The Hepatitis B Vaccine

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The Hepatitis B Vaccine

• Sanofis Springboard into the Asian Market

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Overview
Background
Background
Decision to Transfer Vaccine Technology
Decision to Transfer Vaccine Technology
Benefits of Licensing
Benefits of a Joint Venture
Recommendations
3
Current Situation

• 1983 at a glance

17, 466 employees
Net earnings 146 M
Total sales 9.3 B
Pharma 56.9
GOAL market leader in European Bio-industry
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Vaccine Technology
Sanofi owns 51 stake in IPP
IPP developed Hepatitis B vaccine (plasma based
and GE technology)
Sales are slow in Europe, US and SEA
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The Options
Sanofi is in negotiations to transfer its new
vaccine technology to Taiwan
Questions
Joint Venture or License?
Should Sanofi transfer vaccine technology?
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Should Sanofi Transfer the Vaccine Technology to
Taiwan?
YES
Asia has the highest incidence rates of Hep B
Sanofi needs to increase its Asian presence
Taiwanese govt wants a mass vaccination program
and is looking to become a world leader in biotech
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Incidence of Hepatitis B

• In 1982, Asia had 170 M of the 220 M chronic HBV
  carriers worldwide

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Taiwans Mass Vaccination Program

• Phase I
• New born babies (1.2M/year)
• Phase II
• Unexposed individuals
• women of child bearing age
• children
• adolescents
• adults

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Final Analysis
Recommended by WHO and international health
authorities
TECHNOLOGY
MARKET
220 M carriers worldwide most in Asia
COMPETITION
MSD, Korean Green Cross, Japanese Green Cross
FINANCES
12.6 M in royalties under proposed agreement
ORGANIZATIONAL CAPABILITIES
Pharma, IPP, APALE
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Overview
Background
Decision to Transfer Vaccine Technology
Benefits of Licensing
Benefits of Licensing
Benefits of a Joint Venture
Recommendations
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Licensing
What is Licensing?

• It is the granting of permission to use
  intellectual property rights under defined
  conditions

Benefits of Licensing

• Penetration into new markets for the Licensor
• Reduced cost and risks for the Licensor
• Technology development for the Licensee
• Control over production for the Licensee

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Benefits for Taiwanese to License
Acquisition of valuable technological skills
immediately
Lower costs per dosage

• Lure back western educated Taiwanese

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Benefits for Sanofi to License
Collect profits on an existent 1st generation
vaccine technology
No effort in the production of hepatitis-B
vaccine No effort in the establishment of clinics
Focus on the Bio-engineered vaccines
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Benefits for Both Parties
Access to complementary assets for commercial
success
Sanofi
Taiwanese
New revenue stream from Asia
Technology transfer and lower cost per dose
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Overview
Background
Decision to Transfer Vaccine Technology
Benefits of Licensing
Benefits of a Joint Venture
Benefits of a Joint Venture
Recommendations
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Joint Ventures
What is a Joint Venture?

• A contractual agreement between two or more
  parties to undertake a specific project

Benefits of a Joint Venture

• Access to resources
• Access to markets
• Share costs, risks profits

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Benefits for Taiwanese to Joint Venture
More efficient technology transfer Management
assistance, technical support training
Faster time to market

• Access to a partner with significant research
  product development experience

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Benefits for Sanofi to Joint Venture
Better control over technology transfer
Faster entry to the S.E. Asian markets Gain
intimate knowledge of the local markets Increase
sales profits for other products
Better competitive position
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Benefits for both parties
Access to complementary assets for commercial
success
Sanofi
Taiwanese
Marketing Distribution capabilities in Asia
Manufacturing Product Development skills
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Overview
Background
Decision to Transfer Vaccine Technology
Benefits of Licensing
Benefits of a Joint Venture
Recommendations
Recommendations
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Sanofi Best Case Scenario
Sanofi and NSC enter a joint venture

• Sanofi responsible for manufacturing
• NSC responsible for distribution marketing

Benefits

• greater share of profits for Sanofi
• no disclosure of sensitive technology
• access to significant marketing distribution
  network without huge investment

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Situation Analysis
Both have drawn up similar terms on the contract
Sanofi Advantages
MSD Advantages

• slightly cheaper vaccine
• accelerated plant setup (modular design)
• access to second generation technology

• important contacts in NSC
• political leverage U.S. has trade deficit with
  Taiwan
• ahead in Singapore negotiations

Without offering access to second generation
technology Sanofi does not have a strong
bargaining position
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Consequences of No Deal
Taiwan
Sanofi

• can get first generation vaccine and technology
  from MSD
• will not get second generation vaccine

• loses important market for Hep B vaccine
• gives MSD a greater global market share of Hep B
  vaccine

Without a deal both parties stand to lose Sanofi
will lose more if there is no deal
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Sanofi must ensure that it secures the agreement
with Taiwan
Strategy
Use second generation vaccine as added incentive
to close deal
Leverage the value of second generation
technology to push for a joint venture
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Creating a Competitor
Current Agreement

• Taiwan gains all knowledge for first and second
  generation technologies
• Sanofi gains proceeds from setup of manufacturing
  and technology transfer plus royalties on sales
• Taiwan is free from obligations after 12 year
  period
• Sanofi gains no marketing advantages

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Recommendations

• Proceed with transfer of technology of the first
  generation vaccine as a licensing agreement
  outlined in the Paris meeting of 1984

Remove all references to transfer of second
generation technology in its current form
Proceed with transfer of second generation
technology as a joint venture to research
manufacture and distribute vaccine in Asia
Sanofi and NSC will share the profits from all
sales of second generation vaccine
Second generation vaccines should replace first
generation vaccines in the market as soon as it
becomes feasible to do so
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?
Questions