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* Sees 2014 earnings 4-7 pct higher than in 2013
* Raises dividend to 2.80 euros from 2.77 euros
* Q4 net income up 16.8 pct to 1.81 bln euros
* CEO still sees strong growth in emerging markets
* Shares fall to one-year low, guidance disappoints
By Natalie Huet
PARIS, Feb 6 (Reuters) - French drugmaker Sanofi's forecast for a return to profit growth after three years of decline failed to impress investors on Thursday, sending its shares to a one-year low.
Sanofi last year suffered three straight quarters of falling net income, two profit warnings and several product setbacks, but it is now shaking off the impact of patent losses and betting on continued growth in its diabetes and rare diseases businesses and in emerging markets.
Though the announcement of an increased full-year dividend and a forecast for this year's earnings to grow by between 4 percent and 7 percent represent a marked improvement from the 9.6 percent drop recorded in 2013, analysts had expected more.
"We had hoped for a guidance range that would bracket double-digit growth, so that is disappointing. Nevertheless, Sanofi may have learned its lessons from 2013 and be guiding conservatively," Berenberg analysts wrote in a note.
Shares in Sanofi - France's second-largest listed company behind oil major Total - were down 2.7 percent at 1447 GMT, the worst performer on the Euro Stoxx Healthcare Index and on France's CAC 40 index.
Chief Executive Chris Viehbacher told reporters Sanofi is now beyond its so-called patent cliff, with no major drugs losing protection this year, and had successfully revamped its research and development (R&D) to be able to launch new, harder-to-copy biologic drugs in the years ahead.
Drugmakers worldwide have been struggling with patent expiries as well as cutbacks in healthcare spending by cash-strapped European governments. In the search for growth, Sanofi turned to rare diseases, emerging markets, over-the-counter treatments, animal health and generics.
To squeeze more out of R&D spending, it cut jobs in French laboratories, saying that in-house research was not sufficiently productive. It has also strengthened ties with Regeneron and Alnylam to replenish its product pipeline.
Last year was marred by inventory and manufacturing glitches in Brazil and Canada, a growth-stifling crackdown on sales practices in China and several drug setbacks, including a U.S. red light for multiple sclerosis drug Lemtrada.
There were also some successes, such as the approval of Sanofi's other MS drug, Aubagio, in Europe and the United States, as well as encouraging clinical results for new drugs for cholesterol (alirocumab), rheumatoid arthritis (sarilumab) and diabetes (U300).
Sanofi said that generic competition cut 1.25 billion euros from its sales of key legacy drugs in the United States and Europe last year.
Its top-selling diabetes drug Lantus, sales of which rose 20 percent this year on strong pricing in the United States, will lose patent protection there in February 2015. Its most serious challenger is a biosimilar drug made by Eli Lilly, but that is likely stay off U.S. shelves until 2016 because Sanofi is suing the company for patent infringement.
In the meantime, Viehbacher said the company would bank on its broad geographic spread to boost performance despite economic uncertainty in emerging markets, which account for a third of its sales.
The depreciation of the U.S. dollar, Japanese yen, Brazilian real, South African rand and other currencies against the euro cut 5.2 percentage points from sales growth last year.
Sanofi said that it would raise its 2013 dividend to 2.80 euros per share, from 2.77 euros the previous year, and that it expects this year's earnings per share to grow by 4-7 percent at constant exchange rates.
Asked what revenue growth it expects in emerging markets, Viehbacher said: "We're not going to give a forecast for 2014 at that granular level, but the potential for double-digit growth is certainly there despite the turbulence."
He pointed to favourable demographics and the emergence of a large middle class in countries such as China and India, noting that "people don't stop getting sick because the GDP has suddenly declined".
Fourth-quarter net income rose to 1.81 billion euros ($2.45 billion), up 30.5 percent at constant exchange rates, while sales reached 8.46 billion euros, up 6.5 percent at constant exchange rates.
The average forecast from analysts polled by Thomson Reuters I/B/E/S was for quarterly sales of 8.4 billion euros and net income of 1.77 billion.