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Sanofi Rides on Genzyme & Vaccines Unit, Diabetes Sales Weak
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We issued an updated research on Sanofi, Inc. (SNY - Free Report) on Sep 26.
Sanofi performed quite well in the first half of 2017. Earnings rose4.9% on a reported basis in the first half of 2017 and 2.7% at constant currency rates (CER) on a year-over-year basis.
First halfnet sales rose 8.7% on a reported basis and 5.5% at CER. In January 2017, Sanofi swapped its Merial Animal Health businesses with Boehringer Ingelheim’s Consumer Healthcare (CHC) business. Reflecting this exchange and full consolidation of Sanofi’s European vaccines operations, sales rose 2% at constant structure and CER. We remind investors that Sanofi terminated its Sanofi Pasteur MSD joint venture with Merck & Co., Inc. (MRK - Free Report) in Europe in December last year.
A strong performance by Genzyme’s Specialty Care (Genzyme) and Vaccines units is making up for accelerated decline in the diabetes franchise to support the top line.
In fact, at the second quarter conference call, Sanofi raised its previously issued profit outlook backed by a better-than-expected performance in the first half and cost discipline. However, a tough U.S. payer environment hurt sales in theDiabetesunit.
Continued strong performance of the Genzyme unit, especially the multiple sclerosis drugs, Aubagio and Lemtrada, and rare disease drugs like Myozyme/Lumizymeand Fabrazyme is a positive. The Vaccines unit is also expected to perform well. Sales (including emerging markets) rose 14.3% at CER in the Genzyme unit and 24.5% at CER in the Vaccines unit in the first half of 2017.
Meanwhile, Sanofi is quite optimistic about the sales prospects of its newly launched drug Dupixent for treating atopic dermatitis. The drug, which was launched in the United States in March 2017, generated sales of €26 million in the second quarter, backed by strong demand. Management was pleased with the drug’s uptake. We are optimistic on sales prospects of Dupixent, which could prove to be an important growth driver for the company. Other than Dupixent, other new drugs like Kevzara, launched in the U.S. in June 2017,and Soliqua, a once-daily titratable fixed-ratio combination of Lantus and Lyxumia, launched in the United States in January 2017,should also bring in higher sales in the back half of the year.
However, management expects U.S. diabetes franchise sales to decline faster in the second half due to the impact of formulary exclusion at CVS Health Corporation (CVS - Free Report) and UnitedHealth Group and difficult comparisons from last year. U.S. diabetes sales declined 19.1% in the first half of 2017.
Sanofi’s Diabetes franchise is under significant pressure with key product, Lantus, facing increasing competitive pressure at the payor level and biosimilar competition in several European markets and Japan.
In the cardiovascular franchise, it also remains to be seen if sales trends of Sanofi’s anti PCSK9 therapy, Praluent improve in the second half. Uptake of PCSK9 inhibitors like Praluent and Amgen, Inc.’s (AMGN - Free Report) Repatha have been slower than expected due to significant payer utilization management restrictions in the United States and limited market access in Europe. Praluent’s uptake could remain limited until guidelines supporting broader use of the treatment are issued and phase III cardiovascular outcome study data are out.
Also generic competition will continue to hurt sales of many key drugs in Sanofi’s portfolio including its blockbuster drug, Plavix.
Despite these challenges, we believe that new drug approvals, a solid pipeline and aggressive savings will pave the way for growth at Sanofi.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Sanofi Rides on Genzyme & Vaccines Unit, Diabetes Sales Weak
We issued an updated research on Sanofi, Inc. (SNY - Free Report) on Sep 26.
Sanofi performed quite well in the first half of 2017. Earnings rose4.9% on a reported basis in the first half of 2017 and 2.7% at constant currency rates (CER) on a year-over-year basis.
First halfnet sales rose 8.7% on a reported basis and 5.5% at CER. In January 2017, Sanofi swapped its Merial Animal Health businesses with Boehringer Ingelheim’s Consumer Healthcare (CHC) business. Reflecting this exchange and full consolidation of Sanofi’s European vaccines operations, sales rose 2% at constant structure and CER. We remind investors that Sanofi terminated its Sanofi Pasteur MSD joint venture with Merck & Co., Inc. (MRK - Free Report) in Europe in December last year.
A strong performance by Genzyme’s Specialty Care (Genzyme) and Vaccines units is making up for accelerated decline in the diabetes franchise to support the top line.
In fact, at the second quarter conference call, Sanofi raised its previously issued profit outlook backed by a better-than-expected performance in the first half and cost discipline. However, a tough U.S. payer environment hurt sales in theDiabetesunit.
Continued strong performance of the Genzyme unit, especially the multiple sclerosis drugs, Aubagio and Lemtrada, and rare disease drugs like Myozyme/Lumizymeand Fabrazyme is a positive. The Vaccines unit is also expected to perform well. Sales (including emerging markets) rose 14.3% at CER in the Genzyme unit and 24.5% at CER in the Vaccines unit in the first half of 2017.
Meanwhile, Sanofi is quite optimistic about the sales prospects of its newly launched drug Dupixent for treating atopic dermatitis. The drug, which was launched in the United States in March 2017, generated sales of €26 million in the second quarter, backed by strong demand. Management was pleased with the drug’s uptake. We are optimistic on sales prospects of Dupixent, which could prove to be an important growth driver for the company. Other than Dupixent, other new drugs like Kevzara, launched in the U.S. in June 2017,and Soliqua, a once-daily titratable fixed-ratio combination of Lantus and Lyxumia, launched in the United States in January 2017,should also bring in higher sales in the back half of the year.
However, management expects U.S. diabetes franchise sales to decline faster in the second half due to the impact of formulary exclusion at CVS Health Corporation (CVS - Free Report) and UnitedHealth Group and difficult comparisons from last year. U.S. diabetes sales declined 19.1% in the first half of 2017.
Sanofi’s Diabetes franchise is under significant pressure with key product, Lantus, facing increasing competitive pressure at the payor level and biosimilar competition in several European markets and Japan.
In the cardiovascular franchise, it also remains to be seen if sales trends of Sanofi’s anti PCSK9 therapy, Praluent improve in the second half. Uptake of PCSK9 inhibitors like Praluent and Amgen, Inc.’s (AMGN - Free Report) Repatha have been slower than expected due to significant payer utilization management restrictions in the United States and limited market access in Europe. Praluent’s uptake could remain limited until guidelines supporting broader use of the treatment are issued and phase III cardiovascular outcome study data are out.
Also generic competition will continue to hurt sales of many key drugs in Sanofi’s portfolio including its blockbuster drug, Plavix.
Despite these challenges, we believe that new drug approvals, a solid pipeline and aggressive savings will pave the way for growth at Sanofi.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>