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Sanofi's (SNY) Q3 Earnings and Sales Surpass Estimates
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Sanofi (SNY - Free Report) reported third-quarter 2018 earnings of $1.07 per American depositary share, which beat the Zacks Consensus Estimate of 98 cents. Earnings increased 8.2% on a reported basis. At constant currency rates (“CER”), earnings grew 11.2%.
Third-quarter net sales rose 3.7% on a reported basis to almost $10.91 billion (€9.39 billion). Sales also beat the Zacks Consensus Estimate of $10.88 billion. Unfavorable exchange rate movements hurt sales by 2.6%. At CER, sales increased 6.3% year over year.
Sales increased 5.5% at CER in the United States. At CER, sales rose 10.4% in Emerging Markets, 1.9% in Europe and 9.4% in the Rest of the World (Japan, South Korea, Canada, Australia, New Zealand and Puerto Rico).
Shares were up 3.9% in pre-market trading, following strong earnings and sales growth. In the past six months, Sanofi’s shares have risen 10.5% compared with 7.1% increase for the industry.
All growth rates mentioned below are on a year-on-year basis and at CER.
Segmental Performance
Pharmaceuticals sales (including emerging markets) rose 3.2% to €6.2 billion on a reported basis. However, at CER, Pharmaceuticals sales rose 6.1% driven by growth in Rare Blood Disorder and Immunology franchises, partially offset by lower Diabetes and Established Rx products sales.
Sanofi reports through five Global Business Units (GBUs) — Sanofi Genzyme (Specialty Care), Diabetes & Cardiovascular, General Medicines & Emerging Markets, Consumer Healthcare and Sanofi Pasteur (Vaccines).
Sanofi Genzyme/Specialty Care GBU sales (including emerging markets) increased 34.6% to €2.2 billion, driven by contribution from new immunology drugs — Dupixent and Kevzara — and higher sales of rare disease drugs.
Sales of MS drug, Aubagio rose 12.6% to €426 million while sales of Lemtrada fell 10.6% to €99 million.
Sales of rare disease drugs like Myozyme/Lumizyme improved 13.7% to €209 million. Fabrazyme sales were €191 million, up 12%. Cerdelga sales came in at €41 million, up 32.3%, Aldurazyme sales were up 8% to €49 million and Cerezyme sales rose 3.9% to €165 million.
Oncology sales increased 4.7% to €380 million. Excluding Leukine, which was sold in January, oncology sales grew 6.7%. Jevtana sales were up 17.8% to €106 million. Thymoglobulin recorded sales of €75 million, up 7%. Taxotere sales were up 2.3% to €44 million. Zaltrap and Eloxatin sales were up 15.8% and 8.9% to €22 million and €49 million, respectively. Mozobil sales remained flat at €42 million.
Dupixent/dupilumab for treating atopic dermatitis was launched in the United States and the EU in 2017. Dupixent generated sales of €225 million in the third quarter compared with €176 million in the second quarter of 2018. Total prescriptions written for Dupixent in the United States grew 16% sequentially. Sales of the drug in Europe were €20 million.
Sanofi and Regeneron’s (REGN - Free Report) rheumatoid arthritis drug, Kevzara (sarilumab) was launched in the United States, United Kingdom, the Netherlands and Germany in 2017. The drug was launched in Italy, France, Switzerland and Spain in the third quarter. Kevzara recorded sales of €22 million in the quarter compared with €20 million in the previous quarter.
Rare blood franchise, which was added with the acquisition of Bioverativ in March 2018, brought in sales of €282 million.
Diabetes and Cardiovascular GBU (including emerging markets) declined 6.3% to €1.54 billion. The Diabetes franchise (including emerging markets) declined 9.2% to €1.38 billion due to lower sales of key drugs — Lantus and Toujeo — in the United States.
Sales of diabetes drugs in the United States declined 24.3% to €571 million due to pricing pressure and loss of Part D business In Europe, it fell 2.2%. However, sales of diabetes drugs in Emerging Markets were up 13.4%.
Lantus sales declined 18.2% to €897 million in the quarter. Lantus sales declined 31.7% in the United States due to lower average net price and change in coverage in Sanofi’s Part D business. In Europe, sales declined 12% due to biosimilar competition and patient switching to Toujeo.
Toujeo generated sales of €215 million in the reported quarter, up 10.7%. However, sales were down 15.7% in the United States.
Soliqua/Suliqua generated sales of €20 million in the quarter compared with €17 million in the previous quarter.
In the cardiovascular franchise, Sanofi’s anti PCSK9 therapy, Praluent garnered worldwide sales of €68 million in the reported quarter, up 64.3%. Sales of the other drug in this franchise, Multaq, were up 13.6% to €93 million.
General Medicines & Emerging Markets GBU sales came in at €3.2 billion, up a mere 0.6%. Sales of Established products were €2.13 billion, down 3.2% due to generic competition for Renvela/Renagel in the United States and rising competition for Synvisc.
Sales of Generics fell 5.6% to €383 million with lower sales in Europe while sales were flat in Emerging markets. In September, Sanofi closed the agreement to sell its European generics business, Zentiva, to Advent International.
