Management adopts aggressive approach to advance core business and accelerates the development of blockbusters

The response came earlier than expected for those analysts who underestimated the prospects for growth of Aventis, when it briefly became the world’s largest drug company last year, following its formation through the merger of Rhone-Poulenc and Hoechst.

For the first quarter of 2001, the company reported group net sales of €5.865 billion (₤3.597 billion, $5.143 billion)—a rise of 11.2 percent when compared to €5.275 billion for the same period last year. This included non-core activities, such as Aventis CropScience, that are to be divested. At the same time, group net income rose to €317 million in Q1 2001, compared to €174 million in Q1 2000 (€258 million before exceptional items).

But it was Aventis’s core pharmaceutical business that saw the real uplift. At the company’s R&D Day in New York, Aventis Pharma CEO Richard Markham pointed to the 17.6 percent increase in Q1 2001 sales in this core business to €4.125 billion, although he said the favorable comparison was partly as a result of destocking in Q1 2000. The strong sales growth in the core business was the result of a deliberate focus on strategic products, particularly in the most profitable market, the US.

Strategic products

Sales of strategic products rose 58 percent to €1.619 billion in Q1 2001, when they accounted for 45.8 percent of total prescription drug sales, compared to 32.1 percent in Q1 2000, Markham reported. The most remarkable increases were in its two blockbuster products:

• anti-allergy drug Allegra/Telfast (fexofenadine) was up 68 percent to €384 million for Q1 2001; and

• low-molecular-weight heparin Lovenox/Clexane (enoxaparin sodium) increased sales by 75 percent to €343 million.

Sales of Aventis Pharma in the US rose 37.3 percent to €1.37 billion in Q1 2001, compared to €998 million in Q1 2000. Also, these US sales accounted for 33.2 percent of total Aventis Pharma sales in Q1 2001, compared to 27.1 percent in Q1 2000.

$21 billion in 2003

These figures showed that Aventis Pharma’s strategy for growth—focus on strategic products in the most profitable markets, particularly the US—is working, Markham claimed. With the approach, Aventis is aiming to grow net sales at 10 percent a year for the next three years—and that implies a minimum €21 billion in 2003.

Markham highlighted six products (Allegra/Telfast, Lovenox/Clexane, Taxotere, Lantus, Ketek, and Actonel) to which Aventis is looking for much of the net sales growth that is the basis for predicted increases in net earnings per share by 25–30 percent a year for the next three years. This performance would position Aventis among the fastest growing pharmaceutical companies in terms of earnings growth.

However, Markham maintained that sustainable long-term growth and profitability is achievable only through new product development. Aventis Pharma invested €2.703 billion in R&D last year, and he pledged to continue allocating 16 percent of sales to R&D in the future.

The key to Aventis Pharma’s future success will be its effectiveness in reducing the time it takes to bring forward new products, get them approved and exploit the markets for them. PBN readers will recall that Aventis Pharma DI&A head Frank Douglas was named R&D director of the year in March for his vision and implementation of new paradigms in R&D, including the organization called Drug Innovation & Approval (DI&A), chemical biology and outsourcing (PBN, March 21, page 19).

At the R&D Day, Douglas set out over 30 products currently in the Aventis’s drug pipeline, including key filings in 2000 and 2001 and key approvals obtained in 2000 and expected in 2001.

Douglas envisages the DI&A delivering the drugs pipeline through networking. The DI&A aims to introduce two to three significant new chemical entities a year and cut their time to approval from the traditional 10 to 15 years from target identification to six to nine years.

In practice, the DI&A is managed from Aventis Pharma’s Global Drug Development Center (GDDC) in Bridgewater, New Jersey, US, and concentrates research by therapeutic area on three sites:

• Bridgewater—immunology, central nervous system, respiratory diseases, and rheumatoid arthritis;

• Frankfurt, Germany—cardiovascular, metabolism, and osteoarthritis; and

• Paris, France—oncology, infectious diseases, and Alzheimer’s and Parkinson’s diseases.

Chemical biology

In the process of arriving at early development candidates (EDCs), the DI&A focuses effort and resources in the approach Douglas calls chemical biology. This enhances the probability of success of leads by optimizing the match of drug-like chemicals to druggable biological structures. It involves the deliberate networking of information from different areas of expertise—genomics, proteomics, physiology, pharmacology, rational drug design, medicinal chemistry, and ADMET (absorption, distribution, metabolism, excretion, and toxicology)—that will produce the knowledge needed to arrive at the EDCs for a target family. Douglas claimed that Aventis is the first company in the industry to implement this sort of networking.

Research alliances

Aventis is also using this approach in a number of research alliances. That with Millennium Pharmaceuticals is the most high profile and is unique because, for the first time, Millennium is fully participating in the entire drug discovery, development, and commercialization process for rheumatoid arthritis and respiratory diseases. Aventis is paying up to $200 million for Millennium’s integrated drug discovery platform and purchasing $450 million of newly issued Millennium stock. In the first instance, the Aventis-Millennium partnership aims to produce more than ten EDCs a year. “This is going well and is on track,” said Douglas. “The addition of the Millennium portfolio really increases our target portfolio and early leads.”

He explained that, through its Lead Optimization (LO) function, the GDDC helps to determine which EDCs are appropriate for clinical development. And, through its Product Realization (PR) function, it is also responsible for really accelerating products through phase 2b and 3 studies. The GDDC’s Global Regulatory Approval and Marketing Support (GRAMS) function brings the late-stage drug candidates through the approvals process, launches them as soon as possible, and manages them throughout their life-cycles on the market.

At the R&D Day, LO head Claude Benedict and PR head Sol Raifer illustrated how the DI&A is implemented, giving particular examples of early-stage and late-stage projects (Tables 1 and 2).

In wrapping up the R&D Day, Markham said, “By every measure, this merger has been a success—top line growth; gross margin; pipeline; and partnership with biotech. Aventis is beginning to close the profitability gap with other pharma companies and aims to sustain long-term growth with the flow of new products from its drug pipeline.”

“We are extremely proud of the DI&A team, but none of us is content,” he said. “We acknowledge that we can do better and we’re going to do better.”

With its aggressive focus on marketing and sales, Aventis has certainly secured its short-term future and, with its DI&A, it has the organization to create the potential blockbusters needed for its long-term future. These successes must give confidence that it can take the measures to bridge the gap between the launch of its current late-stage products and the arrival of its accelerated flow of early-stage products on the market.

Table 1

Late-stage projects, May 2001

Table 2

Early-stage projects, May 2001

This article originally appeared in the May 23, 2001, issue (#390) of Pharmaceutical Business News. PBN is an imprint of Informa Publishing Group, Ltd., and a sister publication of D&MD Newsletter. For more information on PBN or Informa Publishing, please visit www.informapharma.com.

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