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Sanofi (SNY) Q1 Earnings, Sales Grow on Coronavirus-Led Buying
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Sanofi (SNY - Free Report) reported first-quarter 2020 earnings of 90 cents per American depositary share, which beat the Zacks Consensus Estimate of 76 cents. Earnings increased 15.6% on a reported as well on constant currency rates (CER) basis driven by higher revenues and lower costs.
First quarter net sales of the French pharma giant rose 6.9% on a reported basis to $9.87 billion (€8.97 billion). At CER, sales increased 6.6% year over year. Sales also beat the Zacks Consensus Estimate of $9.64 billion.
Sales rose 13.1% at CER in the United States, 6.5% in Europe and 2.1% in the Rest of the World (includes China, Japan, Brazil and Russia).
All growth rates mentioned below are on a year-on-year basis and at CER.
Segmental Performance
Earlier Sanofi reported through five Global Business Units (GBUs) — Sanofi Genzyme (Specialty Care), Primary Care, China & Emerging Markets, Consumer Healthcare and Vaccines. Beginning 2020, Sanofi restructured the company‘s operations under three GBUs —Specialty Care (immunology, rare diseases, rare blood disorders, neurology and oncology), Vaccines and General Medicines (diabetes, cardiovascular, and established products). The company’s Consumer Healthcare (CHC) is being established as a standalone business unit.
Pharmaceuticals sales rose 7.5% in the quarter to €6.76 billion driven by Dupixent and coronavirus-led patient stock-piling, which was partially offset by lower Plavix sales in China.
Sanofi Specialty Care GBU sales increased 31.3% to €2.7 billion, driven by Dupixent and Aubagio.
In the immunology, multiple sclerosis and neurology franchise, Dupixent generated sales of €776 million in the quarter, up 129.8%. Sales of the drug in the United States were €613 million, up 123.7%, driven by continued growth in atopic dermatitis and rapid uptake in new asthma indication and launch in chronic rhinosinusitis with nasal polyposis in June 2019. Sales in Europe were €90 million, up 140.5%. Importantly, Dupixent sales growth did not include any one-time COVID-19 related benefits.
Kevzara recorded sales of €55 million in the quarter, up 80%. Please note that Sanofi markets Dupixent and Kevzara in partnership with Regeneron (REGN - Free Report) .
Aubagio sales increased 21.3% to €541 million driven by increased demand while sales of Lemtrada fell 46.7% to €49 million due to competitive pressure and lower new patient starts due to COVID-19.
Sales of rare disease drugs increased 11.2% to €794 million. Myozyme sales rose 11.8% to €246 million. Fabrazyme sales were €214 million, up 14.6%. Cerezyme sales rose 9.7% to €189 million.
Oncology sales increased 28.7% to €186 million. Key cancer drug Jevtana’s sales were up 22.5% to €138 million supported by higher sales in the United States and Europe.
Rare blood disorders franchise recorded sales of €294 million, up 3.6% year over year. Sales of key drug in the franchise, Eloctate declined 10.9% to €161 million in the quarter due to the ongoing competitive pressure in the United States.
Sales in the General Medicines GBU declined 3.8% to €4.07 billion hurt by lower sales in Diabetes and Established Products.
The Diabetes franchise declined 1.2% to €1.28 billion due to lower sales of key drug Lantus in the United States.
Sales of diabetes drugs in the United States declined 18% to €375 million due to pricing pressure. In Europe, sales rose 4.8% and in rest of the world, it rose 9.3% due to patient stockpiling due to COVID-19.
Lantus sales decreased 6.6% to €724 million in the quarter. Lantus sales declined 21.5% in the United States due to lower average net prices. In Europe, sales decreased 3.9% due to biosimilar competition and patient switching to Toujeo. In rest of the world, Lantus sales rose 4.8% driven by a strong performance in China. Toujeo generated sales of €257 million in the reported quarter, up 20.9%.
Sales of Cardiovascular and Established Rx Products came in at €2.79 billion, down 5% mainly due to lower sales of Plavix and Aprovel in China due to anticipated price and inventory adjustments in the channel, following the implementation of the VBP program in China in December 2019. Meanwhile, excluding China, sales in the segment rose 0.6% due to patient stockpiling of chronic disease medicines
Meanwhile, lower sales of Lovenox in Europe and generic competition for Renvela/Renagel in the United Sales also hurt segment sales.
Praluent garnered worldwide sales of €73 million in the reported quarter, up 28.6% driven by higher sales in United States and rest of the world.
Vaccines GBU sales rose 3.7% to €909million as COVID-19 related benefits in influenza vaccines were offset by lower sales of travel vaccines due to COVID-19 related travel restrictions. U.S. sales of vaccines rose 2.9% in the quarter while sales rose0.7% and 5.1% in Europe and rest of the world, respectively.
Consumer Healthcare (CHC) stand-alone unit generated sales were €1.30 billion, up 4.2% as higher demand due to COVID-19 related consumer stockpiling was offset by Sanofi’s voluntary recall of its over-the-counter acid reflux medicine Zantac, which is sold by the generic name of ranitidine by many other companies.
