French pharmaceutical major Sanofi posted a 12.3% rise (on a reported basis) in first-quarter sales, driven by double-digit growth in its Genzyme and Animal Health units, although generic competition continues to affect revenue for its diabetes drug Lantus.
IHS Life Sciences perspective | |
Significance | French pharmaceutical major Sanofi posted a 12.3% rise year on year (y/y) on a reported basis in first-quarter sales to EUR8.8 billion (USD9.9 billion), helped by the weakness of the euro against the US dollar. |
Implications | Although the Genzyme and Animal Health divisions posted double-digit sales growth, sales of the Diabetes unit fell 3.2%, reflecting the pricing impact on Lantus (insulin glargine) in the United States. |
Outlook | Although Sanofi expects a continued fall in sales for its diabetes unit amid competition from generic versions of its bestselling Lantus, future growth will be buoyed by new product launches and progress in R&D, with the company forecasting "stable to slightly growing" full-year earnings per share. |
French pharmaceutical group Sanofi posted a 12.3% rise year-on-year (y/y) on a reported basis in first-quarter sales to EUR8.8 billion (USD9.9 billion), the company said in an earnings release. Company earnings were helped by the weakness of the euro against the US dollar, with first-quarter sales growing by 2.4% at constant exchange rates (CER).
By region, on a CER basis, emerging markets continued to drive performance with a 7.3% y/y rise in first-quarter sales to EUR2.9 billion, in particular Asia and Eastern Europe, Russia and Turkey (both regions up 8.6% to EUR849 million and EUR586 million, respectively). Sales in the emerging markets showed double-digit growth in the Pharmaceuticals (up 10.4%), Diabetes (up 18.5%), Genzyme (up 35.3%), and Generics (up 12.7%) units. In China, sales grew 7.7% to EUR484 million on the back of vaccines, Lantus (insulin glargine), Plavix (clopidogrel), Aprovel (Irbesartan), and (valproate sodium).
In the United States, first-quarter sales grew 1% y/y to EUR3 billion, while Western Europe posted a 0.6% rise to EUR2 billion. However, the Rest of the World region fell 3.5% y/y to EUR944 million, of which Japan fell 8.2% to EUR569 million.
Cost of sales, R&D expenses and selling and general expenses all rose year on year in the first quarter, reflecting investments in new launches at Genzyme and the US diabetes units, as well as in emerging markets. Sanofi's operating income – as calculated by IHS – rose 13.2% y/y to EUR2.4 billion during the first quarter. Net income fell 5.6% y/y to EUR1.023 billion.
Sanofi: Q1 2015 financial results | ||
Q1 2015 (EUR mil.) | % change y/y* | |
Net sales | 8,810.0 | 12.3 |
Other revenues | 80.0 | -3.6 |
Cost of sales | 2,786.0 | 10.7 |
R&D | 1,199.0 | 5.3 |
Selling and general expenses | 2,438.0 | 17.3 |
Operating income** | 2,387.0 | 13.2 |
Operating margin*** | 27.1% | 0.2 pp higher |
R&D as % of sales | 13.6% | 0.9 pp lower |
Net income | 1,023.0 | -5.6 |
* Change calculated on a reported basis | ||
On a product basis, Lantus sales fell 5% y/y to EUR1.6 billion in the first quarter, reflecting lacklustre performance in the US (down 13.1% to EUR1 billion due to expected rebates required to maintain favourable formulary positions with key payors for contracts that started on 1 January 2015), which was partly offset by strong growth in emerging markets (up 18% to EUR276 million).
Strong sales of Aubagio (teriflunomide; more than doubling y/y to EUR170 million) drove performance at the Genzyme unit (up 30.9% y/y to EUR821 million).
Sanofi's oncology sales continued to fall, posting a decrease of 7.3% y/y to EUR357 million due to slumping sales in Taxotere (docetaxel), down 31.9% to EUR53 million in the face of generic competition.
