Sanofi Profit Jumps on Sales of Vaccines and a Rising New Drug


(Bloomberg) --

Sanofi’s profit rose more than expected last quarter, powered by sales of vaccines and newcomer Dupixent, an eczema and asthma drug set to become a blockbuster. The stock had its biggest gain so far this year.

Sanofi is counting on growth drivers like the versatile Dupixent, which awaits approval in nasal polyps and is undergoing tests for lung disease, to replace aging diabetes medicine Lantus. At the same time, research chief John Reed is hunting for opportunities in cancer after Sanofi missed out on the recent wave of revolutionary medicines focused on the immune system. Two acquisitions have delivered new experimental therapies for bleeding disorders.

“We believe the pipeline offers intriguing optionality, overlooked by many,” Peter Welford, an analyst at Jefferies in London, wrote in a note to clients. “Stronger Dupixent is positive given its long-term importance.”

Sanofi rose as much as 4 percent in Paris trading, its steepest gain since October, to 76.64 euros.

As it reviews its pipeline, Sanofi has said it’s accelerating 17 programs -- almost half in cancer -- and dropping more than a dozen others under development, including two in diabetes. The company has also started searching for a successor to Chief Executive Officer Olivier Brandicourt.

First-quarter earnings excluding some items rose 11 percent to 1.42 euros a share in the first quarter, the French drugmaker said in a statement. Analysts predicted 1.32 euros. The company maintained its forecast for 2019.

Vaccines’ Importance

The results highlight the significance of vaccines in partly sheltering the company from the pricing pressure its drugs face in the U.S. Vaccines sales surged 20 percent.

Still, Sanofi stopped short of boosting its earnings forecast for the year, pointing to China’s new drug-buying program as a potential worry for some of its best-sellers. The drug procurement plan in 11 major Chinese cities will likely curb 2019 growth rates for two key medicines, blood thinner Plavix and Avapro for hypertension, the company said.

Amid an expansion of health-care coverage, the China trial forces companies to bid for contracts, driving down prices by as much as 90 percent. That could save the country $20 billion to $30 billion, Vas Narasimhan, head of the Swiss drugmaker Novartis AG, said in an interview earlier this month.

Some other Sanofi drugs disappointed: the hemophilia medicine Eloctate, which faces competition from Roche Holding AG’s Hemlibra, the aging Lantus for diabetes, which is losing ground to cheaper copies, and Praluent for cholesterol, hurt by higher rebates in the U.S.

©2019 Bloomberg L.P.

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