Sanofi (NYSE:SNY) has not reported a lot of good news lately. The company plans to shut down a plant in Newcastle, and a drug that it has been working on has not received the approval for which the company had hoped.
The company's factory in Tyneside, will not be saved and the 450 employees that work there will have to face losing their jobs. The company was unable to merge operations with another site or increase the demand for production and consequently it has no choice but to close the factory. These were the proposals that employees were hoping would be backed by the company so that their jobs would not be lost. The only thing that the factory workers can hope for now is that their union leaders will be able to secure the best possible severance package for them from the company. The blow will be felt across the entire community, as some of the workers have been employed at the plant for decades.
Some believe that Sanofi could 'plummet' following the shutdown of another plant, too. Again, employees at the plant will face losing their jobs over the next few years. Even though the plant is only being shut down four years after it was initially meant to close, this comes as a blow to the company. It seems to me that Sanofi may be on the decline and that now is a good time for investors to get out.
Sanofi experienced yet another blow when the National Institute for Health and Clinical Excellence (NICE) rejected its cancer drug Jevtana. The idea was that the drug would be used as a second line treatment for prostate cancer in combination with prednisone or prednisolone, but NICE ruled that it is not suitable for NHS reimbursement at its current median cost of roughly $35,000 per patient. The hopes that the company had for this drug are dashed. To me it is a pity that the drug, which can increase the survival rates in those who use it, had to be rejected for purely financial reasons and not because it is either unsafe or ineffective. The monetary issue is an unfortunate drawback.
It is bad news for Sanofi when it cannot even get approval on a drug that is effective and that is safe. That being said, there are also a number of side effects that raised concerns, but as the drug increases the survival rates in cancer patients, these side effects are hardly a serious issue in the debate, as far as I am concerned. The side effects include bone marrow suppression and diarrhea.
We need to remember that this is not just a setback for the company, but also a setback for those patients who only have a few treatment options open to them.
Sanofi competitor Eli Lilly (NYSE:LLY) recently won a small lawsuit, which could signify a big win for the pharmaceutical industry, a least for now. The court ruled in favor of Eli Lilly stating that pharmaceutical companies are not required to pay overtime to their sales reps. If they had lost this case then Eli Lilly as well as other pharmaceutical companies such as Abbott (NYSE:ABT) would have been left open to a number of class action suits and would most likely have to have paid huge amounts in back pay to sales staff. However, there are still other similar cases pending that could affect pharmaceutical companies across the board.
Pfizer (NYSE:PFE) used the unique strategy, following the expiration of its Lipitor drug, of viciously marketing the drug in order to get as much last minute revenue as possible. This appeared to be at least partially effective, but now the company has decided that there is nothing more it can do and has given up on Lipitor once and for all. Other drugs in the pipeline, such as tofacitinib, show promise and may be what the company needs to get back into the game as a serious player.
Novartis (NYSE:NVS), as well as several other pharmaceutical companies, have recently been in the news due to allegations that it colluded with Indian drug regulators in order to speed up the approval process of drugs. The question that this raises is whether or not a number of the drugs now marketed in India are in fact effective and, indeed, safe. The company stands by the integrity of its drugs and claims that the methods it used were legal and sufficient for determining whether or not the drugs should be marketed in India.
GlaxoSmithKline (NYSE:GSK) recently made a bid for Human Genome Sciences (HGSI) of $13 cash per share for the company. This is a very good price that Human Genome is not likely to beat anywhere else. The two companies have long since been partners on a variety of projects, and the merger seems like the sensible move, although Human Genome does seem to be playing hard to get to a certain degree. At this point it remains unclear whether or not Human Genome will in fact accept the offer from GSK. GSK hopes to reach a friendly agreement with Human Genome very soon.
Sanofi investors should hope that the news of the factories closing is just a move to straighten out the company's books. A loss of production for another reason could be a sign of bad things ahead, and the company needs to get another new winning drug on the market before it starts to seriously slip down.