Servier relies on oncology to metamorphose



Posted Jan 18, 2022, 6:19 PMUpdated on Jan 18, 2022 at 6:45 PM

An operating result of 278 million and an EBITDA of 625 million, stable, for a consolidated turnover of 4.72 billion euros, up by 0.8% (+4.3% excluding the exchange rate effect): the the Servier group, which took stock of its strategy on Tuesday, will have run very tightly during the financial year ending at the end of September.

If the net result is in the red of 25 million euros, against a net profit of 204 million the previous year, it is the consequence of an exceptional charge of some 200 million, linked to the compensation of the victims. of the Mediator. The group was found guilty of “aggravated deception and manslaughter and manslaughter”. The Paris prosecutor’s office and Servier appealed against this conviction.

But the last financial year was also marked by the acquisition for 1.8 billion dollars (an additional 200 million expected) of the oncology division of Agios Pharmaceuticals, after that of Shire in 2018. Carrying out such operations is not easy without the flexibility provided by access to the financial market, because Servier, it should be remembered, is owned by a foundation and therefore had to resort to borrowing.

Metamorphosis

The group has undergone a metamorphosis. Today, it is a laboratory mainly marketing mature products and generics in the cardio metabolic field – the veinotonic Daflon (473 million) is its first product – in middle-income countries. But tomorrow, as indicated by its president, Olivier Laureau, “Servier will be a laboratory positioned in oncology, immunology and diseases of the central nervous system on remunerative markets”. The growth in sales in oncology (+34.9%) to 604 million, but also in the American (+31.4% to 255 million) and Japanese (90 million) markets over the 2020-2021 financial year provides a taste of what Servier’s performance could be when its transformation is complete.

Until then, the group is concentrating its efforts on R&D (more than 20% of turnover) and on acquisitions likely to improve its pipeline of projects. Over the past eighteen months, an exhaustive strategic review has been carried out which has resulted in the shutdown of 19 of them. Their number has nevertheless doubled, in particular thanks to acquisitions. “Given our size and in a context of strong financial constraints, we must absolutely focus, not only on a limited number of therapeutic areas, but within each of them, on a limited number of projects. only requiring investments that we are able to finance,” explains R&D Director Claude Bertrand.

Outward opening

Within oncology itself, for example, Servier has chosen to work only on rare cancers in the digestive field and on two types of leukemia. Ditto on the technology side, where it is limited to a few complementary and well-mastered platforms, likely to lead to products within a period deemed reasonable.

“Nevertheless, Servier remains very open to the outside,” emphasizes its R&D director. The group has around thirty partnerships with biotechs and around forty agreements with academic research laboratories, “without sacrificing internal research and its five centers [Boston, Danemark, Hongrie, Chine et bientôt Saclay, NDLR] “, he adds.

The impact of exchange rates on Servier’s performance is due to the large share of middle-income countries in the group’s sales (some 50%), many of them having experienced a devaluation of their currency. In China, on the other hand, it was the country’s adoption of a tendering system based on the best cost/benefit ratio that caused the French laboratory’s sales to decline by 23%.

1.3 billion Ebitda targeted in 2025

“By 2025, we have set ourselves the objective of launching a new product every three years, of achieving a turnover of 6.5 billion (including 1 billion in oncology) and an Ebitda of 1.3 billion. », says Olivier Laureau. To achieve this, the group relies on its pipeline of projects, reserving the possibility of supplementing it with one-off purchases of molecules.

On the other hand, to maintain a satisfactory financial balance, major acquisitions are not on the agenda before 2025. Also, the current financial year is presented as a continuation: “accelerating in oncology and strengthening sales in the United States and Japan while maintaining the position in metabolic cardio”, as summed up by Vice-President Finance, Pascal Lemaire.

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