) reported fourth quarter 2013 business earnings of 93 cents per
American Depository Share (ADS), above the Zacks Consensus
Estimate of 88 cents. Earnings were up 30.8% at constant exchange
rates (CER) from the year-ago period.
Fourth quarter net sales decreased 0.8% on a reported basis but
increased 6.5% at CER. Foreign exchange movements negatively
impacted sales during the quarter as currencies including the
Japanese yen and U.S. dollar depreciated as compared to the euro.
Full year earnings came in at $3.35 per ADS, below the Zacks
Consensus Estimate of $3.43. Earnings were down 9.8% (CER) from
the prior year. Full year net sales decreased 5.7% on a reported
basis (down 0.5% at CER).
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 increased 8.4% to €7.1 billion,
reflecting robust performance in Diabetes, Genzyme and Generics
sub-groups. Sanofi is slowly recovering from the adverse effect
of the genericization of a number of its major drugs.
The Diabetes franchise (up 19% to €1.7 billion) continued to
perform well with growth driven by Lantus (up 19.9% to €1.5
billion). Apidra sales went up 33.8% to €81 million in the fourth
quarter of 2013. Newly launched in UK, Germany, Spain, Japan and
Mexico, Lyxumia generated sales of €5 million in the fourth
quarter of 2013.
Genzyme sales increased 31.4% to €595 million. Cerezyme sales
increased 12.9% to €181 million while Myozyme sales increased
13.2% to €131 million. Both the products benefited from the
addition of new patients and growth in Emerging Markets.
Fabrazyme sales were €104 million, up 34.5%, benefiting from gain
in market share and new patient accruals.
Newly launched Aubagio generated sales of €69 million in the
fourth quarter of 2013 as compared to €55 million in the
preceding quarter. Lemtrada, launched in the EU in the fourth
quarter, generated revenues of €2 million.
Zaltrap, another newly launched product, generated sales of €15
million in the fourth quarter of 2013 as compared to €13 million
in third quarter of 2013. Sanofi has developed Zaltrap in
Regeneron Pharmaceuticals, Inc.
Generic competition for Eloxatin (down 19.1%), Aprovel/Avapro
(down 4.2%) and Taxotere (down 6.4%) continued to affect
Sales in the Consumer Health Care business increased 6.1% to €722
million driven by Essentiale, No Spa and Enterogermina. The
Generics sub-group at Sanofi exhibited improved performance in
the fourth quarter of 2013 with sales rising 12% to €478 million.
Higher sales in Brazil aided revenues.
Fourth quarter 2013 Human Vaccines revenues were €959 billion, up
0.1%, reflecting an improvement in the supply of Pentacel, Adacel
and Daptacel and strong influenza vaccine sales. Sales of the
Animal Health segment decreased 6.3% to €444 million in the
fourth quarter of 2013.
At the beginning of Feb 2014, Sanofi's pipeline consisted of 49
new molecular entities and vaccines in clinical development, of
which 12 were either undergoing phase III studies or were under
The company expects 2014 business earnings per share to increase
in the range of 4%-7% at CER. This disappointed the Street
expectation, which hoped for a higher earnings growth rate for
2014. The shares reacted negatively following the
lower-than-expected guidance, falling 1.08%.
The company expects its cost to sales ratio to improve in 2014.
Additionally, it has accelerated its cost-saving plan and expects
to attain annual savings of €2 billion by the end of 2014 instead
Sanofi's fourth quarter results were above expectations with the
company beating the Zacks Consensus Estimate. However, we are
disappointed with the lackluster earnings guidance for 2014.
Sanofi is set to acquire a 12% stake in
) and increase its stake in Regeneron. We expect to see more
activity on the acquisition front in 2014. Although Sanofi has
some promising pipeline candidates (U300, alirocumab and
sarilumab), we are disappointed with the string of pipeline
setbacks at the company in the recent past.
The Complete Response Letter (CRL) for its multiple sclerosis
drug, Lemtrada, was a huge disappointment for Sanofi. With the
U.S. Food and Drug Administration (FDA) requiring additional
studies to be conducted, there could be a significant delay
before Lemtrada reaches the U.S. markets.
Sanofi carries a Zacks Rank #5 (Strong Sell). Some better-ranked
). Allergan holds a Zacks Rank #2 (Buy).
ALLERGAN INC (AGN): Free Stock Analysis
ALNYLAM PHARMA (ALNY): Free Stock Analysis
REGENERON PHARM (REGN): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
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