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Sanofi (SNY) Q3 Earnings Beat, Sales Miss, 2021 EPS View Up

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Sanofi SNY reported third-quarter 2021 adjusted earnings of $1.29 per American depositary share, which beat the Zacks Consensus Estimate of $1.18 per share. Earnings rose 19.1% on a reported and constant currency rate (“CER”) basis, driven by top-line growth, improved margins and cost control.

Net sales in the reported quarter increased 10.1% on a reported as well as CER basis to $12.31 billion (€10.43 billion), driven by higher sales of Sanofi’s blockbuster eczema medicine, Dupixent, and vaccines. Sales slightly missed the Zacks Consensus Estimate of $12.49 billion.

Sales rose 13.4% at CER in the United States and 6.7% in the Rest of the World (includes China, Japan, Brazil and Russia). In Europe, sales increased 8.9%.

All growth rates mentioned below are on a year-on-year basis and at CER.

Segmental Performance

Pharmaceuticals sales rose 7.8% in the quarter to €6.86 billion, driven by strong performance of Dupixent.

Sanofi Specialty Care GBU sales increased 20.2% to €3.29 billion, mainly driven by Dupixent.

In the immunology and neurology franchise, Dupixent generated sales of €1.41 billion in the quarter, up 54.6% year over year. Sales of the drug in the United States rose 47.7%, driven by continued growth in atopic dermatitis and rapid uptake in asthma and chronic rhinosinusitis with nasal polyposis indications. Sales rose 78.4% in Europe and 82.3% in Rest of the world.

Aubagio sales declined 3.8% to €483 million, hurt by lower sales in the U.S. market due to competitive launches. Kevzara recorded sales of €83 million in the quarter, up 42.4%, driven by higher demand for IL-6 receptor blockers and a temporary shortage of tocilizumab. Sanofi markets Dupixent and Kevzara in partnership with Regeneron REGN.

Sales of rare disease drugs rose 5.4% to €779 million. Myozyme sales rose 10.4% to €266 million. Fabrazyme sales were €209 million, up 3.4%. Cerezyme sales declined 0.6% to €159 million.

Oncology sales increased 8.1% to €225 million, driven by launches of Sarclisa and Libtayo, which offset the decline in sales of Jevtana. Libtayo sales were €35 million while Sarclisa sales were €48 million, both slightly higher than the previous quarter. Jevtana’s sales declined 20.9% to €105 million due to the entry of generic competition in Europe.

The rare blood disorders franchise recorded sales of €287 million, down 1.4% year over year Sales of Eloctate declined 4.6% to €144 million in the quarter. The new drug, Cablivi recorded sales of €42 million compared with €46 million in the previous quarter.

Sales in General Medicines GBU declined 1.7% to €3.57 billion, as growth of core drugs (like Toujeo, Soliqua, Praluent, Multaq, Lovenox and Plavix) was more than offset by lower sales of non-core drugs like Lantus and AprovelAvapro.

The Diabetes franchise declined 1.7% to €1.12 billion due to lower sales in the United States. Sales of diabetes drugs in the United States declined 13.4%. In Europe, sales declined 3.2% while in Rest of the World, sales increased 9.3%.

Lantus sales decreased 5.9% to €622 million in the quarter. Toujeo generated sales of €239 million in the reported quarter, up 11.1% year over year.

Sales of Cardiovascular and Established Rx Products came in at €2.24 billion, down 2.1% mainly as higher sales of core assets were offset by lower sales of Aprovel/Avapro and generics and divestment of non-core products.

Vaccines GBU sales rose 16.5% to €2.42 billion in the quarter, driven by the recovery in demand for the meningitis vaccines in the United States and higher sales of influenza vaccines.

While sales of flu vaccines rose 25.5%, sales of Polio/Pertussis/Hib vaccines rose 1.8% in the quarter. Meningitis vaccine sales were up 18.7%. Sales of travel and other endemic vaccines rose 16.9% in the quarter. Adult Booster vaccines sales grew 4.6% in the third quarter.

Consumer Healthcare stand-alone unit generated sales of €1.16 billion, up 11.1%, driven by the strong performance of Digestive Wellness and Pain Care categories.

Cost Discussion

Selling, general and administrative expenses increased 3.6% at CER in the quarter, reflecting increased investments in Specialty Care, which offset the benefit from cost savings. Research and development expenses increased 4.9% at CER as higher investments behind priority assets were partially offset by the termination of diabetes and cardiovascular care-related pipeline products.

2021 Guidance

Sanofi revised its earnings guidance for 2021 upward. The company now expects earnings to grow around 14% at CER in 2021 compared with the previous projection of 12%. However, it anticipates a negative currency impact in the range of 3.5%-4.5% on earnings versus the previous expectation of 4%-5%.

Our Take

Sanofi’s quarterly results were mixed as it beat estimates for earnings while missing the same for sales. Dupixent continued its outstanding performance in the quarter. The drug has, in a very short time, become the key top-line driver for Sanofi. With outside U.S. revenues accelerating and multiple approvals for new indications expected in the near future, Dupixent’s sales are expected to be higher. Record sales of vaccines also contributed to growth in the third quarter. As a result, the French drug giant revised its guidance upward for 2021, for the second time this year.

Sanofi stock has risen 2.1% this year so far compared with the industry’s rally of 12.7%.

Zacks Investment Research
Zacks Investment Research

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Sanofi made notable pipeline developments in the quarter that included positive data readouts for Dupixent in eosinophilic esophagitis and prurigo nodularis as well as the U.S. approval and launch of Nexviazyme in Pompe disease. The acquisition of Translate Bio in September 2021 accelerated Sanofi’s efforts to develop transformative vaccines and therapies using mRNA technology. Sanofi is also developing an adjuvanted recombinant protein candidate vaccine in partnership with Glaxo GSK that is in pivotal late-stage development.

Zacks Rank

Sanofi currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sanofi Price, Consensus and EPS Surprise

Sanofi Price, Consensus and EPS Surprise
Sanofi Price, Consensus and EPS Surprise

Sanofi price-consensus-eps-surprise-chart | Sanofi Quote

A better-ranked drugmaker is Vertex Pharmaceuticals VRTX, which carries a Zacks Rank of 2 (Buy). Its earnings estimate for 2021 has gone up from $12.37 to $12.43 over the past 60 days while that for 2022 has increased from $13.13 to $13.16 per share.

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Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report

Sanofi (SNY) : Free Stock Analysis Report

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