Sanofi, France’s largest drugmaker, reported a larger-than-expected 34 percent decline in first-quarter profit, crimped by generic competition to three key medicines in the U.S.
Profit excluding some costs fell to 1.61 billion euros ($2.1 billion), or 1.22 euros a share, from 2.42 billion euros, or 1.83 euros, a year earlier, the Paris-based company said in a statement today. That’s below the 1.77 billion-euro average estimate of 12 analysts compiled by Bloomberg.
“It’s a poor start to the year,” Alistair Campbell, an analyst at Berenberg Bank in London, wrote in a note to clients today. “There is little to cheer in the numbers.”
Chief Executive Officer Chris Viehbacher has sought partnerships and acquisitions to replenish Sanofi’s drug pipeline and make up for the revenue losses caused by generic competition to the Plavix blood thinner and other top-selling products. He is introducing new products such as Aubagio, a pill for multiple sclerosis, Lyxumia, a diabetes treatment, and Auvi-Q, which guides users through emergency allergy injections.
Sanofi rose 0.2 percent to 83.37 euros in Paris. The stock has returned 50 percent in the past year before today including reinvested dividends, beating the 32 percent return of the Bloomberg Europe Pharmaceutical Index.
The first three months of the year were “a milestone quarter for Sanofi,” Chief Financial Officer Jerome Contamine said in a televised interview posted on the company’s website. “It’s the last quarter we are seeing such a significant impact of the patent cliff.”
Revenue slipped 5.3 percent to 8.1 billion euros in the first three months of the year, missing the average analyst estimate for 8.3 billion euros. Sales from its top-selling Lantus insulin advanced 20 percent to 1.34 billion euros.
During a conference call with reporters today, Viehbacher reiterated he expects growth to resume in the second half. Revenue for the company’s growth platforms -- diabetes, consumer health, vaccines, animal health, Genzyme, other innovative products and emerging markets -- climbed 8.6 percent to 5.7 billion euros.
Today’s results are in line with full-year guidance, Sanofi said. The drugmaker expects 2013 earnings per share excluding some costs to be unchanged at best or down 5 percent at worst from last year, excluding currency fluctuations.
Plavix lost market exclusivity in the U.S. a year ago. In the quarter, Sanofi also suffered from U.S. generic competition to Eloxatin and the Avapro hypertension drug. Generic competition wiped out 553 million euros of sales during the first three months of the year, Sanofi said. In the first half, cheaper copies of its medicines will probably lead to a total of 800 million euros in lost profit, it added.
Sanofi also announced a reorganization of its commercial operations, appointing two new members to its executive committee.
Peter Guenter, Sanofi’s senior vice president of Europe, will be appointed executive vice president of global commercial operations, Sanofi said today. The French drugmaker also appointed Pascale Witz, president and chief executive officer of medical diagnostics at GE Healthcare Inc., executive vice president of global divisions and strategic commercial development. Both will join Sanofi’s executive committee.
The appointments, effective July 1, are in replacement of Hanspeter Spek, Sanofi’s president of global operations, who is due to retire this year.