Meanwhile, non-core divestments and increased regulatory requirements, which resulted in product suspensions, also hurt the performance of the CHC segment.
Costs Decline
Selling, general and administrative expenses declined 2.1% at CER in the quarter, reflecting cost-control measures. Research and development expenses declined 4.3% at CER due to smart spending initiatives and decline in diabetes research expenses.
2020 Guidance
Sanofi maintained its previously issued earnings growth guidance for 2020, barring unforeseen circumstances. It expects earnings to grow approximately 5% at CER in 2020. It anticipates a negative currency impact in the range of 1%-2% on earnings in 2020 versus prior expectation of positive currency impact of around 1%.
Coronavirus Vaccine Research Efforts
Sanofi and Glaxo (GSK - Free Report) have signed a letter of intent to combine their innovative technologies to develop an adjuvanted COVID-19 vaccine. Sanofi has a collaboration with the Biomedical Advanced Research and Development Authority to fund the development of its recombinant-based COVID-19 vaccine candidate. Meanwhile, the company has also collaborated with Translate Bio (TBIO - Free Report) to develop an mRNA-based vaccine for coronavirus infection.
Last month, Regeneron/Sanofi announced plans to study Kevzara to treat patients hospitalized with severe infection due to COVID-19. Regeneron initiated a U.S. based phase II/III study while Sanofi began a based phase II/III study outside the United States in March. While Regeneron is leading the U.S. studies, Sanofi is taking care of the ex-U.S. studies. Sanofi also initiated two studies to evaluate the use of generic malaria drug, hydroxychloroquine as a treatment for COVID-19
Our Take
Sanofi’s results were strong as it beat estimates for both earnings and sales. The company said that around half of the sales and earnings growth at CER was due to COVID-19 associated patient stockpiling. While the Specialty Care unit continued to deliver double-digit growth, the sales decline at the General Medicines unit moderated in the quarter due to increased demand for chronic therapies including diabetes medicines amid the coronavirus pandemic.
However, despite the solid first-quarter results, the company maintained its full-year earnings growth guidance as it expects coronavirus-related benefits seen in the first quarter to reverse over the course of 2020, mainly during the second quarter. This probably led the shares to decline 3.1% in pre-market trading on Friday. Sanofi stock has declined 3.7% this year so far compared with a decrease of 1.1% for the industry
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 (SNY) Q1 Earnings, Sales Grow on Coronavirus-Led Buying
Sanofi (SNY - Free Report) reported first-quarter 2020 earnings of 90 cents per American depositary share, which beat the Zacks Consensus Estimate of 76 cents. Earnings increased 15.6% on a reported as well on constant currency rates (CER) basis driven by higher revenues and lower costs.
First quarter net sales of the French pharma giant rose 6.9% on a reported basis to $9.87 billion (€8.97 billion). At CER, sales increased 6.6% year over year. Sales also beat the Zacks Consensus Estimate of $9.64 billion.
Sales rose 13.1% at CER in the United States, 6.5% in Europe and 2.1% in the Rest of the World (includes China, Japan, Brazil and Russia).
All growth rates mentioned below are on a year-on-year basis and at CER.
Segmental Performance
Earlier Sanofi reported through five Global Business Units (GBUs) — Sanofi Genzyme (Specialty Care), Primary Care, China & Emerging Markets, Consumer Healthcare and Vaccines. Beginning 2020, Sanofi restructured the company‘s operations under three GBUs —Specialty Care (immunology, rare diseases, rare blood disorders, neurology and oncology), Vaccines and General Medicines (diabetes, cardiovascular, and established products). The company’s Consumer Healthcare (CHC) is being established as a standalone business unit.
Pharmaceuticals sales rose 7.5% in the quarter to €6.76 billion driven by Dupixent and coronavirus-led patient stock-piling, which was partially offset by lower Plavix sales in China.
Sanofi Specialty Care GBU sales increased 31.3% to €2.7 billion, driven by Dupixent and Aubagio.
In the immunology, multiple sclerosis and neurology franchise, Dupixent generated sales of €776 million in the quarter, up 129.8%. Sales of the drug in the United States were €613 million, up 123.7%, driven by continued growth in atopic dermatitis and rapid uptake in new asthma indication and launch in chronic rhinosinusitis with nasal polyposis in June 2019. Sales in Europe were €90 million, up 140.5%. Importantly, Dupixent sales growth did not include any one-time COVID-19 related benefits.
Kevzara recorded sales of €55 million in the quarter, up 80%. Please note that Sanofi markets Dupixent and Kevzara in partnership with Regeneron (REGN - Free Report) .
Aubagio sales increased 21.3% to €541 million driven by increased demand while sales of Lemtrada fell 46.7% to €49 million due to competitive pressure and lower new patient starts due to COVID-19.
