* Aims for 6-8 pct rise in 2014 business EPS up from 4-7 pct
* Q2 sales 8.08 bln euros, EPS 1.17 euros vs forecast 1.14
* Diabetes, Genzyme, emerging markets drive sales
* Shares rise 3.5 pct, had underperformed so far this year
(Adds shares, analyst, details on share performance, valuation)
By Natalie Huet
PARIS, July 31 French drugmaker Sanofi
raised its full-year profit forecast on Thursday as it posted
stronger than expected quarterly earnings, driven by its rare
disease and diabetes businesses and higher sales in emerging
Shares in Sanofi, which have underperformed the rest of the
European pharmaceutical industry after a string of disappointing
results last year, rose as much as 4 percent.
Sanofi has sought in recent years to shake off the impact of
patent losses on big-selling drugs, such as blood thinners
Plavix and Lovenox, by betting on diabetes, rare diseases and
over-the-counter treatments. It also revamped its research to
launch new, harder-to-copy and pricier biologic drugs.
It has invested 1.4 billion euros ($1.9 billion) so far this
year to raise to 22 percent its stake in U.S. biotech Regeneron
, its partner on several promising experimental drugs.
One of these, cholesterol drug alirocumab, could reach the
U.S market in the second half of next year, at the same time or
ahead of U.S. rival Amgen, Chief Executive Chris
Viehbacher told reporters on a conference call.
Sanofi now expects business earnings per share (EPS) to grow
6-8 percent this year at constant exchange rates, up from an
initial guidance of 4-7 percent that was widely seen by analysts
as unusually cautious.
Deutsche Bank's Mark Clark, who has a "buy" recommendation
on Sanofi stock, said the market was letting out a sigh of
relief after a lot of nervousness around the company's previous
guidance. He added that with first-half sales up 5 percent and
EPS up 10 percent at constant exchange rates, Sanofi's results
were "genuinely encouraging".
Including their latest gain, Sanofi shares are now up
roughly 3 percent so far this year but still lag the European
healthcare index, up nearly 12 percent amid a wave of
mergers and acquisitions. Sanofi stock trades at around 14 times
forecast earnings, at a discount to peers whose average
price-earnings (PE) ratio is closer to 16.
Viehbacher said the group saw upside in its vaccines
business, in decline so far this year. The unit should return to
double-digit sales growth in the second half, Viehbacher said,
forecasting "a very successful" flu season in the United States.
However, he noted the United States was becoming a tougher
market in terms of pricing. "That bears watching and would be my
only point of caution for the future," he said.
MATURE PRODUCT CHATTER
Pricing pressures from cash-strapped governments seeking to
restrict their healthcare spending and tough competition from
generics has prompted drugmakers worldwide to rationalise their
businesses and triggered a wave of mergers and acquisitions.
Viehbacher has said Sanofi is always on the look-out for
acquisitions to boost its core businesses but will not do deals
at any price. He stuck to this line on Thursday.
Sanofi is also looking to offload a portfolio of some 200
mature drugs in Europe, valued at 6.3 billion euros, as it
strives to reduce exposure to price cuts and relatively high
manufacturing costs on the continent, according to an internal
document circulated by a labour union.
Within the industry, "everybody is talking to everybody" on
what to do with mature drugs, Viehbacher said. He noted that
these products, while on the decline, still generated a lot of
cash flow and it was not easy to find a solution for them.
Sanofi's second-quarter business net income, which excludes
amortisation and legal costs, rose 3.9 percent to 1.54 billion
euros, or 1.17 euros a share, on sales of 8.08 billion. Analysts
polled by Reuters had expected EPS of 1.14 euros on sales of 8.1
A stronger euro against the U.S. dollar and other currencies
shaved 5.5 percentage points off quarterly sales growth. At
constant exchange rates, sales in emerging markets - which
account for over a third of Sanofi's revenue - rose 16.5
percent, driven by Latin America and China, and 9.4 percent in
the United States. They fell 2.8 percent in Western Europe.
Sales of Lantus, the world's most prescribed insulin, rose
16.3 percent over the quarter, to 1.56 billion euros, while
Sanofi's animal health unit Merial returned to growth, helped by
the launch of new flea and tick control drug NexGard.
(1 US dollar = 0.7465 euro)
(Editing by Mark John, Andrew Callus and Mark Potter)