Businessmodel of Sanofi

Customer Segments

Sanofi serves a range of companies, organisations and individuals operating within the healthcare and medical research sector. The Company’s three business segments target slightly different areas of the healthcare sector:

• Its prescription drugs are sold primarily to wholesale drug distributors, independent and chain retail drug outlets, hospitals, clinics, managed-care organisations and government institutions, with rare disease products being sold directly to physicians;
• Its vaccines are sold and distributed through multiple channels, including physicians, pharmacies, hospitals, private companies and distributors in the private sector, and governmental entities and non-governmental organisations in the public and international donor markets; and
• Its animal health products are sold to veterinarians, pharmacies and wholesalers, depending on the regulations within each target market. Sanofi’s largest single market is the Us, which accounts for around 36.2% of its net sales, followed by sales in Western Europe, particularly in France and Germany, which represent around 21.7%. The Company also sells products across Asia, Eastern Europe and Turkey, and the Middle East and Africa.

Value Propositions

Sanofi provides value to its customers in the following ways:

• Its brand recognition and reputation, being among the largest pharmaceutical firms in the world with a proven track record of providing quality and reliable products;
• Its technology and intellectual properties, as well as the technologies and properties licensed from its partners, which it uses to produce unique and innovative products;
• Its commitment to innovation, with the Company devoting a substantial portion of its annual revenue to research and development activities; and
• Its global sales and marketing reach, serving customers worldwide through a broad network of sales and marketing channels, supplemented by a number of distribution partners. ### Channels

Sanofi operates a website at www.sanofi.com through which its provides information to customers on its products, services and activities. The Company, however, does not operate an online sales channel.

The majority of Sanofi’s products are marketed and sold by its in-house sales force. The Company has a network of sales offices organised by jurisdiction, with a presence in more than 100 countries worldwide. The Company markets its products in a variety of ways, including the use of in-person and digital channels, advertisements in medical journals, and exhibitions at major medical events.

Sanofi also enters into co-promotion and co-marketing partnerships for certain products in specific geographical areas. It also utilizes the services of a number of channel partners, particularly in countries where it does not have a direct presence, including distributors and independent sales agents.

Customer Relationships

Despite operating maintaining an online presence, Sanofi’s products are not available on a self-service basis. The vast majority of the Company’s sales are made following direct consultation with customers by members of the in-house sales force, allowing the Company to provide a tailored service to each of its clients. The Company seeks to establish multi-year contracts with customers, and secure recurring business.

Customers are able to contact members of the Sanofi team through an online contact form or over the telephone. The Company also has procedures in place for its healthcare customers to report any adverse events associated with its products.

Sanofi also operates several social networking profiles, through which customers are able to interact with the Company directly, including with Facebook, Twitter, LinkedIn and Google+.

Key Activities

Sanofi is a healthcare company engaged in the research, development, manufacture and marketing of therapeutic solutions and medications.

The Company operates through three business segments: Pharmaceuticals, which consists of the Company’s research, development, production and marketing of medicines; Human Vaccines, which is dedicated to the development, production, marketing and sale of vaccines; and Animal Health, which includes the research, development, production and marketing activities of the Company’s Merial business, which offers a range of medicines and vaccines across numerous animal species.

Sanofi’s pharmaceuticals portfolio comprises numerous products, including prescription medicines, generic medicines and consumer health products.

Key Partners

Sanofi partners with a range of companies throughout the design, manufacture, marketing and sale of its products. Its partners principally comprise:

• Design and Production Partners, comprising medical device companies and technology companies that assist the Company in the design and manufacture of its products;
• Technology and Intellectual Property Partners, comprising pharmaceutical, biotechnology and medical device companies that license rights and technologies for use in Sanofi products;
• Co-Development and Marketing Partners, comprising pharmaceutical and healthcare companies that jointly develop and market certain products in particular jurisdictions; and
• Channel Partners, comprising distributors and independent sales agents that extend the Company’s own marketing and sales reach. Sanofi has sourced external innovation and technologies from key partners such as Regeneron Pharmaceuticals and Alnylam Pharmaceuticals, and has co-developed products with companies including AgaMatrix. Recently the Company has partnered with the US Army to speed up development of a vaccine to the Zika virus.

Key Resources

Sanofi’s key resources are its technologies and intellectual properties, its research and development facilities, its sales and marketing channels, its partnerships, and its personnel. The Company relies upon a range of patents and proprietary rights to provide exclusive rights to market certain products, without which the Company’s operations would be materially and adversely affected.

The Company has intellectual property rights secured in a number of jurisdictions, including numerous patents in the US. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in Sanofi’s name, including applications entitled ‘Process for preparation of dronedarone by oxidation of a hydroxyl group’, ‘Drug delivery device with an improved piston rod’ and ‘Antibodies to kallidin and des-Arg.sub.9-kallidin’.

Cost Structure

Sanofi incurs costs in relation to the research and development of its products, the operation of its sales and marketing channels, the management of its partnerships, and the retention of its personnel.

In 2015 the Company’s aggregate research and development costs, including those accrued by the Animal Health segment, amounted to €5.26 billion, comprising €4,530 million in the Pharmaceuticals segment, €552 million in the Human Vaccines segment and €177 million in the Animal Health segment. Research and development expenses were equivalent to approximately 14.2% of net sales in 2015.

Sanofi also accrues significant administrative costs relating to the payment of salaries and benefits to its workforce of more than 100,000 employees, as well as rental and utility fees associated with the operation of its various offices and research facilities.

Revenue Streams

Sanofi generates revenue through the production and sale of pharmaceutical and healthcare products, including prescription medications, vaccines, medical devices, medical solutions and animal health products.

In 2015 Sanofi recorded €34.54 billion in total net group sales, up slightly on the €31.70 billion recorded in 2014. The vast majority of the Company’s sales are recorded by its Pharmaceutical segment, which recorded annual net sales of €29.80 billion in 2015.

The Human Vaccines segment recorded €4.74 billion in net sales, while the Animal Health segment recorded €5.52 billion.

A substantial share of the Company’s revenue is derived from the sale of certain key products, notably Lantus, the Company’s leading product. In 2015 Lantus alone accounted for €6.39 billion, representing 17.2% of the Group’s aggregate net sales for the year.