UPDATE: Sanofi Profit Up, Beats Views; Plans More Acquisitions
French drugs company Sanofi-Aventis (SNY) plans to maintain its
pace of acquisitions and focus on small- and mid-sized targets, the
company said Wednesday as it beat expectations with a 10% rise in
fourth-quarter net profit, spurred by sales of its key drugs,
including Lantus and Lovenox, as well as an extra boost from
"We're not particularly limited in size...the bigger the deal
becomes, the more a company gets bogged down in integrating it, so
I continue to believe smaller- to mid-size is certainly the way to
go" Chief Executive Chris Viehbacher said of the company's
acquisition plans for this year at a presentation on fourth-quarter
Net profit for the last quarter of 2009 rose to EUR1.8 billion
from EUR1.63 billion a year earlier, beating analyst expectations
for EUR1.76 billion.
"Overall, a solid quarter," said Tim Anderson, analyst with
Sanford Bernstein in a note Thursday. Sanford rates the company
market perform with a EUR60 price target.
Sanofi's quarterly sales rose 3.8% to EUR7.36 billion from
EUR7.09 billion, lifted by fast growth in the vaccines division,
one of the company's platforms for future growth, as governments
stockpiled vaccines for the AH1N1 swine flu virus.
Sanofi said it expects to record growth of 'business' earnings
per share at constant rates of 2% to 5% this year, excluding the
effect of potential generic competition to its blood thinner
CEO Viehbacher said it was too early to calculate the impact of
generic competition to Lovenox in the U.S. as it is not yet known
whether one or more generic alternatives will be approved
Drugs companies are scrambling to find sources of growth to fill
in for the high-margin, blockbuster drugs business that is slipping
away as patents expire.
Analysts welcomed a pledge by Viehbacher last year to match 2008
sales by 2013 despite a drop off in revenues from expiring patents
on key drugs. Among Sanofi's top-selling drugs, sales of its cancer
treatment Eloxatin and heart treatment Plavix weakened over the
quarter due to competition from generic alternatives.
Over the past year, Viehbacher has embarked on an acquisition
spree, bolstering the company's over-the-counter business, vaccines
and generics, with a focus on emerging markets in a bid to steer
the company towards new sources of growth. Viehbacher stressed the
company is interested in further acquisitions in the field of
consumer health. Sanofi recently acquired U.S.-based Chattem, which
makes over-the-counter lotions and potions. Sanofi made EUR6.6
billion-worth of acquisitions last year.
"What changed in 2009 was the focus away from the patent cliff
towards new strategies of growth," Viehbacher said Wednesday.
Like peers, Sanofi has been weeding out its research
investments, and putting emphasis on acquisitions to bolster its
research and development pipeline. Larger rival U.K.-based
GlaxoSmithKine PLC (GSK) last week announced further cuts in its
research investment and a shift away from its core business.
Sanofi Wednesday said it expects cost savings and reductions in
research and development to generate EUR2 billion in 2013. Cost
savings in 2009 generated EUR480 million, and the company expects
cost savings this year to outpace its initial plans.
Sanofi also said it is 'highly probable' that it will merge its
animal health unit Merial with Merck & Co.'s (MRK)
Intervet/Schering-Plough business. Sanofi took over Merial, a
joint-venture run with Merck, as Merck sought clearance from U.S.
antitrust authorities for its takeover of Shering-Plough last year.
The $4 billion sale of Merck's half of the business included an
option for Sanofi to combine Merial with Shering Plough's Intervet
unit, and a decision is expected in the coming weeks.
Viehbacher Wednesday also said he doesn't expect results from
further studies on its diabetes drug Lantus before next year.
Sanofi managed to shake off investor concern after a study
suggested a possible link between the drug and higher rates of
cancer last year. Analysts in recent months have flagged the
possibility the issue could return to focus as results of further
studies are made public.
Viehbacher indicated that the company expects its cancer
treatment BSI-201, which gained fast-track status for approval with
U.S. authorities, to be filed with authorities there at the end of
this year or early next year.
At GMT, Sanofi shares traded EUR0.06 lower, or down 0.1%,
EUR52.6 while the CAC-40 index was up 0.4%.
-By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 17 73;
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