Sanofi, France’s largest drugmaker, said first-quarter profit rose 13 percent, helped by the purchase of U.S. biotechnology Genzyme Corp. and higher sales of diabetes medicine Lantus.
Profit excluding some costs, which Sanofi calls business net income, was 2.44 billion euros ($3.2 billion), or 1.85 euros a share, compared with 2.17 billion euros, or 1.66 euros, a year earlier, the Paris-based company said in a statement today. That beat the 2.2 billion-euro average estimate of 11 analysts compiled by Bloomberg.
Chief Executive Officer Chris Viehbacher led the purchase of Cambridge, Massachusetts-based Genzyme, the largest maker of medicines for rare genetic disorders, one year ago for $20.1 billion. The 52-year-old CEO has been overseeing Genzyme’s integration and working to solve the U.S. biotech’s manufacturing problems, which led to shortages of the Cerezyme and Fabrazyme medicines.
It’s a “strong set of results this morning for Sanofi (SAN), clearly benefiting not only from the Genzyme acquisition but also from the extremely strong performance of our growth platforms, and as always we’ve been exercising extremely strong cost control,” Viehbacher told reporters on a conference call today.
Net sales rose 9.4 percent to 8.51 billion euros in the first quarter, matching analysts’ estimates.
Sanofi shares climbed 2.5 percent to 58.21 euros in Paris, giving the French drugmaker a market value of 78.1 billion euros. As of yesterday, the stock had returned 15 percent over the past year including reinvested dividends, compared with 19 percent for the Bloomberg Europe Pharmaceutical Index. (BEPHARM)
Sanofi reiterated its full-year forecast. The company said Feb. 8 it was expecting profit to drop as much as 15 percent in 2012, hurt by generic competition to its Plavix blood thinner and Avapro hypertension drug in the U.S.
It was a “strong start to 2012,” Alistair Campbell and other London-based analysts at Berenberg Bank wrote in a note to clients today. It’s “perhaps a little disappointing that Sanofi chose to leave guidance unchanged but, given the difficult quarters ahead, it is understandable.”
Viehbacher has been building up Sanofi’s diabetes, cancer, consumer health-care, emerging markets and animal-health businesses, the so-called growth platforms, to help reduce the company’s dependence on patented pharmaceuticals. The takeover of Genzyme was engineered to give Sanofi access to innovative treatments that are less vulnerable to generic competition.
First-quarter revenue from the newly reorganized Genzyme, on a constant structure basis and excluding currency fluctuations, climbed 14 percent to 400 million euros, with sales of Fabrazyme up 50 percent to 47 million euros.
Revenue from the Myozyme and Lumizyme medicines for Pompe disease climbed 17 percent to 112 million euros. Cerezyme brought in 149 million euros, up 5.8 percent in the quarter.
Manufacturing glitches at Genzyme’s Allston Landing plant in 2009 led to shortages of Cerezyme and Fabrazyme, driving down the U.S. biotech’s share price and making the takeover possible.
Genzyme began shipping Fabrazyme produced in its new plant in Framingham, Massachusetts, last month. Patients in the U.S. have returned to full dosing of the medicine, which treats a rare illness known as Fabry disease, Sanofi said today. In Europe, the process of moving the most severely affected patients to full dose of the drug also has begun, the company said.
Production of Genzyme’s rare disease therapies is increasing, Viehbacher told reporters in Cambridge on March 8. The number of Fabrazyme vials sold will almost double this year, he said.
First-quarter results are “solid and reassuring,” Vincent Meunier, an analyst at Exane BNP Paribas in Paris, said in a telephone interview. “Genzyme sales had double-digit growth, Lantus has been accelerating and performance in emerging markets also was strong.”
Emerging market sales climbed 9.9 percent to 2.6 billion euros at constant exchange rates in the quarter, the company said.
Revenue from the company’s Lantus insulin jumped 21 percent to 1.12 billion euros in the quarter, led by higher sales in the U.S., China, Brazil, Russia, Mexico and Japan, Sanofi said.
Sales of the cancer drug Eloxatin more than doubled to 384 million euros in the first three months of the year.
Revenue from Taxotere, also a cancer treatment, dropped 61 percent to 150 million euros. Sales of the Lovenox blood thinner retreated 9.8 percent to 526 million euros while revenue from the Copaxone multiple sclerosis medicine retreated 79 percent to 24 million euros. Plavix, which faces generic competition in the U.S. next month, brought in 505 million euros, up 4.3 percent.
The first three months of the year were “an easy quarter in a tough year” for Sanofi, Mark Purcell and other analysts at Barclays Capital in London wrote in an April 23 note to clients.
Sanofi will continue seeking “bolt-on” acquisitions to expand in areas such as consumer health care, Viehbacher told reporters this morning, declining to comment on a potential interest in Amylin Pharmaceuticals Inc. (AMLN:US), the maker of the diabetes drugs Bydureon and Byetta.
“The Genzyme acquisition has gone extremely well,” he added. “The company is in good shape. We don’t particularly need to do any M&A. We will continue to be opportunistic.”
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