Supply Chain Management Practices in Sanofi Aventis

Dear Sir,
I have tried my best and have made changes as u said accordingly,
As i do not have much knowledge to work on ms.word so things I know i
applied some are remaining, yhose which i am not familiar with,

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 Supply Chain Management Practices in Sanofi Aventis

FINAL PROJECT
SUPPLY CHAIN MANAGEMENT

PREPARED BY:
SHAHRAM SIKANDAR
SARIA MAHWISH
SUBMITTED TO:
SIR AMJAD SHMIM

Lahore Business School, The University of Lahore Islamabad Campus

 Supply Chain Management Practices in Sanofi Aventis

Lahore Business School, The University of Lahore Islamabad Campus

 Supply Chain Management Practices in Sanofi Aventis

A CKNOWLEDGEMENT

All thanks to Almighty Allah who provided us moral courage and spiritual inspiration to keep us
on the right path to achieve plans and goals in us life.

We would like to express our sincere gratitude to our teacher sir Amjad Shamim who guided us
during the Master in Business Administration.

We are also thankful to Mr. Khurram Shehzad for his cooperation in obtaining important
information and published material of Multinational Pharmaceutical Companies.

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 Supply Chain Management Practices in Sanofi Aventis

CHAPTER 1

CHAPTER 2

The earliest drugstores date back to the middle ages. The first known drugstore was opened by

Arabian pharmacists in Baghdad in 754, and many more soon began operating throughout the

medieval Islamic world and eventually medieval Europe. By the 19th century, many of the drug

stores in Europe and North America had eventually developed into larger pharmaceutical

companies.

Most of today's major pharmaceutical companies were founded in the late 19th and early 20th
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 Supply Chain Management Practices in Sanofi Aventis
centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became mass-

manufactured and distributed. Switzerland, Germany and Italy had particularly strong industries,

with the UK, US, Belgium and the Netherlands following suit.

Legislation was enacted to test and approve drugs and to require appropriate labeling.
Prescription and non-prescription drugs became legally distinguished from one another as the
pharmaceutical industry matured. The industry got underway in earnest from the 1950s, due to
the development of systematic scientific approaches, understanding of human biology (including
DNA) and sophisticated manufacturing techniques.

Numerous new drugs were developed during the 1950s and mass-produced and marketed

through the 1960s. These included the first oral contraceptive, "The Pill", Cortisone, blood-

pressure drugs and other heart medications. MAO Inhibitors, chlorpromazine (Thomasine),

Haldol (Haloperidol) and the tranquilizers ushered in the age of psychiatric medication. Valium

(diazepam), discovered in 1960, was marketed from 1963 and rapidly became the most

prescribed drug in history, prior to controversy over dependency and habituation.

Attempts were made to increase regulation and to limit financial links between companies and

prescribing physicians, including by the relatively new U.S. Food and Drug Administration

(FDA). Such calls increased in the 1960s after the thalidomide tragedy came to light, in which

the use of a new tranquilizer in pregnant women caused severe birth defects. In 1964, the World

Medical Association issued its Declaration of Helsinki, which set standards for clinical research

and demanded that subjects give their informed consent before enrolling in an experiment.

Pharmaceutical companies became required to prove efficacy in clinical trials before marketing

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 Supply Chain Management Practices in Sanofi Aventis
drugs. Cancer drugs were a feature of the 1970s. From 1978, India took over as the primary
center of pharmaceutical production without patent protection.

The industry remained relatively small scale until the 1970s when it began to expand at a greater

rate. Legislation allowing for strong patents, to cover both the process of manufacture and the

specific products, came in to force in most countries. By the mid-1980s, small biotechnology

firms were struggling for survival, which led to the formation of mutually beneficial partnerships

with large pharmaceutical companies and a host of corporate buyouts of the smaller firms.

Pharmaceutical manufacturing became concentrated, with a few large companies holding a

dominant position throughout the world and with a few companies producing medicines within

each country.

The pharmaceutical industry entered the 1980s pressured by economics and a host of new

regulations, both safety and environmental, but also transformed by new DNA chemistries and

new technologies for analysis and computation. Drugs for heart disease and for AIDS were a

feature of the 1980s, involving challenges to regulatory bodies and a faster approval process.

Managed care and Health maintenance organizations (HMOs) spread during the 1980s as part of

an effort to contain rising medical costs, and the development of preventative and maintenance

medications became more important. A new business atmosphere became institutionalized in the

1990s, characterized by mergers and takeovers, and by a dramatic increase in the use of contract

research organizations for clinical development and even for basic R&D. The pharmaceutical

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 Supply Chain Management Practices in Sanofi Aventis
industry confronted a new business climate and new regulations, born in part from dealing with

world market forces and protests by activists in developing countries. Animal Rights activism

was also a problem.

