Sanofi, GSK and Novo Nordisk benefit from currency changes while AZ and Novartis suffer: analyst

It's still early in Big Pharma's earnings season, but executives at Johnson & Johnson and Roche have already detailed how fluctuations in currency exchange rates affected their companies' businesses in recent months. Across the pond, certain European drugmakers are benefiting from a stronger dollar, while others are facing a currency headwind, analysts with ODDO BHF recently said.

For European drugmakers that consolidate their earnings in a local currency—such as Sanofi, GSK and Novo Nordisk—ODDO BHF analysts said they stand to see double-digit boosts to earnings per share. All of these companies have a large U.S. business, so when they convert those sales back to their local currencies to report financials, they are seeing a major boost from the strong dollar.

But on the flip side, U.K.-based AstraZeneca and Swiss drugmaker Novartis report their global sales in dollars. Since they have large ex-U.S. businesses, they face currency headwinds when those sales are reported in dollars. The ODDO BHF team forecasts a high-single-digit percentage hit to earnings for those companies based on exchange rates.

Already, J&J and Roche have reported their third-quarter earnings. For J&J, the company said currency effects resulted in a 12% hit to ex-U.S. growth during the period. Worldwide, the hit was 6%, the company said.

As for Roche, the Swiss drugmaker reported (PDF) a 427 million Swiss franc hit to groupwide sales so far this year as a result of currency fluctuations. The company said it expects just a 1% hit to 2022 full-year results overall assuming that exchange rates from Sept. 30 hold up.

The rest of the Big Pharma players begin to report third-quarter earnings next week.

Outside of currency changes, the ODDO analysts flagged several factors to look for at the European drugmakers. For Sanofi, the third-quarter is typically marked by a surge of flu vaccine sales. Sanofi noted recently that 60% of flu vaccine deliveries occurred during the quarter this year, as opposed to last year's 55%. The company also highlighted an expected “record flu season" in a memo ahead of earnings.

Then there’s declining pandemic-related sales, which could be stark compared to last year's third-quarter. Roche already disclosed a  1 billion Swiss franc decline in COVID product sales in the first nine months of 2022 compared with the same period last year. The ODDO BHF analysts predict GSK's COVID-related sales will slip, as well.