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CHMP Positive on Sanofi's Lantus

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The Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (:EMA) recently issued a positive opinion related to Sanofi’s (SNY) diabetes drug, Lantus. The CHMP recommended the inclusion of safety and efficacy data from the ORIGIN (Outcome Reduction with Initial Glargine INtervention), a cardiovascular (:CV) outcomes study, in Lantus’ label.

Data from the seven-year ORIGIN study revealed no difference between Lantus and standard of care in terms of CV disease and mortality.

Lantus, which generated sales of €1.3 billion in the first quarter of 2013, is one of the top-selling drugs at Sanofi. We believe data from this study will encourage physicians to prescribe Lantus.

Lantus is also available as a pre-filled insulin injection pen, Lantus SoloSTAR. In the US, Lantus SoloSTAR accounts for 57% of Lantus sales.

Although Sanofi holds a strong position in the diabetes market, we note that the market is highly crowded with players like Novo Nordisk (NVO), Eli Lilly and Company (LLY) and AstraZeneca (AZN).

Sanofi carries a Zacks Rank #3 (Hold). We remain concerned about the generic erosion confronting most of Sanofi’s key drugs including Plavix, Avapro, Lovenox, Taxotere, Eloxatin and Xatral. The genericization of Avapro and Plavix is expected to negatively impact Sanofi’s business net income by around €800 million in the first half of 2013.

Sanofi is looking to combat headwinds by containing operating costs. Additionally, new product launches should make significant revenue contributions in the upcoming quarters.

Companies that currently look attractive include Novo Nordisk, carrying a Zacks Rank #2 (Buy).

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