Sanofi Profit Hit By Falling Diabetes Revenue

PARIS—French drugmaker Sanofi SA on Tuesday reported sharply lower fourth-quarter net profit, hit by growing pricing pressure in the U.S. diabetes market and higher accounting charges.

The Paris-based pharmaceutical company said net profit fell 75% to €334 million ($374 million) for the three months through December from €1.34 billion a year earlier.

Business net income, the company's term for adjusted income excluding the impact of acquisitions and divestments, declined 6.5% to €1.71 billion, above analysts' expectations of €1.65 billion. Sanofi's total sales rose 2.3% to €9.28 billion.

Sanofi's earnings this 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 €1.9 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 €1.01 billion, boosted by sales of multiple sclerosis treatment Aubagio. Sales of consumer health care products rose 1% to €809 million, while vaccines sales increased 15% to €1.44 billion.

Sanofi proposed a dividend of €2.93 a share on 2015 earnings.

In a bid to revive growth, Sanofi said last year it planned to focus on fewer markets where it has or can build a competitive position.

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 €4.7 billion as part of the deal. Sanofi's animal-health business has an enterprise value of €11.4 billion and Boehringer's consumer-health-care business has an enterprise value of €6.7 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.

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

Write to Noemie Bisserbe at [e-mail]

(END) Dow Jones Newswires

February 09, 2016 03:25 ET (08:25 GMT)

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