Sanofi CEO Viehbacher Sees Return to Growth This Quarter

Sanofi Chief Executive Officer Chris Viehbacher said the French drugmaker will return to earnings growth in the fourth quarter after the loss of patent protection on nine drugs in the past three years eroded profit.

“We’ve just come through the deepest and most concentrated patent cliffs in the industry,” Viehbacher said in a Bloomberg Television interview today at the Asia-Pacific Economic Cooperation meeting in Bali, Indonesia. “Our view is that particularly in the 4Q, the company returns to growth for the next period.” He didn’t say whether it was for profit or sales.

France’s largest drugmaker cut its full-year earnings forecast in August after generic competition and inventory mismanagement in Brazil. The Paris-based company has entered a period where it doesn’t face expiration of protection on its brand-name drugs and is also introducing new treatments for growth, Viehbacher said today.

“One of the good things is that having gotten through the patent cliffs, we have probably the lowest exposure to future” ones, Viehbacher said.

Sanofi gained 0.1 percent to 74.74 euros at the close in Paris. The stock, including reinvested dividends, has returned 8.2 percent compared with an 18 percent gain in the Bloomberg Europe Pharmaceuticals Index.

Earnings Drop

Profit excluding some costs fell 23 percent for the quarter ended June 30, Sanofi reported Aug. 1. Analysts are predicting a 5 percent drop in third-quarter earnings, which the company will report on Oct. 30, and a 21 percent increase for fourth-quarter profit, according to estimates compiled by Bloomberg.

Net income has fallen in each of the four quarters through June 30, while revenue has declined for two straight quarters.

Viehbacher is under pressure to deliver after failing to meet previous forecasts, said Michael Leuchten, an analyst at Barclays Plc in London.

“The question is credibility, and obviously whether he can deliver on his targets,” Leuchten said in a telephone interview. “In the past, he has not quite made guidance. He promised to double his vaccines revenues and emerging markets revenues, and that didn’t happen.”

Developing Markets

Sanofi, which gets about one-third of sales from emerging markets, doesn’t plan to cut its forecasts for a second time despite the impact of a strengthening euro against other currencies, Viehbacher said.

Fundamentals remain “very strong” in emerging markets and Sanofi is committed to investing in those regions, he said.

“You are going to have short-term turbulence,” he said. However, “I think most people recognize the long-term potential of emerging markets.”

Potentially slowing economic growth in countries such as China, Russia and Brazil prompted Eli Lilly & Co. to say Oct. 3 that meeting a full-year sales forecast would be challenging.

The euro is the best performer this year among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. Among emerging-market currencies, the Indian rupee has fallen about 13 percent against the euro this year, the Brazilian real has declined about 10 percent, and the South African rand has dropped about 17 percent, according to data compiled by Bloomberg.

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