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Sanofi ends research in diabetes, narrows units to spur profits

Sanofi ends research in diabetes, narrows units to spur profits
FILE PHOTO: The logo of Sanofi is seen at the company's research and production centre in Vitry-sur-Seine, France, August 6, 2019. REUTERS/Charles Platiau/File Photo   -   Copyright  CHARLES PLATIAU(Reuters)
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By Matthias Blamont

PARIS (Reuters) – Sanofi <SASY.PA> on Monday said it would end its research efforts in diabetes and cardiovascular diseases as part of a reorganisation plan that will narrow the number of its global business units in the hope of bolstering growth and profits.

The French drugmaker, whose pipeline has disappointed investors in recent years, poached new chief executive Paul Hudson from Swiss pharma group Novartis <NOVN.S> in September to revive momentum.

That followed the recruitment of a senior head of research from Roche <ROG.S> in 2018.

Its move to ditch diabetes research – announced alongside cost savings targets – marks a major turning point for a firm whose products in this field dominated the insulin market for two nearly two decades, before it was hit by patent losses and a drop in sales.

“We recognise it is getting more difficult to get breakthrough innovation and that we have to be efficient and move our resources to areas of opportunity, as tough a choice as that is, we are making that choice,” Hudson told reporters.

The firm is bulking up in other areas, however, like the lucrative field of cancer drugs. It announced a deal to buy California-headquartered biotechnology firm Synthorx <THOR.O> about $2.5 billion earlier on Monday.

Sanofi, which is due to further detail its strategic plans to investors on Tuesday in Cambridge, Massachusetts, said it was targeting new savings of 2 billion euros (1.7 billion pounds) by 2022.

It also aims for a core operating margin of 30% by that horizon, up from 25.8% last year.

Sanofi, currently organised around five global business units, said it would reorganise its activities around three pillars, one called specialty care which includes oncology and rare diseases, as well as vaccines and general medicines.

The group’s consumer healthcare unit – known for its over-the-counter products such as paracetamol Doliprane, erectile dysfunction drug Cialis as well as influenza treatment Tamiflu – will be considered as a standalone business, it said.

(Reporting by Matthias Blamont; Editing by Sarah White)

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