Want numbers on formulary pain? Sanofi's diabetes sales are Exhibit A

As payers increasingly look to put a lid on drug costs—partly through formulary management—the decision by two leading pharmacy benefit managers to exclude Sanofi's big-sellers in diabetes took a serious toll in 2017. 

Sanofi reported a U.S. diabetes sales decline of 29.5% in the fourth quarter and 22.8% for the year, to €730 million ($897 million) and €3.12 billion ($3.84 billion), respectively. In a note on the results, Bernstein analyst Tim Anderson wrote that Lantus and Toujeo sales were hit by CVS Health and UnitedHealthcare formulary exclusions.

On the flip side, specialty outfit Genzyme posted strong global growth, 16.8%, in the fourth quarter "due to contributions from the new immunology franchise," Anderson wrote.

The company launched atopic dermatitis drug Dupixent and rheumatoid arthritis drug Kevzara last year, and at the J.P. Morgan Healthcare Conference in January, executives said there's much more to come for those drugs after promising early results. For the full year, Genzyme's sales grew 15.2% to €5.67 billion ($6.97 billion) around the world.

RELATED: 'Audacious' CVS formulary drops key meds from Sanofi, Medivation and Novartis. Yours could be next  

All told, the company reported a 2017 sales increase of 5.7% at constant exchange rates to €35 billion ($43 billion). Its EPS for the year fell by less than a half of a percentage point to €5.54 ($6.81).

Sanofi is no stranger to commercial challenges in diabetes. Along with its peers in the field, the drugmaker has worked for years to reshape itself—in part through layoffs and M&A—and adapt to tough payer tactics.

Part of the corporate changes include a potential sale of Sanofi's European generics business; a deal is expected third quarter of this year, the drugmaker reported Wednesday. Sources recently told Reuters the unit could be worth $2.4 billion as two drugmakers and several private equity outfits compete for the outfit.

RELATED: Kevzara and Dupixent rollouts progressing well, Sanofi execs say, but 2017 was just the beginning 

Despite all of the challenges it's facing, the drugmaker sees growth ahead, projecting 2018 EPS to increase between 2% and 5%. It plans to get there in part through new acquisitions inked recently for Bioverativ to the tune of $11 billion and Abylnx for $4.8 billion.

In notes released Wednesday, analysts pointed out that company's costs came in above expectations for the quarter. For the full year 2017, Sanofi boosted its R&D expenses 5.8% to €5.4 billion ($6.64 billion), in part for its SGLT1/2 program sotagliflozin. Last year, the drugmaker reported phase 3 data showing its drug cut blood glucose levels in Type 1 diabetes patients, plus helped them lose weight and lower their blood sugar, against placebo.