Sanofi's Q2 Report Card: Did New CEO's Hard Work Pay Off?

Sanofi Announces Overall Strong Growth and Future M&A Activity
July 30, 2015
By Mark Terry, BioSpace.com Breaking News Staff

Paris-based Sanofi announced solid growth for the second quarter today. The company’s group sales rose by 4.9 percent for the quarter to €9.378 billion. While sales were a little weak for Diabetes, dropping 3.8 percent, Genzyme more than made up for it with 26.6 percent growth, with the unit’s rare diseases products rising by 9.1 percent and the Multiple Sclerosis franchise sales more than doubling.

Sanofi Announces Overall Strong Growth and Future M&A Activity

Diabetes
Sanofi’s Diabetes division reported €1.988 billion in the second quarter, down by 3.8 percent, driven by a drop in sales of Lantus in the U.S. Overall U.S. sales of Sanofi’s Diabetes products were down 14 percent to €1.134 billion, although that still accounts for 57 percent of worldwide Diabetes sales.

A couple of Sanofi’s product in this area have done very well, notably Lyxumia, with a 50 percent increase in sales in the second quarter and 54.5 percent in the first six months. Sanofi announced on Wednesday that a late-stage Phase III study of LixiLan met its main study target and another study would wrap up at the end of the third quarter. LixiLan is a single-injection mix of Lyxumia and Lantus that is being studied for patients with type 2 diabetes.

According to a consensus forecast put together by Thomson Reuters Cortellis, LixiLan is projected to hit about $1 billion in 2020.

Also of interest, a new drug, Toujeo, was released in the U.S. at the end of March. So far, the drug is being covered by about 73 percent of commercial insurance plans and Medicare Part D covers about 91 percent with unrestricted access. To date, worldwide sales of the drug have hit €13 million in the second quarter and €20 million in the first six months.

Genzyme
Genzyme sales were strong across the board. Net sales for the second quarter were €907 million, up 26.6 percent, driven by Total Rare Diseases net sales of €647 million and Total Multiple Sclerosis sales of €260 million. Sales of the company’s Aubagio rose 80.4 percent in the second quarter to €204 million and 84 percent in the first half to €374 million.

“In the second quarter, Sanofi delivered solid growth on both the top and bottom lines that was consistent with our expectations,” said Olivier Brandicourt, Sanofi chief executive officer in a statement. “We continue to execute on multiple product launches and are excited about the recent approval of Praluent. We are also investing in our commercial infrastructure, biologic capabilities and R&D programs including in immuno-oncology. Recently, we announced a new organizational structure which will be implemented beginning in January 2016 and will simplify and focus Sanofi to optimize future growth.”

The company’s new five-year strategic plan will be revealed on November 6. In a conference call, Brandicourt said, “Sanofi has a strong balance sheet which allows the group to potentially tap into M&A opportunities to further boost its growth file.” Clearly a signal Sanofi will be out shopping over the next couple years. “This company has demonstrated they could be very successful at doing mid-size M&A and bolt-ons. That’s more what we would consider doing, but of course remaining extremely financially disciplined.”

“Sanofi’s balance sheet is pretty clean,” said Alistair Campbell, an analyst at Berenberg Bank in London to BloombergBusiness, “so it’s got the firepower to go out and do M&A. I wouldn’t be surprised if sometime in the second half of the year we see them do something.”

Brandicourt took the reins at Sanofi in April, six months after the former chief executive, Chris Viehbacher, was ousted by the board in October 2014. Viehbacher had been head of Sanofi since 2008, and although popular with investors because he doubled the value of shares in six years, he clashed with the board. Prior to joining Sanofi, Brandicourt was chief executive of Bayer HealthCare AG since 2013 and before Bayer, worked at Pfizer for 13 years.

“This is one of their best quarters in a long time,” Peter Verdult, an analyst at Citigroup in London told BloombergBusiness. “They will reassure investors with the diabetes trends.”

Sanofi’s new cholesterol drug, Praluent, is ready to launch and analysts project it could generate $1.9 billion by 2020.

Sanofi Announces Overall Strong Growth and Future M&A Activity


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