Sanofi: Q1 sales of leading products (EUR mil.) | ||
Q1 2015 net sales (EUR mil.) | % change y/y* | |
Lantus | 1,584 | 9.4% |
Apidra | 91 | 21.3% |
Amaryl | 97 | 12.8% |
Insuman | 33 | 3.1% |
Lyxumia | 8 | 60.0% |
Afrezza | 1 | - |
Toujeo | 7 | - |
Diabetes | 1,837 | 10.5% |
Taxotere | 53 | -23.2% |
Jevtana | 77 | 16.7% |
Eloxatine | 54 | 17.4% |
Thymoglobulin | 55 | 5.8% |
Mozobil | 34 | 36.0% |
Zaltrap | 20 | 25.0% |
Other Oncology | 64 | -8.6% |
Oncology | 357 | 3.8% |
Aubagio | 170 | 117.9% |
Lemtrada | 38 | 660.0% |
Cerezyme | 189 | 12.5% |
Cerdelga | 10 | - |
Myozyme | 156 | 28.9% |
Fabrazyme | 141 | 43.9% |
Aldurazyme | 48 | 17.1% |
Other Rare Diseases products | 69 | 25.5% |
Genzyme | 821 | 45.1% |
Plavix | 483 | -0.8% |
Lovenox | 438 | 5.3% |
Aprovel | 201 | 12.3% |
Renagel/Renvela | 226 | 31.4% |
Allegra | 80 | 0.0% |
Stilnox | 75 | -3.8% |
Depakine | 104 | 13.0% |
Synvisc/Synvisc One | 85 | 21.4% |
Tritace | 75 | 10.3% |
Multaq | 83 | 13.7% |
Lasix | 42 | 16.7% |
Targocid | 40 | 8.1% |
Orudis | 50 | 42.9% |
Cordarone | 34 | 6.3% |
Xatral | 25 | 4.2% |
Actonel | 7 | -66.7% |
Auvi-Q/Allerject | 17 | 70.0% |
Other Established Rx products | 918 | 1.0% |
Total Established Rx products | 2,983 | 5.8% |
Consumer Healthcare | 979 | 10.6% |
Generics | 478 | 13.5% |
Pharmaceuticals | 7,455 | 11.3% |
Vaccines | 697 | 11.0% |
Animal Health | 658 | 13.50% |
* Change on a reported basis | ||
Outlook and implications
Despite generic and biosimilar competition gnawing at sales of Sanofi's best-selling diabetes drug Lantus, new product launches and continued strength are expected to continue to buoy results, with the company forecasting "stable to slightly growing" full-year earnings per share (EPS). In the first quarter, Sanofi's business EPS rose 2.6% on a CER basis to EUR1.32 and grew 12.8% on a reported basis.
In terms of Sanofi's diabetes business, Sanofi said it "expects its global diabetes sales performance at constant exchange rates in the first quarter of 2015 to be indicative of the full-year performance of this division". However, although sales of Lantus are expected to continue their downtrend, potential growth may come from Toujeo (insulin glargine injection), a next-generation basal insulin targeting adults with type 1 and type 2 diabetes and received FDA approval in February and from the European Medicines Agency in March (see United States: 27 February 2015: US FDA approves Sanofi's diabetes treatment Toujeo and Europe: 2 March 2015: CHMP endorses EU approval of two medicines, six drugs recommended for indication extension). Toujeo may be able to achieve EUR124 million in sales in 2015, increasing to EUR1.2 billion in 2020, according to figures published by Bloomberg (see France: 14 April 2015: Sanofi has no plans to discount Toujeo more than Lantus).
Sanofi's R&D pipeline has shown progress, including the initiation of a Phase II study of dupilumab for moderate-to-severe asthma. The company's Genzyme unit also announced this week that the FDA has granted Fast-Track designation to its investigational GZ/SAR402671 as an oral substrate reduction therapy for Fabry's disease (see United States: 28 April 2015: Sanofi's GZ/SAR402671 receives Fast Track designation from US FDA for Fabry's disease). This development is expected to further solidify Genzyme's role as a major growth driver for Sanofi, with multiple sclerosis drug Aubagio (teriflunomide) posting a more than doubling of first-quarter sales to EUR208 million on a CER basis.