Consumer Healthcare GBU sales were €1.11 billion, up 4.1%, driven by growth in Emerging markets. Sales in Europe were up 3.4% due to higher sales of drugs of Allergy Cough & Cold and Digestive categories. Allergy Cough & Cold and Pain categories drove sales up 2.9% in the United States
Third-quarter consolidated Sanofi Pasteur (Vaccines) sales were up 8.2% to €2.1 billion. Vaccines sales were boosted by recovery in supply of polio vaccine, Pentaxim, in China and growth in sales of Menactra and Flublok.
Costs Rise
Selling general and administrative expenses (SG&A) increased 1.6% at CER in the quarter, reflecting investments in immunology and consolidation of Albynx and Bioverativ’s operating expenses, partially offset by lower expense for the diabetes program. R&D expenses were up 9.5% at CER, reflecting increased spending on immuno-oncology and diabetes programs and acquisition cost related to Bioverativ and Ablynx.
2018 Expectations Raised
Sanofi increased the lower end of its earnings growth expectation for 2018 and expects business earnings to grow between 4% and 5% at CER (previously 3-5%). The company expects currency movement to have unfavorable impact of 6% on earnings.
Our Take
Sanofi’s third-quarter 2018 earnings and sales beat estimates. Sanofi looks well poised to return to growth in the second half of the year with a strong third quarter performance.Its 2018 guidance looks upbeat. Growth is being driven by contribution from the Bioverativ and Ablynx deals, improving vaccine sales and decreasing impact of patent expirations. The company Specialty Care segment particularly is on a strong footing with the recent FDA approvals of new drugs Libtayo (cutaneous squamous cell carcinoma), Cablivi (acquired thrombotic thrombocytopenic purpura) and Dupixent for its second indication in asthma.
A couple of better-ranked drug/biotech stocks include Eli Lilly & Company (LLY - Free Report) and Merck & Co., Inc. (MRK - Free Report) . Both the stocks carry a Zacks Rank #2 (Buy).
Lilly’s earnings estimates for 2018 and 2019 have risen from $5.42 to $5.47 and from $5.69 to $5.78, respectively, over the past 60 days. The stock has gained 29.1% this year so far.
Merck’s shares have risen 30.2% this year so far. Its earnings estimates have risen from $4.26 to $4.34 for 2018 and from $4.58 to $4.71 for 2019 over the past 60 days.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
Image: Bigstock
Sanofi's (SNY) Q3 Earnings and Sales Surpass Estimates
Sanofi (SNY - Free Report) reported third-quarter 2018 earnings of $1.07 per American depositary share, which beat the Zacks Consensus Estimate of 98 cents. Earnings increased 8.2% on a reported basis. At constant currency rates (“CER”), earnings grew 11.2%.
Third-quarter net sales rose 3.7% on a reported basis to almost $10.91 billion (€9.39 billion). Sales also beat the Zacks Consensus Estimate of $10.88 billion. Unfavorable exchange rate movements hurt sales by 2.6%. At CER, sales increased 6.3% year over year.
Sales increased 5.5% at CER in the United States. At CER, sales rose 10.4% in Emerging Markets, 1.9% in Europe and 9.4% in the Rest of the World (Japan, South Korea, Canada, Australia, New Zealand and Puerto Rico).
Shares were up 3.9% in pre-market trading, following strong earnings and sales growth. In the past six months, Sanofi’s shares have risen 10.5% compared with 7.1% increase for the industry.
All growth rates mentioned below are on a year-on-year basis and at CER.
Segmental Performance
Pharmaceuticals sales (including emerging markets) rose 3.2% to €6.2 billion on a reported basis. However, at CER, Pharmaceuticals sales rose 6.1% driven by growth in Rare Blood Disorder and Immunology franchises, partially offset by lower Diabetes and Established Rx products sales.
Sanofi reports through five Global Business Units (GBUs) — Sanofi Genzyme (Specialty Care), Diabetes & Cardiovascular, General Medicines & Emerging Markets, Consumer Healthcare and Sanofi Pasteur (Vaccines).
Sanofi Genzyme/Specialty Care GBU sales (including emerging markets) increased 34.6% to €2.2 billion, driven by contribution from new immunology drugs — Dupixent and Kevzara — and higher sales of rare disease drugs.
Sales of MS drug, Aubagio rose 12.6% to €426 million while sales of Lemtrada fell 10.6% to €99 million.
Sales of rare disease drugs like Myozyme/Lumizyme improved 13.7% to €209 million. Fabrazyme sales were €191 million, up 12%. Cerdelga sales came in at €41 million, up 32.3%, Aldurazyme sales were up 8% to €49 million and Cerezyme sales rose 3.9% to €165 million.
Oncology sales increased 4.7% to €380 million. Excluding Leukine, which was sold in January, oncology sales grew 6.7%. Jevtana sales were up 17.8% to €106 million. Thymoglobulin recorded sales of €75 million, up 7%. Taxotere sales were up 2.3% to €44 million. Zaltrap and Eloxatin sales were up 15.8% and 8.9% to €22 million and €49 million, respectively. Mozobil sales remained flat at €42 million.
