Brighter Outlook Predicted as Sanofi-Aventis's Q1 Sales Start to Bounce Back

France's largest pharmaceutical company, Sanofi-Aventis, continued to weather significant challenges to its financial growth over the first quarter (Q1) of 2007, but managed nonetheless to see a 6.9% year-on-year (y/y) increase on a comparable basis to 7.2 billion euro (US$9.8 billion) in net sales during the period. While Pharmaceuticals accounted for the bulk of turnover, it was Sanofi-Aventis's Human Vaccines unit that saw a faster pace of sales growth in January-March. As with other Big Pharma companies, Sanofi-Aventis's financial results have been noticeably affected by the ongoing fluctuation in exchange rates between the euro and the U.S. dollar. The discrepancy is such that, on a reported basis, the rise in net sales was worth just 2.0% y/y. In spite of this, minimal growth in R&D (research and development) spending and a reasonable balance of other operating costs allowed for a reported 12.4% y/y rise to 2.7 billion euro in operating profit.

Generic Competition Continues to Bite…

Examining the performance of Sanofi-Aventis's top 15 drugs by sales, the challenges faced by the company become clearer. While top-selling cardiovascular drug Lovenox (enoxaparin sodium) recorded first-quarter sales of 634 million euro, representing a y/y rise of 8.2% on a comparable basis, there was a distinct negative trend elsewhere, with Plavix (clopidogrel bisulfate), Eloxatin (oxaliplatin), Tritace (ramipril), Amaryl (glimepiride), Xatral (alfuzosin) and Actonel (risedronate sodium) all seeing a slowdown in growth, largely due to the arrival of generic alternatives to a growing number of drugs that have either lost patent protection or are at the centre of a patent dispute. The most recent victim of this generic onslaught is Eloxatin, approved as a treatment for metastatic colorectal cancer and early-stage colon cancer. Following increasing levels of generic competition in Europe, particularly in Germany and the United Kingdom, Eloxatin suffered a 3.2% y/y contraction to 393 million euro in global first-quarter sales, and a much higher 24.3% y/y nosedive in European turnover. The effect on total growth of Sanofi's top 15 was such that the company saw fit to issue two sets of growth figures for its best-selling products, namely a 10.5% y/y rise, including Eloxatin sales losses, and an 11.8% y/y growth rate if Eloxatin's European sales are excluded.

Meanwhile, insomnia treatment Stilnox/Ambien (zolpidem tartrate) continued to see very strong double-digit sales growth, registering an impressive 49.3% y/y rise to 606 million euro in quarterly turnover. This good fortune may be about to change, however, after the U.S. FDA recently approved a raft of new generic versions of Ambien Immediate Release (IR; see United States: 24 April 2007: Sanofi-Aventis's Ambien Sales Threatened as U.S. FDA Approves 13 Generic Versions, while Acomplia to be Reimbursed in Switzerland). Sanofi has attempted to pre-empt this move by launching a Controlled Release (CR) version of Ambien, and many U.S. doctors are believed to have already switched their patients onto the CR version following extensive promotion by Sanofi-Aventis. The Stilnox/Ambien franchise appears to be doing very well, and is likely to continue growing over the rest of the year, but a cooling in the pace of growth remains a distinct probability.

…But Plavix Bites Back

Following the U.S. launch of a generic version of blood-thinner Plavix by Canadian firm Apotex, Sanofi-Aventis and U.S. marketing partner Bristol-Myers Squibb both felt heavy losses in Stateside sales of the drug. In the fourth quarter of 2006, Sanofi's U.S. sales of Plavix plunged to just 273 million euro, while global turnover for the quarter stood at 541 million euro. Now, a quarter later, after a preliminary injunction ordering Apotex to halt its sales of generic clopidogrel bisulfate has taken effect, U.S. sales of Plavix have bounced back spectacularly, securing some 603 million euro in U.S. turnover during January-March. Global sales of Plavix have also picked up quarter-on-quarter (q/q), up by 5.2% to 569 million euro. There is still some damage sustained to the drug, however, as the 569 million euro sold remains 1% less than for the equivalent quarter in 2006. The trial of Sanofi-Aventis and BMS vs. Apotex picked up again in January, and looks set to rumble on for some months yet (see France: 19 January 2007: Sanofi-Aventis, BMS Prepare for Round Two of Generic Plavix Battle as Court Case Set to Resume).

Elsewhere, Sanofi-Aventis's blockbuster hopeful, Acomplia (rimonabant), currently approved as an obesity treatment, saw first-quarter sales of 15 million euro. The drug's market penetration is going slower than hoped for by Sanofi, largely due to its ongoing inability to clinch approval in the United States. However, Acomplia is now on sale in over 10 European markets, of which two—France and Switzerland—have made it available for reimbursement. Acomplia is also available in Argentina, Brazil, Chile and Mexico, and the U.S. FDA is due to issue an action letter on the drug's approval in July, following a meeting in June of the FDA's Endocrinologic and Metabolic Drugs Advisory Committee.

Outlook and Implications

The pick-up in U.S. sales of Plavix has come as a huge relief for Sanofi-Aventis and, while there unquestionably remain clouds on the horizon in the shape of more generic competition, the Plavix bounceback has been sufficient for the French pharma heavyweight to raise its full-year financial guidance. Sanofi-Aventis is now expecting earnings per share (EPS) to grow by 9% over the year as a whole—up from its initial forecast of 6% EPS growth—calculated using an exchange rate of 1 euro/US$1.25. This, however, remains conditional on no "major adverse events" occurring later in the year, namely a loss in the Plavix litigation case or increased U.S. generic competition for Lovenox.

The outcome of the Plavix trial holds significance not only for future U.S. sales of the drug, but also as a potential deal-breaker for Sanofi-Aventis's rumoured interest in acquiring BMS. Officials from Sanofi-Aventis refused to discuss merger plans at the conference call on quarterly results, and BMS's recent drug development deal with U.S. pharma champion Pfizer could also herald a move away from its reliance on a takeover by Sanofi-Aventis (see United States: 27 April 2007: Pfizer to Develop Apixaban, Metabolic Treatments with BMS). With Sanofi anticipating Apotex's generic Plavix stocks still on U.S. pharmacy shelves to be exhausted by the end of the second quarter, the future for the drug's continued upward growth trajectory now lies in the hands of a U.S. court judge.