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Earnings drop at Sanofi as it looks for a quick Medivation resolution

Published on 29/07/16 at 08:00am

Sanofi has published its earnings results for Q2, which show a fall in sales and profits as their diabetes division came under significant pricing scrutiny in the US. With established drugs lagging, a quick move for Medivation now appears a top priority for the French drugmaker.

Net income fell 3.3% at constant exchange rates to €1.68 billion while earnings per share declined 2.1% to €1.31. In its diabetes and cardiovascular division, net sales fell 3.5% while general medicines and emerging markets fell 5.6%. There was better news however, for its vaccines and speciality care businesses, as sales at Sanofi Genzyme rose 20.1% and at Sanofi Pasteur by 6.3%.

Diabetes blockbuster Lantus fared particularly poorly, with sales down 15.7% in the US and 11.2% overall to €1.46 billion.

With sales of established drugs falling, it begins to appear a more pressing need for Sanofi to close their proposed deal for Medivation soon, to acquire their cancer blockbuster, Xtandi. Medivation has so far spurned all overtures.

CEO Olivier Brandicourt remarked on a conference call: “We have entered this new phase of our discussion with Medivation, which of course we expect will be much more productive. There is no certainty in terms of timing but we are ready clearly to move quickly.”

The publication of the results has had a slightly detrimental effect on the share price, with stock down 1.81% at the time of writing.

Commenting on the results as a whole, Brandicourt says: “Our second quarter financial performance was in-line with expectations and reflected anticipated headwinds. Sanofi Genzyme grew 20% and Sanofi Pasteur performed well despite a delay in Dengvaxia uptake. Following our first half performance, we confirm our broadly stable 2016 business earnings per share guidance at current exchange rates.”

Sean Murray

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