Sanofi strong in emerging markets as rivals flag
Paris, April 28, 2012
French drugmaker Sanofi posted better-than-expected quarterly results, bolstered by strong emerging markets, breaking with a trend of earnings misses by European rivals AstraZeneca and GlaxoSmithkline.
Sanofi performed strongly in China, Brazil and Russia - crucial areas for international drugmakers as sales in their home markets decline due to patent expiries and government cuts in healthcare spending.
Its sales to emerging markets in the quarter rose 9.9 percent at constant exchange rates, in sharp contrast to an anaemic 2 per cent gain at GSK and just 1 per cent at AstraZeneca.
The booming middle classes of Asia and Latin America are expected to offer robust growth for makers of prescription drugs in the years ahead, but selling medicines into countries such as China, Russia, Brazil and Turkey can be tough.
Sanofi's rivals said they were hurt by instability in the Middle East, price cuts in Russia and Turkey, and early generic competition in Brazil.
"(Sanofi's) strong performance in emerging markets in particular will please, as will reiteration of guidance," Deutsche Bank analysts said in a note to investors.
Sanofi shares, which have risen around 8 per cent in the last year, were the second-best performers on the CAC40 index at 0815 GMT, trading up 2.9 per cent at 58.41 euros, while the index was down 0.1 per cent.
The Paris-based company confirmed that earnings could decline between 12 and 15 per cent this year as top-selling drugs previously protected by patents, including blood thinner Plavix, are hit by competition from cheap copies.
But it expects to return to growth in subsequent years thanks to emerging markets, diabetes, vaccines, animal health, Genzyme's biotech drugs and new products such as experimental multiple sclerosis drug Lemtrada.
"Although, as expected, Plavix will lose exclusivity in May in the U.S., the strong underlying performance of the business is consistent with our medium-term growth outlook," the chief executive Chris Viehbacher said in a statement on Friday.
Sanofi posted a 12.5 percent rise in first-quarter business net income to 2.44 billion euros ($3.23 billion), driven by a strong performance in emerging markets, biotech unit Genzyme, and diabetes drug Lantus. Consumer healthcare products and cost savings also helped drive earnings higher.-Reuters