Dupixent/dupilumab for treating atopic dermatitis was launched in the United States and the EU in 2017. Dupixent generated sales of €225 million in the third quarter compared with €176 million in the second quarter of 2018. Total prescriptions written for Dupixent in the United States grew 16% sequentially. Sales of the drug in Europe were €20 million.
Sanofi and Regeneron’s (REGN - Free Report) rheumatoid arthritis drug, Kevzara (sarilumab) was launched in the United States, United Kingdom, the Netherlands and Germany in 2017. The drug was launched in Italy, France, Switzerland and Spain in the third quarter. Kevzara recorded sales of €22 million in the quarter compared with €20 million in the previous quarter.
Rare blood franchise, which was added with the acquisition of Bioverativ in March 2018, brought in sales of €282 million.
Diabetes and Cardiovascular GBU (including emerging markets) declined 6.3% to €1.54 billion. The Diabetes franchise (including emerging markets) declined 9.2% to €1.38 billion due to lower sales of key drugs — Lantus and Toujeo — in the United States.
Sales of diabetes drugs in the United States declined 24.3% to €571 million due to pricing pressure and loss of Part D business In Europe, it fell 2.2%. However, sales of diabetes drugs in Emerging Markets were up 13.4%.
Lantus sales declined 18.2% to €897 million in the quarter. Lantus sales declined 31.7% in the United States due to lower average net price and change in coverage in Sanofi’s Part D business. In Europe, sales declined 12% due to biosimilar competition and patient switching to Toujeo.
Toujeo generated sales of €215 million in the reported quarter, up 10.7%. However, sales were down 15.7% in the United States.
Soliqua/Suliqua generated sales of €20 million in the quarter compared with €17 million in the previous quarter.
In the cardiovascular franchise, Sanofi’s anti PCSK9 therapy, Praluent garnered worldwide sales of €68 million in the reported quarter, up 64.3%. Sales of the other drug in this franchise, Multaq, were up 13.6% to €93 million.
General Medicines & Emerging Markets GBU sales came in at €3.2 billion, up a mere 0.6%. Sales of Established products were €2.13 billion, down 3.2% due to generic competition for Renvela/Renagel in the United States and rising competition for Synvisc.
Sales of Generics fell 5.6% to €383 million with lower sales in Europe while sales were flat in Emerging markets. In September, Sanofi closed the agreement to sell its European generics business, Zentiva, to Advent International.
Consumer Healthcare GBU sales were €1.11 billion, up 4.1%, driven by growth in Emerging markets. Sales in Europe were up 3.4% due to higher sales of drugs of Allergy Cough & Cold and Digestive categories. Allergy Cough & Cold and Pain categories drove sales up 2.9% in the United States
Third-quarter consolidated Sanofi Pasteur (Vaccines) sales were up 8.2% to €2.1 billion. Vaccines sales were boosted by recovery in supply of polio vaccine, Pentaxim, in China and growth in sales of Menactra and Flublok.
Costs Rise
Selling general and administrative expenses (SG&A) increased 1.6% at CER in the quarter, reflecting investments in immunology and consolidation of Albynx and Bioverativ’s operating expenses, partially offset by lower expense for the diabetes program. R&D expenses were up 9.5% at CER, reflecting increased spending on immuno-oncology and diabetes programs and acquisition cost related to Bioverativ and Ablynx.
2018 Expectations Raised
Sanofi increased the lower end of its earnings growth expectation for 2018 and expects business earnings to grow between 4% and 5% at CER (previously 3-5%). The company expects currency movement to have unfavorable impact of 6% on earnings.
Our Take
Sanofi’s third-quarter 2018 earnings and sales beat estimates. Sanofi looks well poised to return to growth in the second half of the year with a strong third quarter performance.Its 2018 guidance looks upbeat. Growth is being driven by contribution from the Bioverativ and Ablynx deals, improving vaccine sales and decreasing impact of patent expirations. The company Specialty Care segment particularly is on a strong footing with the recent FDA approvals of new drugs Libtayo (cutaneous squamous cell carcinoma), Cablivi (acquired thrombotic thrombocytopenic purpura) and Dupixent for its second indication in asthma.
Sanofi Price, Consensus and EPS Surprise
Sanofi Price, Consensus and EPS Surprise | Sanofi Quote
Zacks Rank & Stocks to Consider
Sanofi currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A couple of better-ranked drug/biotech stocks include Eli Lilly & Company (LLY - Free Report) and Merck & Co., Inc. (MRK - Free Report) . Both the stocks carry a Zacks Rank #2 (Buy).
Lilly’s earnings estimates for 2018 and 2019 have risen from $5.42 to $5.47 and from $5.69 to $5.78, respectively, over the past 60 days. The stock has gained 29.1% this year so far.
Merck’s shares have risen 30.2% this year so far. Its earnings estimates have risen from $4.26 to $4.34 for 2018 and from $4.58 to $4.71 for 2019 over the past 60 days.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>