July 29, 2010 / 5:43 AM / 9 years ago

UPDATE 1-Sanofi Q2 beats market; mum on Genzyme bid talk

* Q2 EPS, net, operating income beat Reuters poll consensus

* Savings to exceed 1 bln euros in 2010 vs 2008 level

* No mention in statement of M&A strategy (Adds detail from statement)

PARIS, July 29 (Reuters) - Sanofi-Aventis (SASY.PA) beat second-quarter earnings expectations as it beefed up sales and tightened its R&D spending, but the French drugmaker gave no hint in its results statement of any acquisition plans.

Sources told Reuters late on Wednesday that Sanofi plans to make a formal offer of up to $18.7 billion, or $70 per share, for U.S. biotech Genzyme GENZ.O as it seeks to replenish its drug pipeline and make up for the loss of patent protection on blockbuster drugs in the years through 2013. [ID:nN28226612]

Quarterly earnings beat the average outcome of a Reuters poll on all fronts as Sanofi tightened spending, and as sales were driven by its diabetes division, emerging markets and consumer health.

Business net income rose 7.6 percent to 2.478 billion euros ($3.22 billion) versus the poll’s average of 2.32 billion euros. Earnings per share climbed 8 percent to 1.90 euros versus the poll’s 1.78 euros.

Sales increased 4.6 percent to 7.783 billion euros even as competition grew from generic copies of bloodthinner Plavix and cancer drug Eloxatin, and as vaccine sales declined.

The U.S. health regulator’s approval of a generic to bloodthinner Lovenox led Sanofi last week to cut its earnings per share forecast to between stable and 4 percent lower at constant exchange rates from 2-5 percent growth against 2009.

For 2013, Sanofi expects sales to be at least at 2008’s level of 27.57 billion euros, and business net income to be similar to the 2008 level of 7.314 billion euros.

Those forecasts take into account the arrival of a Lovenox copy as well as government healthcare spending cuts, and exclude acquisitions above 1 billion euros, like consumer health company Chattem and a stake in Merial animal health that Sanofi did not already own.

Sanofi expected cost savings, including on R&D, to exceed 1 billion euros at constant exchange rates this year from the 2008 level and compared with a 2013 savings goal of 2 billion euros.

MUM ON MERGERS

In its earnings statement on Thursday, Sanofi did not comment on its acquisition strategy for which CEO Chris Viehbacher has set a limit of 15 billion euros, though never entirely dismissing a bigger deal.

Last year, Sanofi invested 6.6 billion euros on 33 new partnerships and acquisitions and has said it would do a similar number of deals this year to further branch out its business and address unmet medical needs.

A bigger move could be on the cards, however, as more than a fifth of Sanofi’s 2008 drug sales — excluding a generic Lovenox — face patent expiries to 2013, and its drug portfolio can’t offset that loss.

Sanofi’s net debt rose to 6.17 billion euros in the first half from 4.14 billion euros at end-2009, while net cash from operating activities stood at 4.2 billion euros.

Sanofi shares closed 0.6 percent higher at 45.43 euros on Wednesday. The stock is down about 17.5 percent so far this year, underperforming a 1.9 percent dip in the DJ health index .SXDP.

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