Sanofi Profit Hit By Falling Diabetes Revenue -- Update
February 09 2016 - 4:10AM
Dow Jones News
By Noemie Bisserbe
PARIS--French drugmaker Sanofi SA reported sharply lower
fourth-quarter earnings on Tuesday as it continues to face growing
pricing pressure in the U.S. diabetes market, and said profit won't
show much change this year.
Business net income, the company's term for adjusted income
excluding the impact of acquisitions and divestments, declined 6.5%
to EUR1.71 billion ($1.92 billion) from EUR1.83 billion a year ago.
Sanofi's total sales rose 2.3% to EUR9.28 billion.
Sanofi said it expected its business earnings per share to
remain "broadly stable" in 2016 at constant exchange rates "barring
unforeseen major adverse events."
Sanofi's earnings for the quarter highlight the continuing
deterioration of the drugmaker's diabetes business in the U.S.,
where it is forced to offer larger discounts to the government,
insurers and health-care providers to push its products to the
market.
Diabetes drug sales, which account for about 20% of the
company's revenue, fell 13% to EUR1.9 billion in the fourth
quarter, hurt by lower sales of its insulin drug Lantus, which lost
patent protection in the U.S. last year. However, Genzyme, Sanofi's
biotech unit, posted a 28% increase in revenue to EUR1.01 billion,
boosted by sales of multiple sclerosis treatment Aubagio. Sales of
consumer health-care products rose 1% to EUR809 million, while
vaccines sales increased 15% to EUR1.44 billion.
Chief Executive Olivier Brandicourt, who took over in April
after the abrupt dismissal of Christopher Viehbacher, has pledged
to revive profit growth by focusing on fewer markets where it has,
or can build, a competitive position--and by slashing costs.
Sanofi said earlier in February that it planned to cut about 600
jobs in France over the next three years as part of its
restructuring plans. On Tuesday, Mr. Brandicourt said he would
detail global job cuts this summer.
The company continues to look for acquisitions as it positions
itself for stronger growth.
"We want to be vigilant, agile on M&A opportunities," Mr.
Brandicourt told reporters in a conference call. "We should be able
to act swiftly if an attractive opportunity arises," he added.
In December, the company said it had entered exclusive
negotiations with Boehringer Ingelheim GmbH on a possible exchange
of its animal-health business for most of the German group's
consumer-health-care unit.
Boehringer would pay Sanofi EUR4.7 billion as part of the deal.
Sanofi's animal-health business has an enterprise value of EUR11.4
billion and Boehringer's consumer-health-care business has an
enterprise value of EUR6.7 billion. The deal would make Sanofi the
global revenue leader in over-the-counter medicines, just ahead of
Bayer AG and GlaxoSmithKline PLC, and would make closely held
Boehringer No. 2 in animal health after Zoetis Inc.
Last year, the company said it was also considering selling its
European generics business as part of its new strategic plan. Mr.
Brandicourt said Tuesday that the company was "still exploring its
options."
Write to Noemie Bisserbe at noemie.bisserbe@wsj.com
(END) Dow Jones Newswires
February 09, 2016 03:55 ET (08:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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