Sanofi-Aventis (SNY) reported first quarter earnings of $1.13 per American Depository Share (ADS), well below the year-ago earnings of $1.29. The Zacks Consensus Estimate was $1.16.
First quarter net sales declined 1.5%, with performance being impacted by the genericization of several products, especially Lovenox and Taxotere, US healthcare reform, lower A/H1N1 sales and EU pricing austerity. Sales of about €569 million were impacted by generic competition during the first quarter.
The Quarter in Detail
Pharmaceutical segment sales declined 1.6% mainly due to the entry of generic Lovenox, Taxotere and Ambien CR in the US, the impact of US healthcare reform and EU austerity measures, and generic competition for Plavix and Taxotere in Europe.
The diabetes franchise (up 10.5%) continued performing well with growth being driven by Lantus (up 13.2%), and Apidra (up 20.5%). Both products performed well in response to additional promotional efforts by the company. Eloxatin sales increased 172.7% during the quarter reflecting a partial recovery of sales in the US. Meanwhile, Plavix continued to face generic erosion in some parts of Europe.
While Plavix revenues declined 40% in Europe due to increased generic competition, the product continued to grow at a decent rate in the US (up 7.2%) and at a robust rate in both Japan (up 28.8%) and China (up 31.1%). Plavix is expected to lose US exclusivity on May 17, 2012. Sanofi has a co-promotion agreement with Bristol-Myers Squibb (BMY) for Plavix.
As expected, Lovenox sales (down 26.5%) continued to decline during the first quarter due to the entry of generic competition in the US. US sales plunged 51%. Taxotere lost market exclusivity in Nov 2010 and recorded a 31.6% decline in first quarter sales. Taxotere sales, which came in at €2.1 billion in 2010, should decline significantly in 2011.
The consumer health care business recorded year-over-year growth of 40.3% in the first quarter. The Chattem acquisition should help Sanofi establish a strong presence in the US consumer health care market. Allegra OTC, which was launched during the quarter, delivered sales of €80 million.
Sanofi’s generics business recorded strong growth (16.9%) during the quarter with the US and emerging markets driving growth. Meanwhile, Sanofi’s Human Vaccines business declined 38.3% due to lower flu vaccine sales.
While research and development (R&D) declined 4%, selling and general expenses increased 5.1%.
Sanofi has been working on generating cost savings through its Transformation program, which generated cost savings of €1.3 billion in 2010. Sanofi expects to achieve cost savings of €2 billion by 2011, a couple of years ahead of expectations. The company said that it is reallocating resources towards growth platforms and expects to report phase III results on five candidates (lixisenatide, teriflunomide, Zaltrap [aflibercept], alemtuzumab, and semuloparin) in 2011. Sanofi expects to file for approval of three candidates – lixisenatide, alemtuzumab, Zaltrap – within a year.
While the company expects to seek approval for colorectal cancer candidate, Zaltrap, in the second half of 2011, regulatory filings for diabetes candidate, lixisenatide, are expected in the second half of 2011 in the EU and the second half of 2012 in the US. Finally, the US filing for multiple sclerosis candidate, teriflunomide, is slated for the third quarter of 2011, with the EU filing expected in the first quarter of 2012.
The company’s pipeline consists of 64 molecular entities and vaccines in different stages of clinical development including 17 candidates that are in phase III development/under regulatory review.
Updated Guidance to be Provided with Second Quarter Results
Sanofi, which acquired Genzyme Corporation in April 2011, will provide updated guidance with its second quarter results.
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