Sanofi: A Global Leader in Pharmaceuticals - Essay Sample

Introduction

Sanofi is a French multinational pharmaceutical company. It has its headquarters in Paris, France. The company has over 100,000 employees working in 100 countries worldwide (Sanofi, n.d.). The company was formerly known as Sanofi-Aventis when Sanofi-Synthelabo acquired Aventis in 2004, each being a product of previous mergers. In 2011, the company changed its name to Sanofi. Sanofi specializes in the research and development, manufacture and marketing of pharmaceutical drugs, majoring in the prescription market. It also provides over-the-counter medications. The company specializes in seven therapeutic disciplines. These include central nervous system disorders, cardiovascular, diabetes, vaccines, oncology, internal medicine, and thrombosis. Sanofi was the fifth-largest prescription sales company in the world as of 2013 (Palmer & Helfand, 2014).

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

In Australia, Sanofi has its headquarters in Sydney. As of 2017, the company had 750 employees in Australia (IBISWorld, 2017). Much like its parent company in France, it deals with the sale and distribution of pharmaceutical products.

Therapeutic Goods Administration in Australia

In Australia, the quality, efficacy, safety and timely availability of drugs and medical devices are controlled by the Therapeutic Goods Administration (TGA). TGA works through the Therapeutic Goods Regulations and the Therapeutic Goods Act 1989 (Vaughan, 1995). One of the primary functions of TGA is prescription drug evaluation. Extra services include regulation of non-prescription drugs, nutritional, vitamin and herbal products, and medical devices. Under the Australian Register of Therapeutic Goods (ARTG), there are about 48,000 products covered. Out of these products, there is approximately 27,000 drugs and 21,000 medical devices. Also, out of the 27,00 drugs only 3,500 are registered as prescription-only drugs (Vaughan, 1995).

Usually, regulating drugs is a complex and resource intensive process because it accounts for safety, quality, and efficacy without interfering with the timely availability of drugs. It also calls for a balance between efficacy and safety. However, Australia acknowledges that there is no drug that can be considered to be 100% safe. The Approval process of drugs considers the risk-benefit evaluation for any given drug seeking approval.

As it is the case in most instances, TGA is first notified of a drug when an application for marketing is made or when planning for Australian clinical trial. The sponsoring company seeking approval submits preliminary data for clinical trials to the TGA's Clinical Trial Exemption scheme (CTX) or notify the Clinical Trial Notification scheme (CTN) concerning trial approval by an institutional ethics committee.

For the registration of a new drug, toxicology, chemistry and clinical use data of the drug is evaluated from the data given by the sponsoring company. Although most evaluations are conducted within the TGA, external assessment can also be used. Once all the data has been evaluated, the Australian Drug Evaluation Committee (ADEC) considers the application. This committee consists of a group of doctors who give their opinion on the marketing suitability of the drug in Australia. The advice from the ADEC is considered by TGA when issuing the final recommendation.i This is usually the case when the application involves complex clinical concerns. However, if the application is for an existing drug the Baume report is given preference unless a recommendation to reject the application has been issued by TGA. The Baume report gives more emphasis on the timely availability of drugs (Vaughan, 1995).

Impact of Regulation on Research and Development

Pharmaceutical regulations have an effect on drug prices, usually, lower prices. Economic theory suggests that regulation increases demand for drugs; thus it does not reduce sales of pharmaceutical products. According to Hart et al. (1997) prices do not influence the prescription behavior of physicians. However, with the regulation of pharmaceutical products, there is a reduction in profit margins which has a direct negative impact on research and development (R&D) investment decisions (Filson & Masia, 2007). Drivers for R&D are influenced by regulation. Consequently, a reduction in R&D impacts negatively on innovation and company success. Besides, it reduces the number of new drugs in the pharmaceutical market.

Usually, when there is more R&D, the costs of such investments are transferred to the prices of the final products. However, this also results in an increase in the pharmaceutical market with innovation leading to a rise in drug categories.

Since the amount of research and development expenditures is the primary input factor necessary for the innovation process, there is a need for the future TGA regulations to focus on the impact of policies on the efficacy of research and development expenditures. This will create room for unmet medical market to be economically filled. Such policies will not only benefit the pharmaceutical companies but the government and patients too.

Price Regulation

Another objective of TGA is to control the prices of pharmaceutical products. Although price regulation of pharmaceutical aims at improving the total welfare of the society by lowering the price of drugs and increase healthcare access resulting in higher consumer surplus, this benefit is offset by the long-term reduction in research and development spending. Also, price regulation has caused pharmaceutical companies to reduce foreign investment and only invest where countries have less strict price controls.

