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Sanofi (SNY) Q4 Earnings In Line; Can Sell Praulent for Now
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Sanofi (SNY - Free Report) reported fourth-quarter 2016 earnings of 67 cents per American depositary share, which were in line with the Zacks Consensus Estimate. Earnings declined 4.6% on a reported basis and 1.5% at constant currency rates (CER).
Fourth-quarter 2016 net sales rose 3.3% on a reported basis and 3.4% at CER to almost €8.87 billion. Sales were however hurt by exchange rate movements of roughly 0.1%. Sales exclude the results from Sanofi’s Merial animal health business that it swapped with Boehringer Ingelheim’s Consumer Healthcare business in Jan 2017.
Sales rose 11.3% at CER in the U.S. and 3.5% in Emerging Markets while declining 1.7% in Europe and 11% in the Rest of the World (Japan, South Korea, Canada, Australia, New Zealand, Puerto Rico) market.
All growth rates mentioned below are on a year-on-year basis and at CER.
Segmental Performance
The French drugmaker reports through five Global Business Units (GBUs) – Sanofi Genzyme (Specialty Care), Diabetes & Cardiovascular, General Medicines & Emerging Markets, Consumer Healthcare and Sanofi Pasteur (Vaccines).
Under this organizational structure, all Pharmaceutical sales in Emerging Markets are now included under the General Medicines & Emerging Markets GBU.
Sanofi Genzyme/Specialty Care GBU sales increased 12.6% to €1.34 billion, driven mainly by strong uptake of multiple sclerosis drugs, Aubagio (up 34.2% to €367 million) and Lemtrada (up 46.9% to €117 million).
Meanwhile, sales of rare disease drugs like Cerezyme rose 7.8% to €184 million while Myozyme/Lumizyme improved 15.6% to €192 million. Fabrazyme sales were €182 million, up 13.9%. Cerdelga sales came in at €29 million in the fourth quarter of 2016, up 27.3%.
Oncology sales decreased 3.9% to €369 million due to lower sales of Taxotere and Eloxatin.
Diabetes and Cardiovascular GBU sales (excluding emerging markets) rose 3.8% to €1.71 billion. The Diabetes franchise (including emerging markets) rose 1.9% to €1.95 billion as strong performance of newly launched Toujeo offset continued weakness in Lantus. Sales of diabetes drugs in the U.S. rose 5.5% to €1.13 billion. Sales of diabetes drugs in Emerging Markets were up 4.1% while in Europe it declined 5.6%.
Sanofi’s blockbuster drug Lantus sales declined 5.1% to €1.46 billion in the quarter. Lantus sales declined in the U.S. due to lower average net price and patient switching to Toujeo while in Europe sales declined due to biosimilar competition and patient switching to Toujeo.
Toujeo generated sales of €238 million, up 42.5% sequentially in the reported quarter. Toujeo is now available in 45 countries while it continues to gain share in Europe and Japan.
In the cardiovascular franchise, Sanofi’s anti PCSK9 therapy Praluent garnered worldwide sales of €37 million in the reported quarter, up 5.7% sequentially. U.S. sales came in at €30 million while EU sales amounted to €6 million.
In January, the U.S. District Court in Delaware granted Amgen, Inc. (AMGN - Free Report) permanent injunction against infringement by Sanofi and its partner Regeneron Pharmaceuticals, Inc. (REGN - Free Report) of two patents owned by the former for Repatha. The decision banned Sanofi and Regeneron from selling Praluent during the term of the two patents, which describe and claim monoclonal antibodies of PCSK9. Regeneron and Sanofi appealed against the ruling in a higher court. On Wednesday, after trading hours, Sanofi announced that the United States Court of Appeals for the Federal Circuit granted their request to suspend the permanent injunction for Praluent, pending the appeal. This means that Praluent can be sold during the appeals process. Sanofi otherwise would have been prohibited from selling Praluent in the U.S. from Feb 21, 2017.
