(Changes 'keep' to 'back overhaul of' in headline; changes wording of paragraph 7 to remove reference to retaining site)
PARIS May 17 (Reuters) - Sanofi said it would overhaul rather than exit its Toulouse research site, as it seeks to break an impasse with the French government which opposed the drugmaker's reorganisation plans and the loss of jobs.
Sanofi has been regrouping its research operations around the world into regional hubs and closing some laboratories to cut costs as it grapples with the impact on revenues of patent loss on several top-selling drugs.
Chief Executive Chris Viehbacher plans to move research facilities in France to Paris, Lyon and Strasbourg, while closing other sites and cutting jobs.
The announcement last year to wield the axe in France incensed unions, which had predicted layoffs would run up to 2,500, and the newly elected socialist government as several other French companies announced big job cuts.
A government-commissioned report published earlier on Friday called for a reorganisation of the Toulouse site that could preserve around 500 of the 612 staff employed there.
Sanofi said it would take on the recommendations for Toulouse while pressing ahead with its wider plans.
The company said that in the next five years it would support moves such as the creation of a centre in Toulouse to provide research and development services to the company and other pharmaceutical groups, the establishment of local start-ups and the spin-off of some activities.
A Sanofi spokesman said the company was not committing itself to keeping a specific number of jobs at the Toulouse centre. (Reporting by Elena Berton and Noelle Mennella; Editing by Elaine Hardcastle and Helen Massy-Beresford)