Sanofi Cuts 3-Year Diabetes Sales Forecast as Lantus Slides

  • Lantus Slides in U.S. on Slowdown in Basal Insulin Market
  • CEO Brandicourt to Present 5-Yr Strategic Plan Next Week

Sanofi, France’s biggest company by market value, cut its sales forecast for diabetes therapies in the next three years after demand for its best-selling Lantus insulin slumped.

Diabetes sales will probably drop between 4 percent and 8 percent through 2018 at an average annualized rate and at constant exchange rates, the Paris-based company said in a statement Thursday. Last November, it had forecast slight growth at best. Sanofi shares fell as much as 5.3 percent, the biggest drop in more than two months.

Chief Executive Officer Olivier Brandicourt is banking on new therapies such as Praluent, a powerful new cholesterol treatment that first went on sale in July, and Aubagio and Lemtrada for multiple sclerosis, to help make up for the sales slide in ageing best-sellers like Lantus. That worked last quarter: even as diabetes suffered, new products helped profit beat analysts’ estimates. 

Olivier Brandicourt

Photographer: Eric Piermont/AFP/Getty Images

Profit excluding some costs and currency movements, which Sanofi calls business net income, rose to 2.1 billion euros ($2.3 billion), or 1.61 euros a share, from 1.94 billion euros, or 1.47 euros a share, a year earlier, the French drugmaker said. That exceeded the 1.58-euro average of 12 analyst estimates compiled by Bloomberg.

Lantus Rebates

Lantus, which lost patent protection earlier this year, saw overall sales drop 11 percent at constant currencies as Eli Lilly & Co. introduced a cheaper generic rival in Europe. In the U.S., where revenue slid 20 percent, Sanofi was forced to offer insurers bigger rebates, it sold more to government channels such as Medicaid and found that demand for injected insulin overall had weakened as more patients turned to new oral alternatives.

“We conducted a detailed scenario analysis and arrived at what we consider to be a realistic range,” Brandicourt said on a conference call. The lower end of the forecast range is “conservative,” he said.

Sanofi shares fell 3.8 percent to 89.74 euros at 9:29 a.m. in Paris. The stock has gained 35 percent over the past year, including reinvested dividends, compared with a 21 percent advance in the Bloomberg Europe Pharmaceuticals Index.

Sanofi isn’t the only maker of diabetes therapies under pressure. Lilly’s head of diabetes, Enrique Conterno, last week cited a “a slowdown when it comes to the overall insulin market.” Still, Denmark’s Novo Nordisk A/S today boosted its forecast for operating profit growth for this year, helped by demand for its Levemir and Tresiba insulins.

‘Useful Tool’

The 59-year-old Brandicourt, who took over in April as CEO, was short on broad strategic statements today because he’s scheduled to present his five-year plan to investors next week. He’s been working to simplify Sanofi’s structure and in July said he would reorganize the company into five business units. Plans for the new structure are “on track,” he said today. The French drugmaker is considering the disposal of its bio-surgery and renal-care units, people familiar with the situation said last month. It’s also reviewing options for Merial, the animal-health unit, the people said.

Brandicourt is looking for new avenues of growth. Sanofi three months ago agreed to contribute $2.2 billion to work with Regeneron Pharmaceuticals Inc. on therapies that harness the immune system to fight cancer, giving it access to at least four experimental treatments, including one that has entered early-stage clinical trials. Brandicourt also said today that deal-making would be a “useful tool” as a way to bolster Sanofi’s portfolio in the future.

Sales rose 3.4 percent excluding currency swings to 9.59 billion euros last quarter, lagging analyst estimates of 9.72 billion euros. Revenue at the Genzyme unit surged 33 percent.

The profit measure Sanofi calls business net income excludes certain costs including amortization and impairment of intangible assets, legal provisions and other one-time charges.

Sanofi reiterated that earnings per share will be stable to slightly growing this year, excluding currency fluctuations. The voluntary recall of an injectable device in the U.S. and Canada is likely to have, following an initial estimate, a negative impact of about 100 million euros, to be booked this quarter, it said.

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