UPDATE 4-Sanofi ups 2007 outlook as vaccines lift Q3 profit

(Adds additional comments from analysts, Sanofi pharma head)

By Dominique Vidalon and Ben Hirschler

PARIS/LONDON, Oct 31 (Reuters) - French drugmaker Sanofi-Aventis (SASY.PA) raised its 2007 outlook on Wednesday as it reported a forecast-beating 9.1-percent rise in third-quarter profit, helped notably by vaccines and cost cuts.

Shares in the company rose 2.2 percent to 60.58 euros by 1131 GMT.

The world's third-biggest pharmaceuticals group also benefited, as expected, from a recovery in U.S. sales of blood thinner Plavix, following a period of temporary generic competition.

Adjusted net profit was 1.85 billion euros ($2.67 billion), against expectations of 1.71 billion in a Reuters poll of seven analysts. Sales, despite the negative impact of a strong euro against the dollar, rose 1.8 percent to 7.03 billion euros.

"I think the results are very superior to the consensus," pharmaceuticals head Hanspeter Spek told analysts in a conference call. "A striking development has been the strong performance of vaccines."

Sanofi raised its outlook for growth in full-year 2007 earnings per share excluding selected items to around 10 percent from around 9 percent previously, assuming an average euro/dollar exchange rate of $1.25. The exchange rate assumption was unchanged from that previously used.

Sensitivity to the euro/dollar exchange rate is estimated at 0.6 percent growth for a one-cent movement in the exchange rate.

Sanofi-Aventis said it was raising its outlook despite the end of patent protection for its sleeping pill Ambien IR in the United States in April and the arrival of generic competition for cancer drug Eloxatin in Europe.

Analysts said the raised earnings forecast was positive but it would be offset by negative currency headwinds and the fact that fourth-quarter flu vaccine sales would be lower.

"Although guidance was increased in constant currency terms, the decline in the dollar versus the euro means that we will likely leave our forecasts mostly unchanged," said Landsbanki Kepler analyst Denise Anderson.

Investor confidence in Sanofi has been hit this year by a damaging U.S. rebuff to Acomplia, an anti-obesity drug once touted as a potential $3 billion-a-year plus seller, and its shares now trade on less than 11 times forecast 2008 earnings, a discount of more than 20 percent to the European sector average.

EARLY FLU SHOTS

Sanofi has an extensive pipeline of new drugs in development but analysts are worried that many are risky and, even if successful, will not reach the market until around 2011-2012.

The company said it was adjusting its cost structure to the new situation and ratio of selling and general expenses to net sales fell to 26.3 percent in the first nine months of the year from 27.9 percent in the same period of 2006.

Vaccines proved a star performer in the three months to September, with sales up 49 percent at 943 million euros, driven by earlier shipments of flu vaccines compared to last year and strong demand for new cervical cancer shot Gardasil.

Andrew Fellows, an industry analyst at brokerage Helvea, who rates the stock "neutral", said the third-quarter performance benefited from one-off factors but the underlying picture was still of flat drug revenues, with Acomplia showing little promise in Europe.

Spek acknowledged that Acomplia would have limited sales until new clinical trial results were ready for submission to regulators in 2009.

Acomplia, which is sold in 20 countries outside the United States, recorded sales of just 21 million euros in the third quarter.