Impact of Corporate Taxes on Foreign Companies

Australian Pharmaceutical industry is significantly essential to the tax base and national economy. These industries generate billions in corporate tax revenue (Australia Taxation Office [ATO], 2018). The diversities in the pharmaceutical companies are areas of focus for ATO. ATO has legal teams tasked with reviewing the transfer pricing practices and tax performance in the industry under the Australian law. The officers are also tasked with assessing international and domestic tax risks related to thin capitalization, party financing, intellectual property migration, business structures, research and development and consolidation (ATO, 2019).

One of the members of the pharmaceutical industry affected with strict tax regulation in Australia is foreign companies. Just like domestic companies, foreign pharmaceutical companies in Australia are subjected to a 30% corporate tax. Adding this tax with the tax they pay to their home governments it increases expenditure costs thus hurting the R&D - it reduces profit margin (Filson & Masia, 2007).

Moving forward, ATO should review its tax legislation to be flexible on foreign pharmaceutical companies such as Sanofi Ltd.

Pharmaceutical and Drugs Agreements and Policies

Australia has a private healthcare system and a mixed government. As of 2001, Australia spent on healthcare services around 9% of its GDP (gross domestic products), - the government provided 70%, 7% mediated by private health insurance institutions, and from other activities (Harris, 1994). The government was rebated for the costs accrued on both public and private medical services from universal healthcare insurance. There were around 45% of the population insured in private institutions and their costs remained in private hospitals. The government gave persons who take out private health insurance a discount of 30% of the costs of that insurance (Harris, 1994).

The Australian government also provided the third element of protection against medical costs. The third element was in the form of the national Pharmaceutical Benefits Scheme (PBS) that existed before the significant expansion of the medical and government for hospitals (Duckett, 2004).

Among Australians, taking non-prescription or prescription medication is the most prevalent healthcare service. The second most common healthcare service is taking pain relievers. The third is blood pressure medications or heart problems. Usually, these medications are not after recommendation by professional advice. Also, the medications are not discounted by the government (Duckett, 2004). As a result of these trends, Australia has implemented a National Medicines Policy to ensure all pharmaceutical products are monitored to prevent unsafe drugs reaching its population. According to the Commonwealth Department of Health and Aged Care (1999), the National Medicines Policy ensures that the needed medicines reach Australians timely; affordably; put in quality use; meet the appropriate standards of efficacy, quality, and safety. It is also tasked with maintaining a viable and responsible medicine industry.

The Pharmaceutical Benefits Scheme

The Pharmaceutical Benefits Scheme in Australia was formulated in 1948 and given the mandate to control access to medicines and other drugs. Besides, the Therapeutic Goods Administration is tasked with ensuring the safety, quality, efficacy and timely availability of drug are regulated. However, Australia acknowledges that to guarantee quality use of drugs collaboration of a range of policies is required. Some of them include consumer information, educational programs, and strict legislation. Also, pharmaceutical industry support programs can be used to achieve a viable and responsible pharmaceutical industry.

There is a significant government expenditure when a decision to list a pharmaceutical item is made because there is an evaluation of both the effectiveness of the drug complementing the old items and the costs involved. There are guidelines to be followed before a drug can be listed under PBS and they are updated regularly.

Despite much resistance after its introduction, PBS has received much acceptance after promising to guarantee orderliness in the pharmaceutical industry (Duckett, 2004). PBS offers restriction to products requiring preauthorization before they are prescribed. Further, acquiring preauthorization involves contacting PBS agencies, the Health Insurance Commission and sometimes certification of the medical practitioner specifying indications for the prescription. This requirement is however viewed as bureaucratic and not based on evidence.

PBS groups drugs into five levels using the Anatomical Therapeutic Chemical Code. Some of them include "anatomical main group, therapeutic main group, therapeutic subgroup, chemical/therapeutic subgroup, and generic drug name," (Duckett, 2004). Cardiovascular system drugs are the most commonly prescribed group accounting for over 30% of all costs and prescriptions.

When a pharmaceutical product is listed on the Pharmaceutical Benefits Scheme under more than one brand name, pharmacists are required to provide generic forms of the product unless the medical practitioner has given a directive on the prescription form not to do so. The PBS only pays for the "least-costly" products on the availability of generic equivalent leaving consumers to settle any additional expenses for a specific brand name. Also, in such situations, consumers are expected to pay for any copayments. An extra alternative is payable too if an exemption on medical grounds has not been approved for such consumers or the pharmaceuticals under the same therapeutic classes are considered equivalent (Duckett, 2004).

It is a government requirement in Australia that generation policy be facilitated if a computer software used by a medical practitioner to make a prescription for the PBS has defaulted a preferred drug. In this case, under Australian legislation, the form fails to be a generic form for a drug automatically, and it is considered a proprietary form.

Australian expenditure on Pharmaceutical continues to gro...