Mixed results muddy Sanofi's plans for 2018 growth
- French drugmaker Sanofi SA continued to feel the pinch of pricing pressures on its U.S. diabetes business during the fourth quarter, underscoring the rationale behind the company's decision to spend more than $15 billion to acquire Bioverativ Inc. and Ablynx NV this year.
- Fourth quarter sales of Sanofi's diabetes drugs fell by nearly 16% year over year globally and by about 30% in the U.S. — a steep drop amplified by comparison to a strong fourth quarter in 2016. Fast growth from the company's Genzyme unit, however, helped stabilize topline revenue.
- Shares in the drugmaker slid in U.S. market trading Wednesday, likely in reaction to lower-than-expected earnings per share as slower diabetes sales were widely expected.
After losing out in failed attempts to acquire Medivation Inc. and Actelion Pharmaceuticals Ltd., Sanofi spent big to ensure it succeeded in buying Bioverativ and Ablynx.
The French drugmaker dropped $11 billion on Bioverativ — a 64% premium to the biotech's share price the trading day prior to the deal's announcement — and outbid an offer from Danish rival Novo Nordisk A/S by nearly 50% to snap up Ablynx.
Together, the deals signal Sanofi's intent to build a business in rare blood disorders. Bioverativ's marketed drugs Eloctate (antihemophilic Factor VIII) and Alprolix (coagulation Factor IX) give the drugmaker an immediate foothold in $10 billion hemophilia market.
Ablynx, on the other hand, lured Sanofi with the potential of caplacizumab, an experimental drug ready to be filed for approval this year as a treatment for a rare auto-immune blood clotting disorder.
More immediately — from a revenue standpoint — Sanofi expects quickening sales of its two recently approved immunology drugs, Dupixent (dupilumab) and Kevzara (sarilumab). Together, the two brought in €126 million (about $155 million) in sales during the fourth quarter.
Put together, expected growth from Dupixent and revenue from Bioverativ's portfolio will help drive earnings per share growth of between 2% to 5% on a constant exchange rate basis this year.
Yet Sanofi's work to reshape its portfolio will still feel the weight of crumbling sales in diabetes and cardiovascular.
Lantus (insulin glargine) accounted for just over €1 billion in sales during the fourth quarter, down 21% from the same period a year ago. Toujeo (glargine), a follow-on insulin with high expectations, also saw a drop, with sales falling 4%.
In general, Sanofi expects net prices in the U.S. diabetes market to continue to decline, and anticipates reduced Part D Medicare coverage this year.
Weaker-than-expected performance from Praluent (alirocumab) and Soliqua (glargine/lixisenatide) will further crimp the company's diabetes and cardiovascular unit.
Sanofi looks to be recasting itself as a leader in immunology and rare disease. Results from the fourth quarter demonstrate that that process won't be easy.
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