Vaccines Give Sanofi, Glaxo a Shot of Optimism as Views Raised

(Bloomberg) -- Vaccines are putting some pep into big drugmakers’ profits.

Sanofi and GlaxoSmithKline Plc each raised their annual forecasts, based in part on brisk sales of the preventive drugs. Glaxo cited better-than-expected sales of its Shingrix shot, while Sanofi credited vaccines along with its up-and-coming Dupixent drug for eczema.

Drugmakers have been under increasing pressure to limit charges for products, with President Donald Trump proposing that the U.S. Medicare program for the elderly incorporate an international price index for some of its purchases. Vaccines are more resistant to such pressure than some other drugs because they put a relatively low cost burden on health-care systems while allowing people to avoid potentially lethal infections.

Sanofi rose as much as 5.9 percent in Paris. Glaxo fell 1.9 percent in London after earlier rising as much as 3.9 percent.

Shingrix prevents shingles, a painful skin condition that’s related to herpes. It sometimes occurs in people who’ve had chickenpox earlier in their lives, and breaks out in patients with weaker immune systems, such as the elderly. Glaxo raised its forecast for 2018 Shingrix sales to as much as 750 million pounds ($958 million) for the year, an increase of 100 million pounds.

As Glaxo faces competition for its HIV and asthma drugs, “Shingrix becomes the critical driver of near-term earnings outlook,” Citi analysts led by Andrew Baum said in a note to clients. Glaxo can also find takers for the vaccine among patients who take its drugs for HIV and severe lung disease, he said.

Sanofi finance chief Jean-Baptiste Chasseloup de Chatillon said its vaccine sales are expected to grow in the mid- to high-single-digit range in the second half, slightly better than previous forecasts. Results for the quarter were boosted by an increase in sales of Pentaxim, a combination childhood vaccine, after a supply disruption in China.

The company also saw gains in sales of flu vaccine, booster shots for adults and products for travelers, such as Adacel. Sales in the division overall rose 8.2 percent.

©2018 Bloomberg L.P.