SNY Sanofi

   By Donato Paolo Mancini 
 

Shares in French pharmaceuticals heavyweight Sanofi SA (SAN.FR) jumped in early trading Wednesday after the company reported sales numbers that beat expectations, and a rise in key third-quarter metrics. Sanofi's bet on higher-value drugs seemingly offset declining revenue from its diabetes division, long afflicted by the loss of exclusivity for former blockbusters.

Net sales at the company increased to 9.39 billion euros ($10.67 billion) from EUR9.06 billion the year prior, buoyed by sales of vaccines and by the specialty-care division Sanofi Genzyme, which grew 36% on year. Analysts had third-quarter sales at EUR9.24 billion, according to a consensus estimate compiled by FactSet.

At 0902 GMT shares were up 4.1% at EUR78.67, after gaining as much as 5.4%.

Business net income--an important, adjusted metric for the company that excludes amortization, impairments, restructuring costs and other values--increased to EUR2.30 billion from EUR2.14 billion the year before, Sanofi said.

Sales in the diabetes and cardiovascular franchise decreased 6.3% at constant currencies, Sanofi said.

The diabetes division has been under pressure for quite some time. Sanofi lost intellectual property protection in the U.S. for its former blockbuster Lantus in 2015. That, along with competition from biosimilars, is still being felt. Lantus sales declined by about 18% in the third quarter, whereas, between 2002 and 2015, Sanofi's diabetes franchise had a compounded annual growth rate of 18%, according to Michael Leacock of Mainfirst Bank.

Sanofi has attempted to bounce back by trying to convince its customers to unbundle its insulins, Lantus and Toujeo, Dow Jones Newswires reported in July. A spokesman said Wednesday that the company was overall optimistic about the future of its diabetes business, and that it was progressively becoming less dependent on the U.S.

But analysts at Bryan Garnier said that the third-quarter beat confirmed that Sanofi has entered a new phase of growth. "We view this [quarter] as the starting point for future sales and EPS growth momentum," they said, adding that they expect future launches of Libtayo and Cablivi, for cancer and blood disorders respectively, to further illustrate that.

Analysts at Berenberg called the results "very solid," saying that they showed a clear return to growth at the top and bottom line at the company. Jefferies analysts agreed, describing third-quarter numbers as "strong," noting how sales were buoyed by vaccines and pharmaceuticals.

Berenberg also said that Sanofi's Dupixent, which recently gained authorization from the U.S. Food and Drug Administration for the treatment of moderate to severe asthma, delivered a 6% beat at EUR225 million. A consensus analysis by Vera services forecasts sales of EUR2.9 billion in 2021 for the drug.

Like a host of its peers in the industry, Sanofi has moved to focus on higher-value drugs by making deals. This year, it bought Ablynx, which develops drugs made from unusually small antibodies, and Bioverativ, a U.S. hemophilia specialist.

"In the third quarter, Sanofi entered a new growth phase. We delivered strong results with double-digit growth in specialty care and emerging markets, while vaccines contributed a high-single digit increase in sales," said Sanofi Chief Executive Olivier Brandicourt.

Write to Donato Paolo Mancini at donatopaolo.mancini@dowjones.com; @donatopmancini

(END) Dow Jones Newswires

October 31, 2018 05:21 ET (09:21 GMT)

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