July 29, 2019 / 6:19 AM / 19 days ago

Sanofi raises outlook after strong second quarter

PARIS (Reuters) - Sanofi has raised its 2019 outlook on the back of strong second-quarter results, which benefited from double-digit growth at the French drugmaker’s vaccines and rare diseases businesses.

FILE PHOTO: Shareholders talk in front of a logo of Sanofi during the company's shareholders meeting in Paris, France, April 30, 2019. REUTERS/Benoit Tessier/File Photo

The company said on Monday it was now aiming for earnings per share growth of around 5% compared to an earlier target range of 3-5%.

The positive outlook boosted Sanofi’s shares by 2.4% to 77.79 euros in early trading.

“Business EPS outlook is raised to the top-end, but suggests only minor potential upgrades to consensus, at most, in our view,” wrote Peter Welford, an analyst at brokerage Jefferies.

Sanofi is betting on strong uptake of its drug Dupixent, which is used to treat a number of diseases. Dupixent was initially prescribed for atopic dermatitis and later approved for asthma and chronic rhinosinusitis.

Sales of Dupixent, developed with U.S firm Regeneron, rose 168% at constant exchange rates in the second quarter to 496 million euros ($551.80 million).

So far, the medicine has been made available in 28 countries and 18 launches are to take place by year-end.

Sanofi hopes Dupixent’s strong sales prospects and other drugs at its rare diseases business Genzyme, along with those of vaccines and other upcoming products, will continue to offset weakness of the group’s diabetes unit.

Diabetes sales in the second quarter were down 7%, hit again by pricing pressure on its patent-expired Lantus insulin.

WRITEDOWN

Second-quarter net income rose 4.9% at constant exchange rates to 1.64 billion euros while sales were up 3.9% to 8.63 billion euros.

Sanofi booked an 1.8 billion euros impairment charge in the quarter related to haemophilia product Eloctate, after lower sales in the U.S. and a revision of sales projections.

Eloctate’s revenue fell 11%, a result of direct competition from Roche’s Hemlibra, a newcomer in the market.

“It is a non-cash event of course but it is clear that the competition from Hemlibra was a surprise to everyone and it is indeed putting pressure,” Sanofi chief financial officer Jean-Baptiste de Chatillon told reporters.

Eloctate was developed by U.S. haemophilia specialist Bioverativ, which Sanofi bought last year for $11.6 billion.

($1 = 0.8988 euros)

Reporting by Matthias Blamont; Editing by Sudip Kar-Gupta and Jane Merriman

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