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Sanofi (SNY - Analyst Report) recently announced that it has started constructing a new manufacturing facility in the Saigon High Tech Park – Ho Chi Minh City, Vietnam. Sanofi plans to invest approximately $75 million on this new plant. The new plant is expected to be fully operational by the end of 2015.

The manufacturing facility is expected to produce pharmaceuticals and consumer healthcare products with an initial capacity of 90 million units per year, which is expandable up to 150 million units.

We believe that the manufacturing facility will help Sanofi to meet the demand in Vietnam and Association of South East Asian Nations (ASEAN) markets.

The signing of the deal comes close on the heals of Sanofi’s collaboration with a French biopharmaceutical company, Transgene, for the production of immunotherapy products and creating of an industrial platform for the same. The platform will include Transgene’s candidates.

Sanofi and Transgene will invest €10 million in the platform, which will be located at the Genzyme Polyclonals site at Lyon, Gerland. The platform will be solely owned by Sanofi.

Construction, qualification and validation of the manufacturing facility are expected to commence in the third quarter of 2013. Sanofi expects the first batch of commercial grade drugs to be available in 2015.

We note that Sanofi is looking to combat the threat of genericization hanging over many of its drugs by signing deals/making acquisitions. The company’s focus on the high potential emerging markets is also impressive.

Sanofi carries a Zacks Rank #3 (Hold) in the short run. However, large cap pharma stocks such as Novo Nordisk (NVO - Analyst Report), Eli Lilly and Company (LLY - Analyst Report) and Abbott Laboratories (ABT - Analyst Report) currently look more attractive. All three stocks carry a Zacks Rank #2 (Buy).

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