* Sees FY earnings down 7-10 pct at constant currencies
* Says one office visited by authorities in China
* Says not aware of visit purpose
* Q2 business net income down 23.4 pct to 1.48 bln eur
* Shares down 6.2 percent
(Adds details, CEO comments, background)
By Elena Berton
PARIS, Aug 1 Sanofi SA cut its 2013
earnings forecast as it reported a steeper-than-expected drop in
second-quarter profit, hit by the effect of patent losses,
currency fluctuations and an inventory setback in Brazil.
The French company also said one of its 11 regional offices
in China had been visited by the State Administration for
Industry and Commerce (SAIC) in Shenyang, but added it was not
aware of the purpose of the visit from the agency.
A probe by Chinese authorities into the activities of
GlaxoSmithKline led to allegations of a wide-reaching
bribery scandal last month and prompted speculation that other
international companies could be drawn into the investigation.
"We are not really aware of the purpose of the visit, we are
working with," Chief Executive Chris Viehbacher told
reporters on Thursday. SAIC is one of China's anti-trust
regulators in charge of market supervision, which also looks
into low-level bribery cases.
Viehbacher added that the French group's local head office
in Shanghai had not been contacted by Chinese authorities.
China's 21st Century Business Herald earlier reported Sanofi
and U.S. drugmaker Eli Lilly & Co had confirmed visits
to their offices by the Shenyang bureau of the SAIC.
Sanofi said in an emailed statement to Reuters that the
agency visited its offices on July 29, but said the purpose of
the visit was unclear.
Eli Lilly said in a statement to the newspaper that the
visit was a routine inspection by the relevant government
departments that occurred in early 2013, and was completely
different to previous industry investigations led by the public
"Regarding this inspection, we have fully cooperated," the
U.S. group told the paper. Lilly representatives in China did
not respond immediately to a request for comment from Reuters.
China remains a priority market for Western drug makers,
which can command hefty price premiums for their medicines even
though they are no longer protected by patents.
A promise this week by GlaxoSmithKline to make its drugs
more affordable in China in the wake of the bribery scandal
could be a lever for Chinese authorities to start redressing the
Viehbacher said it was premature to say what repercussions
the scandal would have on Sanofi's business in China.
"We are examining the issue closely and we are examining our
business in China, but I think it's too early to draw any
conclusions," he said.
Sanofi also predicted earnings this year would be between 7
and 10 percent lower than in 2012 at constant exchange rates,
but said it continued to expect to return to growth in the
second half of 2013.
Sanofi had previously forecast that annual profit would be
flat to 5 percent lower at constant currencies.
Its shares were down 6.2 percent at 75.13 euros by 0758 GMT,
the biggest losers in the CAC 40 index in Paris which
was up 0.3 percent.
"Whilst this is disappointing, the one-time nature of most
of the areas of weakness now creates even easier comparatives
for the growth rebound expected in the second half of 2013 and
beyond," analysts at brokerage Jefferies said in a note to
The group's closely watched business net income, which
excludes items such as amortisation and legal costs, declined
23.4 percent to 1.48 billion euros ($1.96 billion), below an
average of 1.79 billion in a Thomson Reuters I/B/E/S poll of
Sales shrunk 9.8 percent to 8 billion as last year's patent
expiry on anti-clotting drug Plavix, once the world's
second-best selling prescription drug, sliced 481 million euros
off revenue in the quarter.
The group's generics business in Brazil was hit by much
higher-than-planned inventory levels during the second quarter,
As a result, Sanofi had to adjust sales by 122 million euros
and book an additional provision of 79 million to write off the
inventory and other related costs.
($1 = 0.7531 euros)
($1 = 6.1289 Chinese yuan)
(Additional reporting by Michael Martina in Beijing; Editing by
Christian Plumb and David Holmes)