Sanofi: Long-Term Generic Impact

Sanofi-Aventis ADR (SNY - Analyst Report), located in France, develops and manufactures pharmaceutical products, primarily for sale in the prescription drug market. The company, which has global operations, focuses on major therapeutic areas such as cardiovascular, central nervous system, oncology and internal medicine formulations. Combined, Sanofi-Aventis is the third largest pharmaceutical company in the world in terms of revenues.

While valuation on the combined company is reasonable, we would like to see more visibility on the potenial longer-term impact of generics before we recommend buying the shares. We rate the shares a Hold with a $38 price target.

Our biggest concern for Sanofi-Aventis is the high exposure to generic risk on many of its leading franchises. We see risk to Avapro, Allegra, Lovenox, Eloxatin, Delix, Plavix and Ambien all keeping a lid on shares over the next several quarters. Ambien IR sales continue to fall significantly quarter-after-quarter following the expiry of the patent in April 2007 and logged a mere 34 million in sales in the second quarter of 2008.

Read the full analyst report on SNY