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Sanofi (SNY) Q1 Earnings Beat, Sales Miss, Dupixent Strong

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Sanofi (SNY - Free Report) reported first-quarter 2023 adjusted earnings of $1.16 per American depositary share, which beat the Zacks Consensus Estimate of $1.10 as well as our estimate of $1.01 per share. Earnings rose 11.3% on a reported basis and 11.9% on a constant currency rate (“CER”) basis.

Net sales rose 5.7% on a reported basis and 5.5% on a CER basis to $10.97 billion (€10.22 billion). Exchange rate movements boosted sales by 0.2 percentage points in the quarter. Sales missed the Zacks Consensus Estimate of $11.60 billion.

Sales rose 11.8% at CER in the United States but declined 2.1% in the Rest of the World (including China, Japan, Brazil and Russia). In Europe, sales rose 8.4%.

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

Segment Performance

Sanofi’s Biopharma segment includes Global Business Units (GBUs) Specialty Care, General Medicine and Vaccines.  Biopharma sales rose 4.6% in the quarter to €8.73 billion.

Sanofi Specialty Care GBU sales increased 18.3% to €4.29 billion, mainly driven by Dupixent and rare disease drugs.

Dupixent generated sales of €2.32 billion in the quarter, up 39.7% year over year. Dupixent sales were less than our estimates of €2.37 billion.

Sales of the drug in the United States rose 43.3%, driven by strong demand for its approved indications, atopic dermatitis, asthma and chronic rhinosinusitis with nasal polyposis indications, eosinophilic esophagitis and prurigo nodularis. In the United States, Dupixent’s new prescription share and total prescription share rose 45% and 32%, respectively.

Dupixent sales rose 32.2% in Europe and 27.8% in the Rest of the World, driven by sales in Japan and China.

Aubagio sales declined 16.9% to €419 million due to generic competition in Canada. Aubagio generics were launched in the United States in March 2023 while in Europe, generics are expected to be launched in the fourth quarter.  Kevzara recorded sales of €73 million in the quarter, down 23.2%.

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.

Rare disease drug, Myozyme sales declined 3% to €228 million due to patients switching to Nexviazyme. The new drug Nexviazyme/Nexviadzyme recorded sales of €81 million in the first quarter compared with €65 million in the previous quarter. Fabrazyme sales were €246 million, up 11.8% due to growth in all regions. In the Gaucher franchise, Cerezyme sales rose 26.7% to €196 million due to favorable purchasing patterns in the Rest of the World region. Newly launched rare disease drug Xenpozyme recorded sales of €18 million in the quarter compared with €17 million in the previous quarter.

Sarclisa sales rose 33.8% to €87 million, reflecting growth in all three geographic regions. Jevtana’s sales declined 21.4% to €79 million due to the entry of generic competition in some countries in Europe and increased competitive pressure in the United States.

Among the rare blood disorder drugs, Alprolix sales rose 12% to €125 million. Eloctate sales declined 15.9% to €118 million in the quarter. Sanofi’s newest rare blood disorder drug, Altuviiio, a once-weekly new class of factor VIII therapy for hemophilia A, was launched at the end of March in the United States.

Sales in General Medicines GBU declined 11.4% to €3.27 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 32.6% to €447 million in the quarter. Toujeo generated sales of €289 million in the reported quarter, up 4.4% year over year. Lovenox sales declined 11.9% to €323 million. Aprovel sales declined 12% to €110.0 million. Praluent sales rose 42% to €98 million.

Vaccines GBU sales rose 15.2% to €1.17 billion in the quarter, mainly due to a recovery in sales of Booster and Travel vaccines. Total vaccine sales beat our estimates of €1.08 billion.

While sales of flu vaccines rose 6.1%, sales of PPH vaccines declined 11.3% in the quarter. Sales of meningitis, travel and other endemic vaccines rose 16.7% in the quarter. Booster vaccine sales rose 11.9% in the quarter.

VidPrevtyn Beta, Sanofi’s recombinant COVID-19 booster vaccine, which was approved in Europe in 2022, recorded sales of €167 million, representing contractual sales.

Consumer Healthcare (CHC) standalone unit generated sales of €1.5 billion, up 11.2%, driven by growth in all regions. The CHC segment witnessed double-digit growth in Digestive Wellness, Allergy and Cough & Cold categories.

Costs Rise

Business selling, general and administrative expenses rose 8.7 at CER in the quarter on increased investments in Specialty Care and further investments in CHC. Business research and development expenses increased 3.9% at CER due to higher investments in vaccines.

Maintains 2023 Guidance

Sanofi expects adjusted earnings to grow at a low single-digit range at CER in 2023. It anticipates a negative currency impact in the range of 5.5%-6.5% on earnings versus the prior expectation of 3.5%-4.5%.

Our Take

Sanofi’s quarterly results were mixed as it beat estimates for earnings but missed the same for sales. Dupixent continued its strong performance in the quarter. Sanofi is on track to achieve its Dupixent sales guidance of €10 billion.

Shares were down slightly in pre-market trading due to the mixed quarterly performance. Sanofi’s stock has risen 3.5% in the past year compared with the industry’s rise of 12.1%.


Sanofi Price, Consensus and EPS Surprise

Sanofi Price, Consensus and EPS Surprise

Sanofi price-consensus-eps-surprise-chart | Sanofi Quote

Sanofi expects the approval of Beyfortus (nirsevimab) RSV vaccine in the United States this year, which, coupled with Altuviiio (hemophilia A), which is already launched, should boost the company’s long-term revenue growth. Beyfortus is already approved in Europe.

Sanofi possesses a promising early-to-mid-stage pipeline with several data readouts expected in 2023.

In March, Sanofi announced an agreement to buy Provention Bio for $25.00 per share in cash, representing an equity value of approximately $2.9 billion. The acquisition will add Provention Bio’s Tzield to Sanofi’s portfolio, which is the first therapy to delay the onset of Stage 3 type I diabetes (T1D) in patients aged 8 years and older who already have Stage 2 T1D. Tzield was approved by the FDA in 2022. Sanofi already has a co-promotion agreement with Provention Bio for Tzield. An update is expected on the first-quarter conference call. The transaction is expected to close in the second quarter.

Zacks Rank

Sanofi currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
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Another Stock to Consider

Another large drug stock worth considering is Novo Nordisk (NVO - Free Report) , which has a Zacks Rank of 1.

Estimates for Novo Nordisk’s 2023 earnings per share have increased from $4.49 to $4.70 over the past 30 days. Estimates for 2024 have jumped from $5.29 per share to $5.51 in the same timeframe. Novo Nordisk’s stock has surged 47.9% in the past year.

Novo Nordisk beat earnings expectations in three of the trailing four quarters. The company delivered a four-quarter earnings surprise of 3.00%, on average.

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