Sanofi-Aventis reports strong earnings and raises forecast
CEO Christopher A. Viehbacher said: "The group delivered very strong results in the second quarter, driven by solid growth of key pharmaceutical brands and vaccines, strong sales in Emerging Markets and recent acquisitions." Since his appointment in December, the French drugmaker's top man has taken steps to reorganize in the current environment and prepare for the upcoming generic competition. He has closed a number of partnerships, acquired some generics and and overhauled Sanofi's research and development.
The company also tried to allay concerns regarding the many drugs coming off patent by 2012, accounting for 20 percent of Sanofi's revenues. It said earnings in 2013 will be equal to 2008's, excluding acquisitions. Sanofi also said it aims for two billion euros in cost savings before tax by 2013 compared to 2008, but cost savings alone won't create growth and the company promises to deliver either organically or through acquisitions.
Among the highlights of the results:
- Strong growth from Lantus (up 26.0 percent), Lovenox (up 13.3 percent) and Taxotere (up 10.7 percent).
- Growth of 18.4 percent for the Vaccines business excluding H5N1 contracts.
- Net sales growth of 5.4 percent in the U.S., 4.6 percent in Europe and 20.1 percent in Emerging Markets
The fourth largest drugmaker has also outlined the recent acquisitions, which already contributed to profit in the quarter, and the reorganization of Sanofi's research operations. Sanofi will shut down plants, close 14 projects announced earlier and two more announced today, and focus on the most promising ones.
Going forward, Multaq was approved by the FDA on July 1, and launched in the United States on July 28. Also, as a world leader in flu vaccines, Sanofi will get a boost from increased demand due to the spread of H1N1 swine flu, though the sales impact in 2009 may be limited.
Unlike many other pharma CEOs, Viehbacher said in a CNBC interview that he supports the current health care reforms, saying they may cause short-term pain, but long-term it's always better when patients can afford the drugs. He said patients should support the reform.
Sanofi was also reported to have agreed to buy Merck & Co. (MRK)'s 50 percent stake in their Merial animal-health venture. While helping Merck clear the way to its acquisition of Schering-Plough (SGP), it should also give Sanofi some desperately needed new revenue. The acquisition is set to be announced this week, according to Bloomberg sources, and analysts peg the stake's worth at about two billion euros ($2.8 billion).
Meanwhile, the FDA today also approved Sanofi's Sculptra Aesthetic as treatment for wrinkles, specifically smile lines, in healthy patients in the form of an injection, following a 233 patient study. Apparently, "Sculptra Aesthetic works gradually to offer natural-looking results that can last up to two years," Sanofi stated.