Like many a corporate rejuvenation plan, CEO Paul Hudson's blueprint for Sanofi includes some hefty cost cutting.

The French drugmaker's aiming for €2 billion in annual savings by 2022, executives said Tuesday at an investor event where Hudson unveiled his strategy. And the company has already made progress, projecting €600 million in savings this year.

The cost-cutting details aren't all fleshed out yet. But in short? Sanofi is shedding jobs in support functions, ratcheting back manufacturing budgets, tightening up purchasing, cutting down on travel and more.

In one big move, Sanofi is revamping its marketing deal with Regeneron to emphasize fast-growing Dupixent and "deprioritize" cholesterol med Praluent and rheumatoid arthritis treatment Kevzara. "[R]ight-sizing" the commercial teams for those two drugs will save some cash, though Sanofi didn't say how many sales and marketing jobs face the ax.

Together with discontinuing R&D in diabetes and cardiovascular diseases—in many ways the headline announcement Tuesday—those cuts can save €500 million by 2022, Sanofi says.

The French drugmaker aims to realize a bigger chunk of savings—€1 billion by 2022—through "smart spending" in purchasing by negotiating better prices and better managing its demand. On top of those two goals, Sanofi is targeting €500 million in savings from "operational excellence," or improving manufacturing efficiency and employee productivity.

Sanofi estimates it'll cut 8% of its support staff this year and plans to take that to 20%, Chief Financial Officer Jean-Baptiste de Chatillon said Tuesday. In a call with reporters, Hudson said that effort has been in place since before he started at the drugmaker. The company has kicked off voluntary departure programs in countries including Japan, U.S., Germany and France.

At the end of 2018, Sanofi employed more than 21,000 people in marketing and support functions globally, although it wasn't clear exactly how many of those jobs would be affected.

To show the company is serious about saving, execs said Tuesday that operating costs for the drugmaker are down 0.7% in 2019 through September compared with an average increase of 4.8% in recent years. Sanofi expects that belt-tightening to save €600 million this year. 

De Chatillon got into some granular detail about the company's penny-pinching. By using video conferencing to replace in-person meetings, Sanofi has saved 18% on travel costs through September this year, he said. It's saving money on consultants—those fees are down 36% this year—by giving employees more power to make their own decisions. And an e-learning platform has helped cut training costs by 15% this year. 

Further, Sanofi plans to streamline its established medicines portfolio, which currently features about 300 products. Some of those meds have limited sales and cost more money to maintain than they bring in, so Sanofi aims to reduce the portfolio to about 100 drugs by 2025. 

Asked about potential R&D layoffs in fields that Sanofi is deprioritizing, Hudson said on the call it’s "too soon" to work through those details. Sanofi has a "proud history" in those areas, but the company had to make "hard choices" and recognize that within its existing R&D group for diabetes and CV, there weren’t any pipeline programs that would change medical practice and secure favorable reimbursement.  

At least some of the savings from that R&D shift will likely be redeployed into programs Sanofi is ramping up, namely rare diseases and oncology. And on Sanofi's overall headcount plans, Hudson said the drugmaker will add positions in some businesses where it can succeed and reduce them elsewhere.

Sanofi doesn’t yet know how that balance will shake out and will work on the details over the coming weeks and months, he added.

The new strategy isn't all about saving money, though. The company plans to invest in fields where it can succeed, plus spend on M&A and business development, among other spending priorities.

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