Pharmaceutical Fireside Chat between Paul Hudson, CEO of Sanofi and David Flores, CEO of BioCentury China … [+]
Comparison of November 2022-2023 stock market performance of Sanofi, Pfizer AlstraZeneca, … [+]
October 27, 2023, Sanofi declared his income, generally exceeding estimates. The company also has announced that it would devote more resources to internal R&D and split its consumer division to focus on innovative pharmaceutical products. The market interpreted the news in its own way, sending the stock back to November 2022 levels, erasing the hard-earned gains made over the past 12 months. Sanofi has remained among the top performers in the pharmaceutical sector year after year, but the 20% drop in a single day sent shockwaves throughout the industry despite a gradual recovery. For many in the industry, this price drop and the subsequent negative media coverage came as a surprise. The industry is facing unprecedented losses of exclusivity, with some companies expected to see 20% to 70% of their current sales become generic in less than a decade.
“The majority of global pharmaceutical companies will experience a loss of exclusivity in the coming years, but Sanofi is in a better position than most, with our last major LOE of the decade this year. And while I’m constantly evaluating a lot of opportunities to strengthen our science, I honestly prefer our own R&D. This is why we decided to redouble our efforts in our science, at the expense of short-term profitability, with the aim of creating long-term value and transforming the practice of medicine. Sanofi CEO Paul Hudson told me privately at the BioCentury China Healthcare conference in Shanghai, less than a week after the announcement. I previously wrote an article about Sanofi’s AI efforts, and my question was simple: “As a provider of AI software to pharmaceutical companies, I have a broad view of the industry and, to me it seems like Sanofi is doing better than anyone else. another AI company. It also has several potentially blockbuster drugs in the works. Why did the market react this way? From my perspective, it seems that most analysts and journalists have misinterpreted the clear message that Sanofi’s decisive CEO sent to the market.
It’s important to note that increasing R&D doesn’t just mean that all research will be done in-house. A substantial part of the R&D can also be contributed, refined and perfected in the same way as Sanofi’s first-in-class mega-blockbuster. Dupixent (dupilumab). Mr. Hudson made it clear that he had fought hard to overcome the “not invented here” attitude.
He also took very bold steps by restructuring internal R&D, promoting one of the pharmaceutical industry’s most talented immunologists, Dr. Frank Nestlé, as CSO, ensuring that the company’s most promising programs are prioritized. He also brought in the famous British scientist with experience in venture capital and the creation of new biotechnology companies, Dr Houman Achrafian as head of research and development.
BioCentury revelations
THE BioCentury China Health Summit is one of the largest annual gatherings of biotech and biopharma executives in China, and even during the pandemic, I have tried to attend and present every year. In 2023, the summit celebrated its 10th anniversary and the presence of Paul Hudson was the jewel of the second day. While many other executives from major pharmaceutical companies attended the event, as well as analysts from some of the world’s largest investment groups, Paul was the world’s top executive.
He also hosted a two-hour closed-door meeting with several innovative biotech companies and early-stage investment fund founders to learn first-hand about the true state of the local R&D ecosystem and better understand in which areas of innovative drug discovery the country has done the most. progress the most and explore the hottest areas for potential partnerships or acquisitions.
The room was filled with many high-level delegates standing in the back, but I managed to arrive early and sit in the front row.
David Flores, co-founder, president and CEO of BioCentury, asked the questions and served as moderator. The conference has a rule that anything said on stage cannot be quoted directly, so I will provide a summary of the original statements.
As expected, the first questions focused on the recent announcement and the market response. Mr Hudson explained the need to invest more in research and development to avoid the fate of the many pharmaceutical companies facing a loss of exclusivity and forced to make spontaneous and often irregular bets.
His bets were very clearly defined. He wanted to build on Sanofi’s strengths in immunology and make it the world leader in immunology. Its strategy involves not only prioritizing immunology as a core therapeutic area, but also using AI across the board to ensure the right patients receive the right treatment at the right time in their journey. The company will use several mechanisms, including AI, from very early diagnosis to treatment and eventually cure. He explained that when analyzing patient journeys, they sometimes see cases where they take a patient off the medication and the patient is disease-free for the entire year.
Hudson believes that with Sanofi’s arsenal of treatments in place and underway, as well as its diagnostic products, it might be possible to select patients early, just after diagnosis, using AI to see who will be super-responders and put them on the optimal treatment protocol to maximize the benefit for the patient. It will also invest more in organic products because, despite their higher costs, they sometimes work miracles.
Its strategy is innovative and, as such, it is not easily understood or adopted by everyone. Investors and pharma veterans are reluctant to change; they are used to doing things the same way. And everyone is trying to surpass the standard of care. But with the right treatment at the right time, it may be possible to go beyond the standard of care and return the patient to a disease-free state. According to him, with this approach, dermatology in particular is set to experience a profound change.
Hudson envisions a future of personalized medicine – providing treatment at every stage of a patient’s journey and precisely targeting specific patient populations.
I was very happy to see that Sanofi’s “All-In-on-AI” strategy is continuing and that the company is deploying very concrete solutions used by thousands of its employees. In addition to AI drug discovery and development and AI for personalized medicine to maximize the chance of success, Sanofi has developed a variety of AI tools for businesses and operations.
PowerPoint Slides Are a Disease of Big Pharma
Mr. Hudson explained that when group leaders present their results in PowerPoint slides, they tend to sugarcoat the current situation and make bad predictions. He also explained the term “Snackable AI» – providing a bit of AI to many people across the organization for real-time decision-making and reporting. Much of the real-time reporting is now done in the form of Reels – actionable Instagram-style notifications. Unlike people who can soften their poor performance to avoid change, AI does not see its career in danger. And the AI doesn’t care if you like it or not. Snackable AI delivers radical data transparency and immediate, reliable feedback without hesitation or sugarcoating.
He also explained that when the data doesn’t look good or puts the manager in an uncomfortable state, the manager will work hard not to provide you with the data. He provided examples in which he was continually told that the results were not yet ready, so he requested that the raw data be uploaded into the Large Language Model (LLM) based system and analyzed. and interpreted in a few hours.
When he joined the company in 2019, the financial analysis report alone consisted of thousands of slides. Today it is on the order of 30 slides and is delivered using AI. Humans can analyze and present cases that fall outside the model.
He also provided several examples where AI was used to solve supply chain issues and field deployment issues in near real time. For example, there was one case where reports of leaking syringes could have stopped the supply chain because humans would have automatically assumed the problem was with the manufacturing of the syringes. However, the AI system identified, in near real time, that there were no manufacturing issues. Instead, nurses were not trained to use the syringes correctly and wait for a click before injecting.
He concluded with a very positive view of China, both from a market and R&D perspective. While some global pharmaceutical giants scaled back their R&D sites in China even before the pandemic, Sanofi expanded and set up a drug discovery site in Suzhou, located about 30 minutes by train from Shanghai. Most other companies have very light influence on local internal R&D and primarily use their research capabilities to pursue licensing opportunities, but a brief interaction with this left-of-center gives the impression of a “Tesla Gigafactory. The team is really focused on delivering their own innovative therapies as quickly as possible.
In short, Sanofi is in a period of radical transformation where it will invest heavily in research and development, both internal and external, focusing primarily on immunology, deploying AI everywhere and making its reporting simpler and faster. He clearly wants to dominate the pharmaceutical industry for decades to come, even if it means investing more in the short term. It also wants to establish itself further in China, invest in local R&D and increase its market share.
