Sanofi (France)'s Chief Says Investors Underestimate Drug Pipeline
Published: Jan 28, 2013
Sanofi (SAN) Chief Executive Officer Chris Viehbacher says investors are still underestimating the French company’s pipeline of experimental drugs. Sanofi has gained 31 percent over the past year in Paris trading, giving the company a market value of 96.4 billion euros ($129.8 billion). Sanofi last year surpassed Total SA (FP) as the biggest company by value in France’s benchmark CAC 40 (CAC) Index. “People have started to recognize the value of our diversified model, and I think the future increase is going to come from the R&D pipeline, which is underestimated,” Viehbacher said during an interview today with Bloomberg Television in Davos, Switzerland, where he is attending the World Economic Forum. Viehbacher, who became CEO in December 2008, has been bolstering Sanofi’s pipeline by reorganizing research and development, dropping the least promising projects and accelerating acquisitions and partnerships. Paris-based Sanofi needs the new products to make up for sales declines caused by generic competition to its biggest medicines, such as the Plavix blood thinner. Sanofi shares can rise further, Viehbacher said today. “There is still value in the stock,” he said. “All that we’ve done is really caught up to the rest of the industry because we clearly were at a discount. I think the whole industry is still poised for a re-rating.” Sanofi shares sell for 11.7 times this year’s estimated earnings, compared with an average price-earnings ratio of 12.7 for the world’s biggest drugmakers. Three years ago, after Viehbacher’s first year on the job, Sanofi fetched only 8.2 times earnings. Aubagio, a pill to treat multiple sclerosis, Zaltrap for cancer, and the diabetes medicine Lyxumia are among the new drugs Sanofi is bringing to market. Viehbacher has cited a vaccine against dengue, a deadly mosquito-borne virus, and a cholesterol-lowering drug targeting an enzyme called PCSK9, as experimental therapies he’s excited about.