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Sanofi (SNY - Free Report) reported fourth-quarter 2020 adjusted earnings of 73 cents per American depositary share, which missed the Zacks Consensus Estimate of 88 cents per share. Earnings were flat on a reported basis but rose 9.8% on constant currency rates (“CER”) basis.
Fourth-quarter net sales declined 2.4% on a reported basis to $11.16 billion (€9.38 billion) due to currency headwinds of 6.6%. At CER, sales rose 4.2% year over year driven by higher sales of Sanofi’s blockbuster eczema medicine, Dupixent, and record influenza vaccine sales. Sales missed the Zacks Consensus Estimate of $11.71 billion.
Sales rose 5.3% at CER in the United States, 6% in Europe and 1.7% in the Rest of the World (includes China, Japan, Brazil and Russia).
All growth rates mentioned below are on a year-on-year basis and at CER.
Segmental Performance
Pharmaceuticals sales rose 2.4% in the quarter to €6.29 billion as strong performance of Dupixent was partially offset by lower sales in General Medicines due to weak U.S. Diabetes sales.
Sanofi Specialty Care GBU sales increased 18.3% to €2.8 billion, mainly driven by Dupixent.
In immunology, multiple sclerosis and neurology franchise, Dupixent generated sales of €982 million in the quarter, up 54.2%. Sales of the drug in the United States rose 52.7% driven by continued growth in atopic dermatitis and rapid uptake in asthma and chronic rhinosinusitis with nasal polyposis indications. Sales rose 76.9% in Europe and 44.9% in Rest of the World.
Kevzara recorded sales of €60 million in the quarter, up 16.7%. Please note that Sanofi markets Dupixent and Kevzara in partnership with Regeneron (REGN - Free Report) . Aubagio sales increased 3.7% to €472 million.
Sales of rare disease drugs rose 3% to €734 million as demand growth was partially offset by sales phasing. Myozyme sales rose 3.8% to €235 million. Fabrazyme sales were €200 million, down 0.9%. Cerezyme sales rose 0.6% to €160 million.
Oncology sales increased 24.6% to €213 million driven by launches of Sarclisa and Libtayo and continued growth of legacy franchises. Key cancer drug, Jevtana’s sales were up 7% to €131 million.
Rare blood disorders franchise recorded sales of €317 million, up 11% year over year driven by higher sales of Cablivi and Alprolix due to industrial sales to Sobi. Sales of Eloctate declined 6.8% to €156 million in the quarter.
Sales in General Medicines GBU declined 7.5% to €3.49 billion hurt by lower sales in Diabetes and Established Products.
The Diabetes franchise declined 8.4% to €1.09 billion mainly due to pricing pressure in the United States and COVID-19 impact on Rest of the World sales. Sales of diabetes drugs in the United States declined 19.6% to €339 million. In Europe, sales fell 2.8% while in Rest of the World, sales declined 1.6%.
Lantus sales decreased 13.6% to €587 million in the quarter due to pricing pressure, patients switching to Toujeo and biosimilar competition. Toujeo generated sales of €221 million in the reported quarter, flat year over year.
Sales of Cardiovascular and Established Rx Products came in at €2.41 billion, down 7.1% mainly due to the impact of the pandemic, divestments and lower sales Renagel/Renvela.
Vaccines GBU sales rose 14.6% to €2.06 billion in the fourth quarter driven by demand growth for influenza vaccines in the United States and Europe and higher sales of meningitis and Polio/Pertussis/Hib vaccines. The sales growth was partially offset by lower sales of travel vaccines (due to COVID-19-related travel restrictions) and adult booster vaccinations.
Consumer Healthcare (CHC) stand-alone unit generated sales of €1.03 billion, down 3% due to lower demand for cough and cold products thanks to social distancing measures. Moreover, non-core divestments and increased regulatory requirements, which resulted in product suspensions, also hurt the performance of the CHC segment. However, the Digestive Health brands did well in the quarter.
Cost Discussion
Selling, general and administrative expenses rose 0.3% at CER in the quarter, reflecting increased investments in Specialty Care and Vaccines, which offset the benefit from cost savings. Research and development expenses decreased 6.8% at CER as reallocation of resources toward priority assets could not fully offset the decline in diabetes development expenses.
2021 Guidance
Sanofi expects earnings to grow in a high single-digit range in 2021. However, it anticipates a negative currency impact in the range of 4.5%-5.5% on earnings.
Separately, Sanofi said it expects to expand its business operating income margin to 30% by 2022. It also announced a target to generate costs savings of €2.5bn by 2022.
Our Take
Sanofi’s results were tepid as it missed estimates for both earnings and sales. However, its earnings growth expectations for 2021 are encouraging.
Shares were up more than 2.0% in pre-market trading on Friday. Sanofi stock has declined 6.5% in the past year compared against an increase of 5.4% for the industry
Sanofi’s Specialty Care segment is on a strong footing, particularly with regular label expansion of Dupixent. The drug has, in a very short time, become the key top-line driver for Sanofi. The recent Synthorx and Principia acquisitions have strengthened its R&D pipeline. Meanwhile, it is working on two COVID-19 vaccine candidates, one each in partnership with Glaxo (GSK - Free Report) and Translate Bio (TBIO - Free Report) whose clinical studies are expected to begin in the coming weeks. However, the weak performance of its Diabetes segment is a concern.
