A major financial concern for pharmaceutical companies is the so-called "patent cliff," which represents the sharp downturn
to be expected for product sales upon the expiry of its patent. In 2012, an estimated US$33 billion of sales was reported
to have been lost as a result of the patent cliff (1). It has been suggested that for the period between 2012 and 2018, more
than US$290 billion of sales would be at risk from patent expirations, with 2015 being the most crucial year for pharmaceutical
Patent expiry results in generic-drug competition and pharmaceutical companies must plan well in advance on how to deal
with this difficult period. Most companies will emphasise the strengths of their product pipelines and highlight the next
generation of innovative products that they hope to bring into the market. These products are often follow-on products for
existing ones, for example the use of different formulations, rather than truly novel therapies.
With many companies being listed on the stock market, investors and analysts will be looking for companies that have potential
to launch new blockbusters and bring in sufficient revenues to make up for the shortfalls of products with expired patents.
However, replacing previous blockbusters with next generation products is not easy, particularly in today's harsh pricing
environment. Some companies may find that their own pipelines are not strong enough to guarantee promising products. As a
result, they may consider alternative strategies such as acquisitions or mergers with other companies to strengthen their
Sanofi is one company that recently had to contend with the patent cliff. However, because it had already planned for the
patent cliff a long time ago, the company's management has confidently predicted that it will be able to deal with this scenario
by the end of 2013 (2). In 2012, Sanofi's profits were set for a 15% sales drop due to patent expiries of major products,
primarily its anticoagulant Plavix (clopidogrel) and the blood pressure drug Avapro/Aprovel (irbesartan) (2, 3). By the end
of 2012, sales of Plavix had dropped 6% at constant exchange rates to €503 million, while sales of Avapro/Aprovel had dropped
by 34% to €212 million (2). The company was able to somewhat compensate by improved sales of its diabetes franchise. In particular,
sales of Lantus (insulin glargine) grew 23% to €1.34 billion, thereby becoming the company's leading product (2). Nevertheless,
Sanofi's emphasis has been onits pipeline products, with the company expecting to launch 18 new drugs by the end of 2015 (3).
In addition, Sanofi acquisition of Genzyme has helped expand its biotech potential and capitalise on Genzyme's existing track
record in rare disease therapies (2, 3).