Sanofi Aventis Essay

Sanofi Aventis is one of the world’s leading pharmaceutical companies. It is headquartered in France and ranks as the number one pharmaceutical company in the European market. As a result of more than 100 years of accumulated experience in the pharmaceutical industry (through its two legacy companies, Sanofi-Synthelabo and Aventis), the firm is active in many medical disciplines and its business includes two main activities: pharmaceuticals and human vaccines through Sanofi Pasteur. In their pharmaceutical activity, major therapeutic areas include cardiovascular, thrombosis, metabolic disorders, oncology, central nervous system, and internal medicine. It is a major employer with approximately 100,000 employees worldwide and an impressive sales force of 35,000 medical visitors. It is also present in 100 countries throughout five continents, but its products can be found in more than 170 countries through local distributors.

Performance features include consolidated sales of approximately €25 billion, whereas more than €4 billion dedicated to research and development promises further growth. A manifestation of the firm’s commitment to research and development is the establishment of 30 research centers that can be found in the French regions of Toulouse or Vitry/Alfortville, in other European countries such as Germany, the

United Kingdom, and Italy, and in countries such as the United States and Japan. Manufacturing of products is equally dispersed geographically, since 72 industrial sites of the firm can be found in such countries as France, Hungary, Italy, Germany, or the United States, whereas more can be found in Canada, China, Thailand, or Argentina (for the operations of Sanofi Pasteur). Last but not least, the firm enjoys a 5.3 percent market share in the global pharmaceutical industry with countries such as the United States (33.8 percent of net sales), France, Germany, Italy, and Japan generating most net sales.

Primary customers include wholesale drug distributors, independent and chain retail drug outlets, hospitals, clinics, managed care organizations, and government institutions. In order to reach these distribution channels, the company is dependent upon its medical sales representatives who assist health practitioners’ work by providing updated information on drugs and their properties. Promotional channels include a variety of advertising, public relations, and promotional tools such as advertisements in medical journals and active presence at major medical congresses. In some countries, traditional, massive promotional channels such as television, newspapers, and radio are also used in order to promote brands directly to patients (primarily with regard to OTC healthcare products).

A major means Sanofi Aventis uses to market its top-selling brands is the use of strategic alliances with other firms such as Bristol-Myers Squibb, Procter & Gamble, and Teva Pharmaceutical Industries. The alliance agreements include marketing and financial arrangements that vary depending on the country in which products are marketed. Options include comarketing the products independently under each one’s own brand names, exclusive marketing, or copromotion under a single brand name. Such a strategic marketing decision may offer commensurate benefits such as expanded distribution network and extended promotional coverage but is also subject to several risks. For example, the firm cannot ensure that collaborating partners will perform as expected with regard to operational management or promotion of own brands instead of promoting co-marketed brands. Additional risks the firm faces that potentially can be turned into dangers include the high levels of uncertainty of its investment in research and development (since the turnover may not counterbalance accumulated costs), its over reliance on the U.S. market, its dependence on third parties for the manufacture and supply of a substantial portion of raw materials and specialized components, and the problem of counterfeit products.

However, in the challenging market of pharmaceuticals, the major threat stems from the changing competitive environment, which is partly due to the multiplicity of laws regulating the healthcare environment and the number of sophisticated players active in the market. There is a constant need for product innovation, expansion of the product portfolio, and an extended presence in all geographical areas of the world for the company to sustain further profitable growth and stay ahead of competitors. Major competitive forces include the ever-increasing competition for research and development of new patented products and new therapeutic conditions and competition between generic products. In this respect, major competitors of Sanofi Aventis include Abbot, Astra Zeneca, Eli Lilly, GlaxoSmithKline, Merck & Co., and Novartis. The future will show which of these firms will optimally co-align its competencies and resources with these environmental contingencies and maintain a sustainable position in the global pharmaceutical industry.

Bibliography:

  1. Helen Carmichael, “Sanofi-Aventis Opens for Business,” Chemistry World (v.1/12, 2004);
  2. Sanofi-Aventis, www.sanofi-aventis.com (cited March 2009).

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