Sales of rare disease drugs increased 11.2% to €794 million. Myozyme sales rose 11.8% to €246 million. Fabrazyme sales were €214 million, up 14.6%. Cerezyme sales rose 9.7% to €189 million.
Oncology sales increased 28.7% to €186 million. Key cancer drug Jevtana’s sales were up 22.5% to €138 million supported by higher sales in the United States and Europe.
Rare blood disorders franchise recorded sales of €294 million, up 3.6% year over year. Sales of key drug in the franchise, Eloctate declined 10.9% to €161 million in the quarter due to the ongoing competitive pressure in the United States.
Sales in the General Medicines GBU declined 3.8% to €4.07 billion hurt by lower sales in Diabetes and Established Products.
The Diabetes franchise declined 1.2% to €1.28 billion due to lower sales of key drug Lantus in the United States.
Sales of diabetes drugs in the United States declined 18% to €375 million due to pricing pressure. In Europe, sales rose 4.8% and in rest of the world, it rose 9.3% due to patient stockpiling due to COVID-19.
Lantus sales decreased 6.6% to €724 million in the quarter. Lantus sales declined 21.5% in the United States due to lower average net prices. In Europe, sales decreased 3.9% due to biosimilar competition and patient switching to Toujeo. In rest of the world, Lantus sales rose 4.8% driven by a strong performance in China. Toujeo generated sales of €257 million in the reported quarter, up 20.9%.
Sales of Cardiovascular and Established Rx Products came in at €2.79 billion, down 5% mainly due to lower sales of Plavix and Aprovel in China due to anticipated price and inventory adjustments in the channel, following the implementation of the VBP program in China in December 2019. Meanwhile, excluding China, sales in the segment rose 0.6% due to patient stockpiling of chronic disease medicines
Meanwhile, lower sales of Lovenox in Europe and generic competition for Renvela/Renagel in the United Sales also hurt segment sales.
Praluent garnered worldwide sales of €73 million in the reported quarter, up 28.6% driven by higher sales in United States and rest of the world.
Vaccines GBU sales rose 3.7% to €909million as COVID-19 related benefits in influenza vaccines were offset by lower sales of travel vaccines due to COVID-19 related travel restrictions. U.S. sales of vaccines rose 2.9% in the quarter while sales rose0.7% and 5.1% in Europe and rest of the world, respectively.
Consumer Healthcare (CHC) stand-alone unit generated sales were €1.30 billion, up 4.2% as higher demand due to COVID-19 related consumer stockpiling was offset by Sanofi’s voluntary recall of its over-the-counter acid reflux medicine Zantac, which is sold by the generic name of ranitidine by many other companies.
Meanwhile, non-core divestments and increased regulatory requirements, which resulted in product suspensions, also hurt the performance of the CHC segment.
Costs Decline
Selling, general and administrative expenses declined 2.1% at CER in the quarter, reflecting cost-control measures. Research and development expenses declined 4.3% at CER due to smart spending initiatives and decline in diabetes research expenses.
2020 Guidance
Sanofi maintained its previously issued earnings growth guidance for 2020, barring unforeseen circumstances. It expects earnings to grow approximately 5% at CER in 2020. It anticipates a negative currency impact in the range of 1%-2% on earnings in 2020 versus prior expectation of positive currency impact of around 1%.
Coronavirus Vaccine Research Efforts
Sanofi and Glaxo (GSK - Free Report) have signed a letter of intent to combine their innovative technologies to develop an adjuvanted COVID-19 vaccine. Sanofi has a collaboration with the Biomedical Advanced Research and Development Authority to fund the development of its recombinant-based COVID-19 vaccine candidate. Meanwhile, the company has also collaborated with Translate Bio (TBIO - Free Report) to develop an mRNA-based vaccine for coronavirus infection.
Last month, Regeneron/Sanofi announced plans to study Kevzara to treat patients hospitalized with severe infection due to COVID-19. Regeneron initiated a U.S. based phase II/III study while Sanofi began a based phase II/III study outside the United States in March. While Regeneron is leading the U.S. studies, Sanofi is taking care of the ex-U.S. studies. Sanofi also initiated two studies to evaluate the use of generic malaria drug, hydroxychloroquine as a treatment for COVID-19
Our Take
Sanofi’s results were strong as it beat estimates for both earnings and sales. The company said that around half of the sales and earnings growth at CER was due to COVID-19 associated patient stockpiling. While the Specialty Care unit continued to deliver double-digit growth, the sales decline at the General Medicines unit moderated in the quarter due to increased demand for chronic therapies including diabetes medicines amid the coronavirus pandemic.
However, despite the solid first-quarter results, the company maintained its full-year earnings growth guidance as it expects coronavirus-related benefits seen in the first quarter to reverse over the course of 2020, mainly during the second quarter. This probably led the shares to decline 3.1% in pre-market trading on Friday. Sanofi stock has declined 3.7% this year so far compared with a decrease of 1.1% for the industry
Sanofi currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sanofi Price, Consensus and EPS Surprise
Sanofi price-consensus-eps-surprise-chart | Sanofi Quote
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 >>