* 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 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).
EMERGING MARKETS RESILIENCE
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
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
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.