Marketing changed dramatically in the 1990s, partly because of a new consumerism. The

Internet made possible the direct purchase of medicines by drug consumers and of raw materials

by drug producers, transforming the nature of business. In the US, Direct-to-consumer

advertising proliferated on radio and TV because of new FDA regulations in 1997 that

liberalized requirements for the presentation of risks. The new antidepressants, the SSRIs,

notably Fluoxetine (Prozac), rapidly became bestsellers and marketed for additional disorders.

Drug development progressed from a hit-and-miss approach to rational drug discovery in both

laboratory design and natural-product surveys. Demand for nutritional supplements and so-called

alternative medicines created new opportunities and increased competition in the industry.

Controversies emerged around adverse effects, notably regarding Vioxx in the US, and

marketing tactics. Pharmaceutical companies became increasingly accused of disease mongering

or over-medicalizing personal or social problems.

1.2 Major Players in Market:

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 Supply Chain Management Practices in Sanofi Aventis

1.3 Player Chosen:

From the above mentioned players I have chosen Sanofi Aventis for my project.

CHAPTER 2

2.2. History of Sanofi Aventis:

Sanofi-Aventis was formed in 2004 when Sanofi-Synthlabo acquired Aventis. In early 2004,

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 Supply Chain Management Practices in Sanofi Aventis
Sanofi-Synthlabo made a hostile takeover bid worth 47.8 bn for Aventis. Initially, Aventis

rejected the bid because it felt that the bid offered inferior value based on the company's share

value. The three-month takeover battle concluded when Sanofi-Synthlabo launched a friendly

bid of 54.5 bn in place of the previously rejected hostile bid. French government intervention

also played an active role. The French government, desiring what they called a "local solution",

put heavy pressure on Sanofi-Synthlabo to raise its bid for Aventis after it became known that

Novartis, a Swiss pharmaceutical company, was in the running.

2.1-a Sanofi-Synthlabo
Sanofi-Synthlabo was formed in 1999 when Sanofi (former subsidiary of Total) merged with

Synthlabo (former subsidiary of L'Oral). The merged company was based in Paris, France.

2.1-b Aventis

Aventis was formed in 1999 when French company Rhne-Poulenc S.A. merged with the

German corporation Hoechst Marion Roussel, which itself was formed from the 1995 merger of

Hoechst AG with Roussel Uclaf and Marion Merrell Dow. The merged company was based in

Schiltigheim, near Strasbourg, France.

2.2 Origin of Company

The origin of company is France and the head office is located at Lyon but Asia regional head
office is located at Singapore. The company is operating since 1875 globally. The Aventis
acquired Sanofi in 1996 and became Sanofi Aventis. It deals with Oncology, Anti Diabetic
medicines and Vaccines. The vaccine division is the largest division of the world and it is known
by Sanofi Pasteur after the name of Louis Pasteur. It deals with 20 vaccines. The R and D of
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 Supply Chain Management Practices in Sanofi Aventis
Aventis is very strong and now a days company is doing research on developing vaccines against
Dengue fever and AIDS. The company local head office is located at Karachi. The address is
given below.

Plot No 22, Sector No 23

Korangi Industrial Area

Karachi

74900

The managing director in Pakistan is Mr. Tariq Wajid.

2.3 Methodology

During interviews one of the most important tasks that one needs to accomplish is of collecting

as much quality information about the organization as possible. This information helps in writing

of good and factual report. Following are the main sources from where I utilized the data

Data that have been originally collected (raw data) and have not undergone any sort of statistical

Treatment are called primary data. In writing this report I collected the primary data through,

Interviews
CHAPTER 3

Products
Pharmaceuticals produced by Sanofi-Aventis include Lovenox/Clexane for thrombosis (its

biggest seller in 2008), Plavix/Iscover for atherothrombosis, Apidra and Lantus for diabetes,

Taxotere for breast, lung and prostate cancer, Eloxatin for colorectal cancer,

Stilnox/Ambien/Ambien CR/Myslee/Zolfresh/Zolt/Stilnoct for insomnia, Copaxone for multiple

sclerosis, Approval/Avapro/Karvea and Delix/Tritace/Triatec for hypertension, Allegra/Telfast

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 Supply Chain Management Practices in Sanofi Aventis
and Nasacort for allergic rhinitis, Menactra for meningitis, Xatral for benign prostatic
hyperplasia, Actonel for osteoporosis and Pagets disease and Depakine and Depakote for

epilepsy.

3.2 Management
Jean-Franois Dehecq, Chairman.
Chris Viehbacher, CEO.

Dehecq was the General Manager of Sanofi from its creation in 1973 until 2007.

