) reported second quarter 2013 business earnings of 72 cents per
American Depository Share (ADS), below the Zacks Consensus
Estimate of 89 cents. Earnings were down 18.5% at constant
exchange rates (CER) from the year-ago period.
Second quarter net sales decreased 9.8% on a reported basis and
6.3% at CER. The strong performance of growth platforms was more
than offset by generic competition and an adjustment in Brazil.
Sanofi operates through the following segments: Pharmaceuticals,
Human Vaccines and Animal Health. All growth rates mentioned
below are on a year-on-year basis and at CER.
Pharmaceutical segment sales decreased 7.1% to €6.7 billion.
Weaker revenues were primarily due to generic competition (€481
million), European pricing pressure and an adjustment related to
inventory mismanagement in Brazil. In Brazil, inventory levels
were much more than required. As a result, Sanofi recorded an
adjustment, which lowered the net revenue by €122 million.
Additionally, the company has created a provision of €79 million
for write-off of inventory and other related costs.
The diabetes franchise (up 12.9% to €1.6 billion) continued to
perform well with growth driven by Lantus (up 17.7% to €1.4
billion). Apidra sales went up 25.0% to €68 million in the second
quarter of 2013.
We note that several of Sanofi's key products are facing generic
competition. In the second quarter of 2013, Eloxatin sales
nosedived 83.7% to €60 million due to generic competition. The
product went off patent in the U.S. on Aug 9, 2012.
Generic competition also affected Plavix revenues, down 1.3% to
€493 million and Aprovel/Avapro/Karvea/Avalide revenues, down
27.5% to €238 million. We remind investors that Plavix and Avapro
went off patent in the US in May 2012 and Mar 2012, respectively.
Adverse impact of Plavix and Avapro genericization was €795
million, which was in line with the company's expectation.
Lovenox (down 9.2% to €436 million) also performed
disappointingly due to generic competition in the U.S.
BIOGEN IDEC INC (BIIB): Free Stock Analysis
REGENERON PHARM (REGN): Free Stock Analysis
SHIRE PLC-ADR (SHPG): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
To read this article on Zacks.com click here.
Newly launched Aubagio generated sales of €33 million in the
second quarter of 2013 as compared to €20 million in first
quarter of 2013. Zaltrap generated sales of €14 million in the
second quarter of 2013 as compared to €11 million in first
quarter 2013. Sanofi has developed Zaltrap in collaboration with
Regeneron Pharmaceuticals, Inc.
Genzyme sales increased 25.6% to €525 million. Cerezyme sales
increased 18.0% to €171 million. Myozyme sales increased 15.0% to
Fabrazyme sales were €91 million, up 28.4%, benefiting from
patients switching to Fabrazyme from
) Replagal in the Western European market.
Sales in the consumer health care business climbed 1.8% to €729
million driven by Doliprane, Allegra, Essentiale and
The Generics sub-group at Sanofi continued with its disappointing
performance in the second quarter of 2013 with sales declining
36.8% to €300 million. Reduced sales of the authorized generic
versions of Aprovel in the U.S. coupled with lower sales and an
adjustment in Brazil hurt results during the quarter.
Second quarter 2013 Human Vaccines revenues were €760 million, up
0.4%. Sales of the Animal Health segment decreased 5.7% to €529
million in the second quarter of 2013.
At the beginning of Aug 2013, Sanofi's pipeline consisted of 60
new molecular entities and vaccines in clinical development, of
which 14 were either undergoing phase III studies or were under
The company lowered its 2013 business earnings guidance due to
adjustment in Brazil. 2013 business earnings per share are now
expected to decrease in a band of 7% to 10% (at CER) from 2012
levels (previous guidance: flat-to-down 5%).
Sanofi expects to return to growth in the remaining quarters of
2013. Sanofi is looking to combat the generic threat confronting
most of its key drugs by signing deals and making acquisitions.
We are pleased with Sanofi's efforts to develop its pipeline and
believe that newly approved products in Sanofi's portfolio hold
huge commercial potential.
Sanofi carries a Zacks Rank #3 (Hold). Companies that currently
look attractive include
Biogen Idec Inc.
), carrying a Zacks Rank #1 (Strong Buy).