February 6, 2020 / 6:53 AM / 14 days ago

Drugmaker Sanofi expects further profit growth from narrowed focus

PARIS (Reuters) - French drugmaker Sanofi (SASY.PA) on Thursday forecast further profit growth for 2020 even as it drops some research in areas such as diabetes in a shake-up to narrow its focus on blockbuster treatments including eczema medicine Dupixent.

Paul Hudson, chief executive officer of Sanofi, poses during the annual results news conference in Paris, France, February 6, 2020. REUTERS/Benoit Tessier

Sanofi, long viewed as a laggard in the pharmaceutical sector, has changed its chief executive, its chief financial officer and head of research over the past two years and is hoping to shine again thanks to the pipeline shake-up and cost cuts.

The company said earnings per share (EPS) are likely to rise by about 5% in 2020. That is on par with a similar target last year, which it ultimately surpassed. EPS growth reached 6.8% in 2019 as net income rose 7% to 7.5 billion euros ($8.25 billion).

Booming Dupixent sales helped to boost revenue in Sanofi’s fourth quarter to 9.6 billion euros, up 6.8% on a reported basis, even though growth in vaccines, another area it is prioritising, was a little weaker than Jefferies analysts had expected.

The company said it was on track to increase annual sales of Dupixent - developed with U.S firm Regeneron (REGN.O) - to 10 billion euros in the longer term, from 2.1 billion euros now.

“I am encouraged by the fourth-quarter results, which position Sanofi to deliver on our new strategic priorities,” said CEO Paul Hudson, a former Novartis (NOVN.S) executive who led Sanofi’s revamp.

In December Sanofi also set a target of reaching a core operating margin of 30% by 2022. It stood at 27% at the end of 2019 and Sanofi said it was “trending towards” its goal.

Shares in the French drugmaker were up 2.4% by 0913 GMT.

Like rivals such as Britain’s GlaxoSmithKline (GSK.L) and Switzerland’s Novartis, Sanofi, which announced cost savings targets last month, is trying to zoom in on potential blockbuster treatments and has halted unsuccessful programmes.

Hit by patent losses and a drop in sales, Sanofi said in December that it would end research in diabetes and cardiovascular diseases to devote more efforts to the lucrative field of cancer medicines.

It is also aiming for an extra 2 billion euros of cost savings by 2022, including in its supply chain.

Reporting by Matthias Blamont; Writing by Sarah White; Editing by David Goodman

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