General Medicines & Emerging Markets GBU sales came in at €3.64 billion, up 0.4%. Sales of Established products were €2.57 billion, down 1.3%, reflecting termination of Auvi-Q commercialization in the U.S. and generic competition of Plavix in Japan (Plavix lost exclusivity in Japan in 2015).
Consumer Healthcare GBU sales were €834 million, up 2.7%, as higher sales in Europe offset lower sales in Russia due to a challenging economic environment.
Sales of Generics increased 0.2% to €468 million as higher sales in Emerging markets and Japan partially offset lower sales in Europe and the U.S.
Total Pharmaceuticals sales increased 3.4% to €7.52 billion, as growth in multiple sclerosis, rare disease, cardiovascular, Diabetes and CHC franchise offset the decrease in Oncology and Established Rx Products sales.
Fourth-quarter consolidated Sanofi Pasteur (Vaccines) sales increased 3.7% (comparability based on reclassification of VaxServe sales – Sanofi's vaccine distribution and service provider in the U.S.) to €1.35 billion, driven by strong sales of Polio/Pertussis/Hib vaccines in the U.S. and Emerging markets. Sales of influenza vaccines declined in the quarter due to early shipments in the third quarter.
As expected, the uptake of Dengvaxia (the world's first dengue vaccine) was limited in the fourth quarter as no new immunization programs were implemented.
Costs Rise
Selling general and administrative expenses (SG&A) increased 4.8% in the quarter as the company prepares for the U.S. launch of Dupixent in atopic dermatitis and Kevzara in rheumatoid arthritis. Sanofi and Regeneron’s rheumatoid arthritis (RA) drug sarilumab was approved in Canada this month (to be marketed as Kevzara) while the Biologics License Application (BLA) is expected to be re-submitted in the U.S. this quarter (complete response letter received in Oct 2016). Dupixent/dupilumab, developed for treating atopic dermatitis, is under priority review in the U.S. (PDUFA Date: Mar 29, 2017) and EU.
R&D spending rose 4.7% at CER as the company started several late-stage studies.
2016 Results
Full-year 2016 net sales declined 0.7% on a reported basis but rose 1.2% at CER to almost €33.8 billion.
Full-year 2016 business earnings were $3.07 per American depositary share, which beat the Zacks Consensus Estimate of $3.03. Earnings rose 0.7% on a reported basis and 4.1% at CER.
2017 Outlook
Sanofi expects 2016 business earnings to be between flat to down 3% at CER. It anticipates positive currency impact in the range of 3%-4% on business earnings in 2017.
SG&A expenses are expected to go up in 2017 mainly driven by investments behind the launch of Kevzara and Dupixent. In fact, overall operating expenses in 2017 are expected to grow at a similar rate as in 2016 at CER.
Our Take
Sanofi’s fourth-quarter 2016 results were mixed. While revenues increased year over year, earnings declined as higher sales were offset by higher operating costs and taxes. However, the appeals court’s decision to allow Sanofi/ Regeneron to continue selling Praluent while the litigation continues marks a temporary relief for the company.
Shares of Sanofi rose 2.4% on Wednesday. In fact, so far this year, Sanofi’s share price has risen 1.8%, better than a 0.1% increase for the Zacks classified Large-Cap Pharma industry.
We expect investor focus to remain on the sales ramp-up of newly launched drugs Toujeo and basal insulin GLP-1 combo product, Soliqua/Suliqua. Soliqua was launched in the U.S. and approved in EU last month. The company expects a lot of activity on the pipeline front in the upcoming quarter.
Another large drugmaker, GlaxoSmithKline plc (GSK - Free Report) also reported fourth-quarter results on Wednesday. Glaxo’s earnings of 48 cents per American depositary share missed the Zacks Consensus Estimate of 57 cents. Revenues were up 6% year over year at constant CER.
