Sanofi to 'optimize' CMOs to drive down spending

In the months since Paul Hudson took over as CEO, Sanofi has framed its December capital markets day as the moment when the new leader’s vision would fully take shape. Hudson delivered on that promise on the day, unveiling a raft of changes to Sanofi’s priorities.

From an outsourcing perspective, the big news related to Sanofi’s focus on achieving “operational excellence in manufacturing​.” That focus will affect Sanofi’s in-house operation and relationships with contract manufacturing organizations (CMOs).

In a section on manufacturing procurement, Sanofi said it intends to optimize its CMOs and suppliers to “reduce baseline by 20%​.”

Sanofi CFO Jean-Baptiste Chasseloup de Chatillon, who gave the part of the presentation on CMOs, did not provide further details of that facet of the strategy during his talk.

Chasseloup de Chatillon included the details of Sanofi’s changing approach to CMOs in a section on the company’s plans to take costs out of the business. The goal is to find €2bn ($2.2bn) in savings by 2022.

Sanofi expects improved manufacturing efficiency, including through a new approach to CMOs, and organizational productivity to contribute €500m of the savings. The remaining €1.5bn will come from reducing spending on deprioritized businesses and general procurement savings.

The planned optimisation of CMOs and suppliers comes at a time when Sanofi is investing in its own operations in a bid to make them more efficient.

Digital technologies are central to the push to improve the in-house operation. For example, Sanofi is looking to the digitalization of chemistry, manufacturing and controls to shorten lead times by six months.

Similarly, Sanofi is targeting a 20% reduction in plant cycle times in conjunction with its digital sites initiative and aiming to bring its inventory level down by 20 days through the use of techniques such as artificial intelligence-powered forecasting.

The new Sanofi will also have fewer products for any site, be they its own or those of a CMO, to make. One of Sanofi’s goals is to reduce the number of product families in its established product portfolio by 65%.

Last year, Sanofi had around 300 product families, many of which occupy a long tail of low-selling products. By 2025, Sanofi plans to have cut off the long tail, leaving it with a core of around 100 product families.