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Sanofi (SNY) Q2 Earnings & Sales Beat, Ups 2022 Growth View

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Sanofi (SNY - Free Report) reported second-quarter 2022 adjusted earnings of 93 cents per American depositary share, beating the Zacks Consensus Estimate of 85 cents per share. Earnings rose 25.4% on a reported basis and 16.7% on a constant currency rate (“CER”) basis, driven by higher sales and improved margins.

Net sales increased 15.7% on a reported basis and 8.1% on a CER basis to $10.82 billion (€10.12 billion) on higher sales of Dupixent. The Consumer business continued its growth momentum in the quarter while Vaccine sales recovered. Sales beat the Zacks Consensus Estimate of $10.32 billion. Exchange rate movements boosted sales by 7.6 percentage points in the quarter.

Sales rose 12.7% at CER in the United States and 5.3% in the Rest of the World (including China, Japan, Brazil and Russia). In Europe, sales increased 5.7%.

Sanofi’s stock has risen 1.6% in the year so far compared with the industry’s rise of 9.2%.

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Image Source: Zacks Investment Research

All growth rates mentioned below are on a year-on-year basis and at CER.

Segment Performance

Pharmaceuticals sales rose 7.9% in the quarter to €7.67 billion, driven by the continued strong performance of the Specialty Care segment.

Sanofi Specialty Care GBU sales increased 21.6% to €4.08 billion, mainly driven by Dupixent and rare disease drugs.

Dupixent generated sales of €1.96 billion in the quarter, up 43.4% year over year. Sales of the drug in the United States rose 37.9%, driven by continued growth in atopic dermatitis and rapid uptake in asthma and chronic rhinosinusitis with nasal polyposis indications. In the United States, Dupixent’s new prescription share and total prescription share rose 23% and 38%, respectively.

Dupixent sales rose 56.6% in Europe and 65.3% in the Rest of the world as the company expanded in newer markets and younger age groups.

In the immunology and neurology franchise, Aubagio sales declined 2.2% to €526 million. Kevzara recorded sales of €77 million in the quarter, up 30.4%, driven by a temporary increase in demand for IL-6 receptor blockers. The company expects a slight decline in sales for the immunology and neurology franchise in the remaining quarters of 2022.

Sanofi markets Dupixent and Kevzara in partnership with Regeneron (REGN - Free Report) . While sales are recorded by Sanofi, Regeneron records its share of profits/losses in connection with global sales of Dupixent and Kevzara.

Sales of rare disease drugs rose 11.6% to €891 million, driven by the Pompe, Fabry and Gaucher franchises, which benefitted from favorable buying patterns in the Rest of the World region. In the Pompe franchise, Myozyme sales declined 3.6% to €252 million due to patients switching to Nexviazyme. The new drug Nexviazyme recorded sales of €43 million in the second quarter. Fabrazyme sales were €238 million, up 9.3%. In the Gaucher franchise, Cerezyme sales rose 18.8% to €202 million, driven by favorable buying patterns in the Rest of the World region.

Oncology sales increased 8.0% to €263 million, driven by the launch of Sarclisa in key markets, which more than offset the decline in sales of Jevtana. Libtayo sales were up 36.4% to €47 million, while Sarclisa sales rose 52.5% to €64 million. Jevtana’s sales declined 15.8% to €105 million due to the entry of generic competition in some countries in Europe.

Like Dupixent and Kevzara, Sanofi had also developed Libtayo in collaboration with Regeneron. This June, Sanofi announced that it is selling its stake in its collaboration agreement for Libtayo to partner with Regeneron. From third-quarter 2022 onwards, Sanofi will stop consolidating ex-U.S. sales for Libtayo.

The rare blood disorders franchise recorded sales of €336 million, up 5.5% year over year, as higher sales of Alprolix and Cablivi were offset by lower Eloctate sales. Alprolix sales rose 16% year over year to €129 million, driven by higher sales in the U.S. and the Rest of the World region. While Cablivi sales were up 4.3% to €51 million, Eloctate sales declined 3.5% to €153 million in the quarter.

Sales in General Medicines GBU declined 4.1% to €3.60 billion, as the growth of core drugs (like Multaq, Toujeo, Praluent and Rezurock) was more than offset by lower sales of non-core drugs (like Lantus and Aprovel).

Lantus sales decreased 12.1% to €600 million in the quarter due to lower sales in the U.S., following biosimilar competition as well as the implementation of the volume-based procurement (VBP) for insulins in China which started in May 2022. Toujeo generated sales of €267 million in the reported quarter, up 2.4% year over year. Lovenox sales declined 10.9% to €337 million. Aprovel sales rose 13.1% to €120.0 million. Praluent sales rose 147.9% to €128 million.

In 2022, Sanofi expects General Medicines sales to be roughly stable, with growth in sales of core assets.

Vaccines GBU sales gained 8.7% to €1.18 billion in the quarter, mainly due to strong demand for Polio/Pertussis/Hib (PPH) vaccines and recovery in demand for travel and booster vaccines with the easing of pandemic-related travel restrictions.

While sales of flu vaccines decreased 5.9%, sales of PPH vaccines rose 7.9% in the quarter. Meningitis vaccine sales declined 24.7%. Sales of travel and other endemic vaccines rose 83.8% in the quarter. Booster vaccine sales surged 32.1% in the quarter.

Sanofi anticipates a record sales year for flu vaccines in 2022.

Consumer Healthcare (CHC) stand-alone unit generated sales of €1.27 billion, up 9.1%, driven by the strong performance of the Cough and Cold, Allergy, Digestive Wellness and Pain Care categories.

Costs Rise

Selling, general and administrative expenses increased 2.8% at CER in the quarter, reflecting increased investments in Specialty Care, which offset the benefit from cost savings. Research and development expenses increased 12.8% at CER due to higher investments behind priority assets to boost the pipeline.

2022 Guidance

Sanofi raised its financial guidance for 2022. The company now expects adjusted earnings to grow approximately 15% at CER in 2022 versus prior expectation to grow in a low double-digit range. It also anticipates a positive currency impact in the range of 7.5%-8.5% on earnings, up from the previous 4%-5% range.

Our Take

Sanofi’s quarterly results were impressive as it beat estimates for both earnings and sales. Dupixent continued its outstanding performance in the quarter. The drug has, in a very short time, become the key top-line driver for Sanofi. With outside U.S. revenues accelerating and multiple approvals for new indications expected shortly, Dupixent’s sales are expected to be higher. Recovery in sales of vaccines contributed to driving top-line growth in the quarter. The French drug giant’s earnings growth expectations for 2022 are quite encouraging.

Sanofi Price

 

Sanofi Price

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Zacks Rank

Sanofi currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked stocks in the overall healthcare space include Eli Lilly (LLY - Free Report) and Novavax (NVAX - Free Report) , both of which carry a Zacks Rank of 2 (Buy).

Eli Lilly’s stock has risen 19.1% this year so far. Eli Lilly’s earnings estimates for 2022 have gone up from $8.28 per share to $8.34 per share, while that for 2023 has increased from $9.47 per share to $9.55 per share over the past 30 days.

Eli Lilly missed earnings estimates in three of the last four quarters while beating the mark on one occasion. Eli Lilly has a four-quarter earnings surprise of 2.26%, on average.

Novavax’s stock has declined 60.6% this year so far. Novavax’s earnings estimates for 2022 have gone up from $24.68 per share to $27.23 per share, while that for 2023 have increased from $9.82 per share to $10.62 per share over the past 30 days.

Novavax missed earnings estimates in each of the last four quarters, delivering a negative earnings surprise of 184.49%, on average.

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