Sanofi Profit Hit By Falling Diabetes Revenue -- Update

By Noemie Bisserbe 

PARIS--French drugmaker Sanofi SA reported sharply lower fourth-quarter earnings on Tuesday as it continues to face growing pricing pressure in the U.S. diabetes market, and said profit won't show much change this year.

Business net income, the company's term for adjusted income excluding the impact of acquisitions and divestments, declined 6.5% to EUR1.71 billion ($1.92 billion) from EUR1.83 billion a year ago. Sanofi's total sales rose 2.3% to EUR9.28 billion.

Sanofi said it expected its business earnings per share to remain "broadly stable" in 2016 at constant exchange rates "barring unforeseen major adverse events."

Sanofi's earnings for the quarter highlight the continuing deterioration of the drugmaker's diabetes business in the U.S., where it is forced to offer larger discounts to the government, insurers and health-care providers to push its products to the market.

Diabetes drug sales, which account for about 20% of the company's revenue, fell 13% to EUR1.9 billion in the fourth quarter, hurt by lower sales of its insulin drug Lantus, which lost patent protection in the U.S. last year. However, Genzyme, Sanofi's biotech unit, posted a 28% increase in revenue to EUR1.01 billion, boosted by sales of multiple sclerosis treatment Aubagio. Sales of consumer health-care products rose 1% to EUR809 million, while vaccines sales increased 15% to EUR1.44 billion.

Chief Executive Olivier Brandicourt, who took over in April after the abrupt dismissal of Christopher Viehbacher, has pledged to revive profit growth by focusing on fewer markets where it has, or can build, a competitive position--and by slashing costs.

Sanofi said earlier in February that it planned to cut about 600 jobs in France over the next three years as part of its restructuring plans. On Tuesday, Mr. Brandicourt said he would detail global job cuts this summer.

The company continues to look for acquisitions as it positions itself for stronger growth.

"We want to be vigilant, agile on M&A opportunities," Mr. Brandicourt told reporters in a conference call. "We should be able to act swiftly if an attractive opportunity arises," he added.

In December, the company said it had entered exclusive negotiations with Boehringer Ingelheim GmbH on a possible exchange of its animal-health business for most of the German group's consumer-health-care unit.

Boehringer would pay Sanofi EUR4.7 billion as part of the deal. Sanofi's animal-health business has an enterprise value of EUR11.4 billion and Boehringer's consumer-health-care business has an enterprise value of EUR6.7 billion. The deal would make Sanofi the global revenue leader in over-the-counter medicines, just ahead of Bayer AG and GlaxoSmithKline PLC, and would make closely held Boehringer No. 2 in animal health after Zoetis Inc.

Last year, the company said it was also considering selling its European generics business as part of its new strategic plan. Mr. Brandicourt said Tuesday that the company was "still exploring its options."

Write to Noemie Bisserbe at [e-mail]

(END) Dow Jones Newswires

February 09, 2016 03:55 ET (08:55 GMT)

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