"It's bizarro world there at Sanofi," said Steve Cody, managing partner of New York-based public-relations and crisis-management firm Peppercom. "It's almost a textbook example of how not to handle crisis communications. It's classic CYA [cover your ass] stuff, and it's not smart from a branding standpoint."
Despite damning reports in media including Forbes, The International Herald Tribune, The Washington Post, CBS News, NBC News -- not to mention copious coverage on blogs -- the company hasn't changed its advertising and has issued only curt statements addressing the reports that Ambien is showing up as a factor in drivers who take the medication and have no memory of getting behind the wheel, and that it's the cause of a rare disorder known as "sleep-eating." As regards the former, the French drug maker put out a statement that said, in part, "while sleepwalking may occur during treatment with Ambien, it may not necessarily be caused by it."
And that, said another PR expert, is a major mistake. "They're letting The New York Times and Wall Street Journal and media outlets throughout the country frame the story."
The company said it does not discuss its marketing strategies. A spokeswoman would not respond to an e-mail asking if it's hired a crisis-management company to deal with the fallout.
Perhaps Sanofi's smugness can be explained by its overwhelming 75% share of the $2.8 billion prescription-sleep-aid category, which is itself exploding. Some 43 million prescriptions for sleeping pills were filled last year according to IMS, up 13% from 2004 and up 60% since 2000.
So far, the Street does not seem to think Sanofi has been caught napping. Its stock went from $43.31 a share March 8, when the first story on Ambien and sleep-driving appeared, to $44.92 on March 15, the day after the story on Ambien and sleep-eating ran.
Rivals stand pat
It's too early to tell whether sales are slumping, according to IMS. But analyst Andrew Baum of Morgan Stanley recently wrote that Ambien's sales were already estimated to drop 12% this year, due to the emergence of insomnia competitors: Sepracorf's Lunesta; Sonata, from King Pharmaceuticals; Rozerem, from Takeda; and the expected debut of Pfizer's Indiplon.
Ambien's wake-up call, however, could boost those rivals, which have not been linked in news reports to either side effect. Some have been spending mightily to beat back the leader: Lunesta laid out $215 million in measured media last year compared to $130 million on Ambien. However, marketers of rival sleep medications said they have no plans to change advertising to reflect the problems associated with Ambien.