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 PROJECTSUPPLY 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

ACKNOWLEDGEMENT

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 2The 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 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

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Supply Chain Management Practices in Sanofi Aventisand 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 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 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 22.2. History of Sanofi Aventis:Sanofi-Aventis was formed in 2004 when Sanofi-Synthélabo acquired Aventis. In early 2004, Sanofi-Synthélabo 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-Synthélabo 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-

Synthélabo to raise its bid for Aventis after it became known that Novartis, a Swiss

pharmaceutical company, was in the running.2.1-a Sanofi-SynthélaboSanofi-Synthélabo was formed in 1999 when Sanofi (former subsidiary of Total) merged with Synthélabo (former

subsidiary of L'Oréal). The merged company was based in Paris, France.2.1-b AventisAventis was formed in 1999 when French company Rhône-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 CompanyThe 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 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 23Korangi Industrial AreaKarachi74900The managing director in Pakistan is Mr. Tariq Wajid. 2.3 Methodology During interviews one of the most important tasks that one needs to

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Supply Chain Management Practices in Sanofi Aventisaccomplish 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 3ProductsPharmaceuticals 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 and

Nasacort for allergic rhinitis, Menactra for meningitis, Xatral for benign prostatic hyperplasia,

Actonel for osteoporosis and Paget’s disease and Depakine and Depakote for epilepsy.3.2 ManagementJean-François 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

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Supply Chain Management Practices in Sanofi Aventisother 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

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 company’s vaccines

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Supply Chain Management Practices in Sanofi Aventis 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 it’s the part of the MIS of Aventis, so main

role is to update the MIS 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 partie’s 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

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Supply Chain Management Practices in Sanofi Aventis DHL Speedex

4.3 Procurement

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

1. EPI – PakistanCHAPTER 55.1 Drivers:Sanofi Aventis is working on the following supply chain driver:Facilities

1. Inventory2. Transportation3. Information4. Sourcing5. Pricing

The application of the driver is given below:

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

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Supply Chain Management Practices in Sanofi Aventis

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 company’s profit. Sanofi Aventis mainly work on the following informational

components

1. Push and pull2. Coordination and information sharing3. 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.

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.

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Supply Chain Management Practices in Sanofi Aventis1. Pricing and economies of scale2. 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

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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