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Sanofi (SNY) Q4 Earnings In Line; Can Sell Praulent for Now
Sanofi (SNY - Free Report) reported fourth-quarter 2016 earnings of 67 cents per American depositary share, which were in line with the Zacks Consensus Estimate. Earnings declined 4.6% on a reported basis and 1.5% at constant currency rates (CER).
Fourth-quarter 2016 net sales rose 3.3% on a reported basis and 3.4% at CER to almost €8.87 billion. Sales were however hurt by exchange rate movements of roughly 0.1%. Sales exclude the results from Sanofi’s Merial animal health business that it swapped with Boehringer Ingelheim’s Consumer Healthcare business in Jan 2017.
Sales rose 11.3% at CER in the U.S. and 3.5% in Emerging Markets while declining 1.7% in Europe and 11% in the Rest of the World (Japan, South Korea, Canada, Australia, New Zealand, Puerto Rico) market.
All growth rates mentioned below are on a year-on-year basis and at CER.
Segmental Performance
The French drugmaker reports through five Global Business Units (GBUs) – Sanofi Genzyme (Specialty Care), Diabetes & Cardiovascular, General Medicines & Emerging Markets, Consumer Healthcare and Sanofi Pasteur (Vaccines).
Under this organizational structure, all Pharmaceutical sales in Emerging Markets are now included under the General Medicines & Emerging Markets GBU.
Sanofi Genzyme/Specialty Care GBU sales increased 12.6% to €1.34 billion, driven mainly by strong uptake of multiple sclerosis drugs, Aubagio (up 34.2% to €367 million) and Lemtrada (up 46.9% to €117 million).
Meanwhile, sales of rare disease drugs like Cerezyme rose 7.8% to €184 million while Myozyme/Lumizyme improved 15.6% to €192 million. Fabrazyme sales were €182 million, up 13.9%. Cerdelga sales came in at €29 million in the fourth quarter of 2016, up 27.3%.
Oncology sales decreased 3.9% to €369 million due to lower sales of Taxotere and Eloxatin.
Diabetes and Cardiovascular GBU sales (excluding emerging markets) rose 3.8% to €1.71 billion. The Diabetes franchise (including emerging markets) rose 1.9% to €1.95 billion as strong performance of newly launched Toujeo offset continued weakness in Lantus. Sales of diabetes drugs in the U.S. rose 5.5% to €1.13 billion. Sales of diabetes drugs in Emerging Markets were up 4.1% while in Europe it declined 5.6%.
Sanofi’s blockbuster drug Lantus sales declined 5.1% to €1.46 billion in the quarter. Lantus sales declined in the U.S. due to lower average net price and patient switching to Toujeo while in Europe sales declined due to biosimilar competition and patient switching to Toujeo.
Toujeo generated sales of €238 million, up 42.5% sequentially in the reported quarter. Toujeo is now available in 45 countries while it continues to gain share in Europe and Japan.
In the cardiovascular franchise, Sanofi’s anti PCSK9 therapy Praluent garnered worldwide sales of €37 million in the reported quarter, up 5.7% sequentially. U.S. sales came in at €30 million while EU sales amounted to €6 million.
In January, the U.S. District Court in Delaware granted Amgen, Inc. (AMGN - Free Report) permanent injunction against infringement by Sanofi and its partner Regeneron Pharmaceuticals, Inc. (REGN - Free Report) of two patents owned by the former for Repatha. The decision banned Sanofi and Regeneron from selling Praluent during the term of the two patents, which describe and claim monoclonal antibodies of PCSK9. Regeneron and Sanofi appealed against the ruling in a higher court. On Wednesday, after trading hours, Sanofi announced that the United States Court of Appeals for the Federal Circuit granted their request to suspend the permanent injunction for Praluent, pending the appeal. This means that Praluent can be sold during the appeals process. Sanofi otherwise would have been prohibited from selling Praluent in the U.S. from Feb 21, 2017.
