Sanofi warns of lower diabetes product sales; Q3 profit boosted by performance of Genzyme, vaccines

Sanofi said Thursday alongside its third-quarter financial results that due to "recent market trends," it expects global diabetes sales through 2018 to decline at an average annualised rate of between 4 percent and 8 percent on a constant currency basis. A previous forecast had guided for slight growth at best. Shares in the company fell as much as 5.3 percent on the news.

"We conducted a detailed scenario analysis and arrived at what we consider to be a realistic range," remarked CEO Olivier Brandicourt, adding that the lower end of the forecast range for diabetes sales is "conservative." The drugmaker noted that it plans to "mitigate the impact of this revised sales expectation on its business operating income by 2018 and will present the mid-term strategic and financial outlook" next month. "Despite headwinds in our diabetes business, we are confident in Sanofi's long-term prospects and we look forward to sharing our roadmap...on November 6," Brandicourt added.

In the third quarter, growth in Sanofi's diabetes portfolio was hit by lower sales of Lantus in the US, where they fell 19.6 percent on a constant exchange rate basis to 997 million euros ($1.1 billion). Overall sales of the product reached 1.6 billion euros ($1.8 billion), down less than 1 percent on a reported basis, but a decline of 11 percent at constant currencies. In the US, where Lantus lost patent protection in May, Sanofi has been forced to offer insurers bigger rebates on the drug, while sales of injected insulin has weakened as more patients switch to oral therapies. The company said that diabetes products generated total revenue of 1.9 billion euros ($2.1 billion), up 2.9 percent year-over-year.

Brandicourt noted that during the quarter, Sanofi "showed growth on both top and bottom line...driven by strong performance of Genzyme, vaccines and emerging markets." Sales of vaccines jumped 18.3 percent versus the year-ago period to 1.7 billion euros ($1.9 billion), with revenue from the Genzyme division up 42.2 percent at 923 million euros ($1 billion), boosted by strong sales of the multiple sclerosis therapy Aubagio.

Quarterly revenue from prescription drugs rose 6.6 percent to 7.3 billion euro ($8 billion), while overall sales climbed 9.2 percent to 9.6 billion euros ($10.5 billion), missing analyst estimates of 9.7 billion euros ($10.6 billion). Sanofi reported that net income in the quarter surged 36.8 percent year-over-year to 1.6 billion euros ($1.8 billion).

For the full year, the drugmaker reaffirmed that earnings per share will be stable to slightly growing. However, Sanofi indicated that the voluntary recall of its Auvi-Q and Allerject injectable devices in the US and Canada is likely to have a negative impact of about 100 million euros ($110 million), to be booked in the fourth quarter. The recall is being made because the injectors may not deliver the correct dose.

Last month, sources suggested that Sanofi is weighing the disposal of its bio-surgery and renal-care units, and is also considering option for its Merial animal-health division. The company recently agreed to work with Regeneron Pharmaceuticals on immuno-oncology treatments, with Brandicourt commenting Thursday that deal-making would be a "useful tool" as a way to bolster its portfolio in the future.

To read more Top Story articles, click here.