Sanofi cuts earnings guidance despite return to sales growth
pharmafile | October 31, 2013 | News story | Sales and Marketing | Sanofi, Viehbacher, vaccines
Sanofi cut its earnings guidance for 2013 after its third quarter results missed targets, despite a return – barely – to revenue growth for the first time in five quarters.
Group revenues inched up 0.6% to €8.43 billion ($11.63 billion), despite problems at the company’s vaccines business and a lacklustre performance in emerging markets, and missed analyst expectations. Earnings were also under pressure with net income down 9% to €1.79 billion in the quarter.
The French drugmaker now says it expects 2013 earnings per share down 10% on 2012 levels, at the lower limit of its earlier 7%-10% prediction.
Chief executive Chris Viehbacher put a brave face on the results, saying the quarter marketed an ‘inflection point’ for Sanofi as it signalled the end of the company’s patent cliff, which has seen billions of sales from brands such as anticoagulant Plavix (clopidogrel) and Avapro (irbesartan) for high blood pressure lost to generic competition.
That positive interpretation seemed to resonate with investors, and after an initial slump Sanofi’s shares gained 2.4% by the close of trading yesterday. In a research note Deutsche Bank suggested that the company was on track for a growth year in 2014.
The reasons for missing analysts’ sales forecasts were put down to shortages of pertussis-containing Pentacel and Adacel vaccines in the US – caused by compliance problems at a plant in Toronto that emerged during routine quality testing – and the effects of the bribery probe affecting drugmakers in China that pegged growth in the country back to 5% from around 15% previously.
Viehbacher said the vaccine problem was a technical issue which did not have any impact on product quality and has been resolved, while in China “promotional activities and sales [are] progressively coming back to normal”.
Vaccine sales fell 7% to €1.3 billion, while emerging markets grew a little under 3% to €2.65 billion, with the slowdown in China accentuated by an overstocking issue in Brazil that also had an impact on the firm’s second-quarter results by depressing generics sales.
On a slightly more positive note, Sanofi joined other drugmakers in the current results season in reporting a glimmer of recovery in Europe, although sales still fell nearly 5% to €1.9 billion.
Even more encouragingly, there were 20%-plus growth rates for Sanofi’s diabetes franchise – headed by long-acting insulin Lantus (insulin glargine) – and its speciailty medicines subsidiary Genzyme, which contributed €1.67 billion and €529 million, respectively.
Viehbacher said profits should follow sales and return to growth in the fourth quarter, adding: “Nothing in the third quarter gives us any cause for concern.”
Phil Taylor
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