General Medicines & Emerging Markets GBU sales came in at €3.64 billion, up 0.4%. Sales of Established products were €2.57 billion, down 1.3%, reflecting termination of Auvi-Q commercialization in the U.S. and generic competition of Plavix in Japan (Plavix lost exclusivity in Japan in 2015).
Consumer Healthcare GBU sales were €834 million, up 2.7%, as higher sales in Europe offset lower sales in Russia due to a challenging economic environment.
Sales of Generics increased 0.2% to €468 million as higher sales in Emerging markets and Japan partially offset lower sales in Europe and the U.S.
Total Pharmaceuticals sales increased 3.4% to €7.52 billion, as growth in multiple sclerosis, rare disease, cardiovascular, Diabetes and CHC franchise offset the decrease in Oncology and Established Rx Products sales.
Fourth-quarter consolidated Sanofi Pasteur (Vaccines) sales increased 3.7% (comparability based on reclassification of VaxServe sales – Sanofi's vaccine distribution and service provider in the U.S.) to €1.35 billion, driven by strong sales of Polio/Pertussis/Hib vaccines in the U.S. and Emerging markets. Sales of influenza vaccines declined in the quarter due to early shipments in the third quarter.
As expected, the uptake of Dengvaxia (the world's first dengue vaccine) was limited in the fourth quarter as no new immunization programs were implemented.
Costs Rise
Selling general and administrative expenses (SG&A) increased 4.8% in the quarter as the company prepares for the U.S. launch of Dupixent in atopic dermatitis and Kevzara in rheumatoid arthritis. Sanofi and Regeneron’s rheumatoid arthritis (RA) drug sarilumab was approved in Canada this month (to be marketed as Kevzara) while the Biologics License Application (BLA) is expected to be re-submitted in the U.S. this quarter (complete response letter received in Oct 2016). Dupixent/dupilumab, developed for treating atopic dermatitis, is under priority review in the U.S. (PDUFA Date: Mar 29, 2017) and EU.
R&D spending rose 4.7% at CER as the company started several late-stage studies.
2016 Results
Full-year 2016 net sales declined 0.7% on a reported basis but rose 1.2% at CER to almost €33.8 billion.
Full-year 2016 business earnings were $3.07 per American depositary share, which beat the Zacks Consensus Estimate of $3.03. Earnings rose 0.7% on a reported basis and 4.1% at CER.
2017 Outlook
Sanofi expects 2016 business earnings to be between flat to down 3% at CER. It anticipates positive currency impact in the range of 3%-4% on business earnings in 2017.
SG&A expenses are expected to go up in 2017 mainly driven by investments behind the launch of Kevzara and Dupixent. In fact, overall operating expenses in 2017 are expected to grow at a similar rate as in 2016 at CER.
Our Take
Sanofi’s fourth-quarter 2016 results were mixed. While revenues increased year over year, earnings declined as higher sales were offset by higher operating costs and taxes. However, the appeals court’s decision to allow Sanofi/ Regeneron to continue selling Praluent while the litigation continues marks a temporary relief for the company.
Shares of Sanofi rose 2.4% on Wednesday. In fact, so far this year, Sanofi’s share price has risen 1.8%, better than a 0.1% increase for the Zacks classified Large-Cap Pharma industry.
We expect investor focus to remain on the sales ramp-up of newly launched drugs Toujeo and basal insulin GLP-1 combo product, Soliqua/Suliqua. Soliqua was launched in the U.S. and approved in EU last month. The company expects a lot of activity on the pipeline front in the upcoming quarter.
Sanofi currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sanofi Price and Consensus
Sanofi Price and Consensus | Sanofi Quote
Another large drugmaker, GlaxoSmithKline plc (GSK - Free Report) also reported fourth-quarter results on Wednesday. Glaxo’s earnings of 48 cents per American depositary share missed the Zacks Consensus Estimate of 57 cents. Revenues were up 6% year over year at constant CER.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>