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Sanofi (SNY) Q4 Earnings & Sales Miss, 2021 EPS View Bright
Sanofi (SNY - Free Report) reported fourth-quarter 2020 adjusted earnings of 73 cents per American depositary share, which missed the Zacks Consensus Estimate of 88 cents per share. Earnings were flat on a reported basis but rose 9.8% on constant currency rates (“CER”) basis.
Fourth-quarter net sales declined 2.4% on a reported basis to $11.16 billion (€9.38 billion) due to currency headwinds of 6.6%. At CER, sales rose 4.2% year over year driven by higher sales of Sanofi’s blockbuster eczema medicine, Dupixent, and record influenza vaccine sales. Sales missed the Zacks Consensus Estimate of $11.71 billion.
Sales rose 5.3% at CER in the United States, 6% in Europe and 1.7% in the Rest of the World (includes China, Japan, Brazil and Russia).
All growth rates mentioned below are on a year-on-year basis and at CER.
Segmental Performance
Pharmaceuticals sales rose 2.4% in the quarter to €6.29 billion as strong performance of Dupixent was partially offset by lower sales in General Medicines due to weak U.S. Diabetes sales.
Sanofi Specialty Care GBU sales increased 18.3% to €2.8 billion, mainly driven by Dupixent.
In immunology, multiple sclerosis and neurology franchise, Dupixent generated sales of €982 million in the quarter, up 54.2%. Sales of the drug in the United States rose 52.7% driven by continued growth in atopic dermatitis and rapid uptake in asthma and chronic rhinosinusitis with nasal polyposis indications. Sales rose 76.9% in Europe and 44.9% in Rest of the World.
Kevzara recorded sales of €60 million in the quarter, up 16.7%. Please note that Sanofi markets Dupixent and Kevzara in partnership with Regeneron (REGN - Free Report) . Aubagio sales increased 3.7% to €472 million.
Sales of rare disease drugs rose 3% to €734 million as demand growth was partially offset by sales phasing. Myozyme sales rose 3.8% to €235 million. Fabrazyme sales were €200 million, down 0.9%. Cerezyme sales rose 0.6% to €160 million.
Oncology sales increased 24.6% to €213 million driven by launches of Sarclisa and Libtayo and continued growth of legacy franchises. Key cancer drug, Jevtana’s sales were up 7% to €131 million.
Rare blood disorders franchise recorded sales of €317 million, up 11% year over year driven by higher sales of Cablivi and Alprolix due to industrial sales to Sobi. Sales of Eloctate declined 6.8% to €156 million in the quarter.
Sales in General Medicines GBU declined 7.5% to €3.49 billion hurt by lower sales in Diabetes and Established Products.
The Diabetes franchise declined 8.4% to €1.09 billion mainly due to pricing pressure in the United States and COVID-19 impact on Rest of the World sales. Sales of diabetes drugs in the United States declined 19.6% to €339 million. In Europe, sales fell 2.8% while in Rest of the World, sales declined 1.6%.
Lantus sales decreased 13.6% to €587 million in the quarter due to pricing pressure, patients switching to Toujeo and biosimilar competition. Toujeo generated sales of €221 million in the reported quarter, flat year over year.
Sales of Cardiovascular and Established Rx Products came in at €2.41 billion, down 7.1% mainly due to the impact of the pandemic, divestments and lower sales Renagel/Renvela.
Vaccines GBU sales rose 14.6% to €2.06 billion in the fourth quarter driven by demand growth for influenza vaccines in the United States and Europe and higher sales of meningitis and Polio/Pertussis/Hib vaccines. The sales growth was partially offset by lower sales of travel vaccines (due to COVID-19-related travel restrictions) and adult booster vaccinations.
Consumer Healthcare (CHC) stand-alone unit generated sales of €1.03 billion, down 3% due to lower demand for cough and cold products thanks to social distancing measures. Moreover, non-core divestments and increased regulatory requirements, which resulted in product suspensions, also hurt the performance of the CHC segment. However, the Digestive Health brands did well in the quarter.
Cost Discussion
Selling, general and administrative expenses rose 0.3% at CER in the quarter, reflecting increased investments in Specialty Care and Vaccines, which offset the benefit from cost savings. Research and development expenses decreased 6.8% at CER as reallocation of resources toward priority assets could not fully offset the decline in diabetes development expenses.
2021 Guidance
Sanofi expects earnings to grow in a high single-digit range in 2021. However, it anticipates a negative currency impact in the range of 4.5%-5.5% on earnings.
Separately, Sanofi said it expects to expand its business operating income margin to 30% by 2022. It also announced a target to generate costs savings of €2.5bn by 2022.
Our Take
Sanofi’s results were tepid as it missed estimates for both earnings and sales. However, its earnings growth expectations for 2021 are encouraging.
Shares were up more than 2.0% in pre-market trading on Friday. Sanofi stock has declined 6.5% in the past year compared against an increase of 5.4% for the industry
Sanofi’s Specialty Care segment is on a strong footing, particularly with regular label expansion of Dupixent. The drug has, in a very short time, become the key top-line driver for Sanofi. The recent Synthorx and Principia acquisitions have strengthened its R&D pipeline. Meanwhile, it is working on two COVID-19 vaccine candidates, one each in partnership with Glaxo (GSK - Free Report) and Translate Bio (TBIO - Free Report) whose clinical studies are expected to begin in the coming weeks. However, the weak performance of its Diabetes segment is a concern.
Sanofi currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sanofi Price, Consensus and EPS Surprise
Sanofi price-consensus-eps-surprise-chart | Sanofi Quote
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Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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