|Sanofi CEO Chris Viehbacher|
Sanofi's third-quarter results show emerging markets can be a double-edged sword. Though the company's growth in these fast-growing countries often outclasses that of its peers, this time--for the second quarter in a row, we might add--emerging markets failed to pump up Sanofi's top line. What with generic competition and lagging vaccines sales, the French drugmaker ($SNY) posted a decline in sales and a steeper decline in profits.
Partly because of a slowdown in China, partly because of faltering generic sales in Brazil, emerging markets grew by an anemic 2.8% for the third quarter. Overall, Sanofi's sales dropped by 6.7% to €8.43 billion ($11.59 billion), and profits declined by 19%, falling short of analyst estimates. And Sanofi cut its earnings forecast for the year, also for the second quarter in a row.
Times are a-changing, CEO Christopher Viehbacher said. He called the third quarter "an inflection point" that marks the end of Sanofi's patent-cliff nightmare. All that ended in August, he said, and the company actually put forth sales growth in September.
Offsetting all this was some strong growth in diabetes, with Lantus continuing its surge. The drug delivered 21% sales growth year-over-year, to €1.46 billion ($2.01 billion), and the entire diabetes business was up 20% on a constant-currency basis. Sanofi's other designated growth areas--consumer healthcare and Genzyme among them--also pumped things up. The launch of multiple sclerosis drug Aubagio, coupled with rare-disease growth, lifted Genzyme sales by 21% to €529 million ($727.6 million).
More of that is to come, Viehbacher has said; a few weeks ago, he pledged that really, truly Q4 would mark Sanofi's return to growth. Emerging markets won't continue to be a drag, Viehbacher figures; in China, for instance, new hospitals are popping up regularly, adding new customers each time. The company intends to continue investing there, and in other countries, if on a more targeted, thoughtful basis, he said. "There will be some ups and downs," Viehbacher said on a conference call with analysts. "You're going to have currency movements, there are going to be some issues on pricing, but you are going to still see a volume increase. Here and there will be pockets of slowdown, but there's still growth to be found. We may just have to look harder for it."
- read the release (PDF)
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