Sanofi Lifts Profit Outlook -- Update

By Noemie Bisserbe 

PARIS--French drugmaker Sanofi on Friday lifted its profit outlook for the year after posting better-than-expected third-quarter earnings, and said it planned to complete a EUR3.5 billion ($3.82 billion) share buyback by the end of 2017.

Shares were trading 5.5% higher at EUR72.63 in early trading in Paris.

Sanofi said it now expected earnings per share--excluding the impact of acquisitions and divestments--to grow between 3% and 5% in 2016 at constant exchange rates. Sanofi previously said earnings per share would remain "broadly stable" this year. Weakening currencies could, however, have a 4% negative impact on revenues in 2016, the company warned.

The Paris-based drugmaker said net profit rose by 3% to EUR1.67 billion for the three months through September, buoyed by higher biotech drug and vaccine sales and lower costs.

Business net income, the company's term for adjusted income excluding the impact of acquisitions and divestments, increased 10% to EUR2.3 billion, above analysts' expectations of EUR1.93 billion, according to a Dow Jones Newswires poll. Sanofi's total sales increased 2% to EUR9.03 billion.

Sanofi's results this quarter show how the French drugmaker's long-drawn-out efforts to cut costs to boost its profitability are finally paying off. However, the dwindling revenue of its all-important diabetes division reflect continuing pricing pressure in the U.S. market.

Diabetes drug sales, which account for about 20% of the company's revenue, fell 2% to EUR1.81 billion in the third-quarter, hurt by a 10% drop in Lantus insulin sales. Sanofi's vaccine division and its biotech unit Genzyme, which respectively posted a 14% and 17% jump in the third-quarter, helped offset lower diabetes sales this quarter.

To boost growth, Sanofi has pledged to refocus the company on fewer businesses, and replenish its new drugs pipeline.

In August, however, Sanofi was defeated by pharmaceutical giant Pfizer Inc. in the race to acquire U.S. innovative cancer drugmaker Medivation Inc.

One of the company's promising new drugs, rheumatoid arthritis treatment Sarilumab, also suffered a setback, after regulators found manufacturing deficiencies at a French plant, Sanofi said Friday.

"These deficiencies may potentially impact the timing of the approval," Chief Executive Olivier Brandicourt told reporters in a conference call.

The company previously said it expected to receive approval for Sarimulab from the U.S. Food and Drug Administration, or FDA, in the fourth quarter of 2016.

"We are working with the U.S. FDA to resolve these issues as quickly as possible," Mr. Brandicourt added.

Write to Noemie Bisserbe at [e-mail]

(END) Dow Jones Newswires

October 28, 2016 03:55 ET (07:55 GMT)

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