3.4 Competitors of the company.

The main competitors of the company are according to the product portfolio. The detail is given

below.
Anti Diabetic Group = Ely Lille and Getz

Oncology = Pfizer

Vaccine Group = GSK and Novartis

3.5 Production:

The company has two manufacturing plants in Pakistan. One is located at Wah Punjab and
other is located at Karachi Pakistan, In these plants tablets and liquid form is manufacturing
while rest of the products are being imported from Lyon France. The vaccine division have 10
manufacturing plants all over the world and all the vaccines available in Pakistan are being
imported from different plants of the world. The packaging is being done in parts, in Karachi and

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 Supply Chain Management Practices in Sanofi Aventis
globally as well, it depends upon the products. For instance, oncology, vaccine and anti
diabetic medicines are being packed and manufactured globally, not in Pakistan.

3.5-a Name
The name of Supply chain manager is Mr. Masood Ahmad Shah. The office of supply chain
manager is located at Karachi

CHAPTER 4

4.1 Activities Involved in Supply Chain of Sanofi Aventis Pakistan

The role in detail is given below.

The frequent supply of Products from Head office warehouses to local distributors.
Having direct contact with the institutional distributors
Making quotations for the tenders
Maintaining cold chain of the companys vaccines
Arranging meeting on the supply issues with stakeholders
Inventory of products
Direct dealing with the institutional managers of the company for negotiations in
bidding process
The supply chain system is computerized and its the part of the MIS of Aventis, so
main role is to update the MIS
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 Supply Chain Management Practices in Sanofi Aventis
Dealing with IMS and third parties to ensure the smooth supplies

4.2 Suppliers

The Aventis previously dealt with its self managed supply system including lodgistics and
transportation of the medicines from one place to other. The company had its own distribution
set ups all the country but now Aventis nominated the distribution set-ups and hired the third
parties. These third Parties are responsible to provide services to the company and they charge
their services to the company. The major third parties names are given below.

TCS
DHL
Speedex
Premier Agency
Trade Leaders, Islamabad
Al Noor drug agency, Islamabad
Sameel Sulaiman Lahore and Faislabad

More-over the company has its own planes that carries the finished products from different
plants to Pakistan.

The detail is given below.

Ships
Planes
Vehicles
Trucks
Supply persons
TCS
DHL
Speedex

4.3 Procurement

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 Supply Chain Management Practices in Sanofi Aventis

No tender is involved; they never gave any ad in the newspapers for procurement. The only way
of Procurement is direct contact to the bidders. The supply chain deals with the bidders. The
procurement depends upon 3 quotations from different bidders and the lowest one is awarded the
order.

The company has its own MC (Management Committee). The MC members includes Director
Sales, Marketing Managers, Product Managers and CEO of the company. The main decision
power is held by the regulatory affairs director and director of industrial affairs. There are around
10 members in MC
EPI Pakistan

CHAPTER 5

5.1 Drivers:
Sanofi Aventis is working on the following supply chain driver:

1. Facilities
2. Inventory
3. Transportation
4. Information
5. Sourcing
6. Pricing

The application of the driver is given below:

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 Supply Chain Management Practices in Sanofi Aventis

5.2 Facilities:
These are the locations to or from which the inventory is transported. Sanofi Aventis is working

on the responsiveness method by placing the inventory close to the customers. However by

doing this efficiency of the company would goes down as it does not achieve the economies of

scale

Inventory:

Sanofi Aventis mainly deal with efficiency by centralised stocking the inventory and achieve the

economies of scale.

5.3 Transportation:
Faster transportation used by the company and by doing this achieving the responsiveness and

ignoring the efficiency in this case company bears increasing cost to facilitate the customers.

Information:

Accurate information always brings the increase in efficiency and responsiveness. Company is

working on both the efficient and the responsive modes because information plays a vital role to

increase the companys profit. Sanofi Aventis mainly work on the following informational

components

1. Push and pull

2. Coordination and information sharing
3. Forecasting and aggregate planning

5.4 Sourcing:
Sourcing means purchasing the goods and services some times company insource the goods and

services and some time outsource.

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 Supply Chain Management Practices in Sanofi Aventis

Components of sourcing are given below:

1. In house or outsource
2. Supplier selection
3. Procurement

5.5 Pricing:
Sanofi Aventis working on the following components of pricing.

1. Pricing and economies of scale

2. Fixed price vs menu price

Company deal with the responsiveness in pricing strategy by lowering supply chain cost defend

market share or even steal market share some time company use differential pricing to attract

customers with varying needs.

5.6 Lead Time:

There are two categories of medicines according to lead time;
1. Those type of medicines which are acquired on demand from foreign countries
only on specific orders.
Such type of sales has a lea time of 5-8 days

2. Those medicines which are available for normal orders, i.e. locally available
usually has a lead time of 1-2 days.

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 Supply Chain Management Practices in Sanofi Aventis

CHAPTER 6

6.1 SWOT ANALYSIS:

Strengths:
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 Supply Chain Management Practices in Sanofi Aventis

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 Supply Chain Management Practices in Sanofi Aventis
6.2 CONCLUSION:

Sanofi Aventis is an example of the supply chain advancement in the world

of efficiency and responsiveness. There are some faults as well but it can be
conclude as the leader of the supply chain functions.

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