub.

After a lengthy drought, Sanofi was able to manage a few boasts on the development side of the business last year. There was an approval for the MS drug Aubagio and a new cancer drug, Zaltrap. The Lemtrada MS app was accepted at the FDA a few weeks ago, followed closely by lixisenatide (Lyxumia), the new diabetes therapy recently approved in Europe.

Sanofi's big claim to fame right now is Lantus, which brought in close to $5 billion last year. That has everyone gunning for a piece of that action, from Eli Lilly ($LLY) to Novo Nordisk ($NVO). But as Novo's recent Tresiba rejection underscores, that's easier said than done.

Sanofi's regulatory advances haven't all been unqualified successes, either. Both Aubagio and Lemtrada have been heavily overshadowed by Biogen Idec's ($BIIB) BG-12, a likely near-term winner at the FDA. Zaltrap was dealt an embarrassing setback when the pharma giant was forced to offer a deep discount on the drug after some high-profile practitioners at Memorial Sloan-Kettering refused to include it on the formulary, scoffing at its price and an efficacy rate that could be matched by rival therapies.

Sanofi is clearly expecting better from its late-stage hopefuls. Phase III data is expected in 2013 for otamixaban for ACS patients. There's a JAK2 inhibitor in trials for myelofibrosis, a new glargine formulation in diabetes and an anti-PCSK9 mAb in monotherapy for hypercholesterolemia that has some analysts thinking about some very big peak potential sales.

For more:
Sanofi CEO Viehbacher boasts of R&D resurgence as FDA takes MS app
Aubagio approval sets Sanofi up with possible blockbuster
FDA approves Sanofi's Zaltrap for colorectal cancer

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