Sanofi returns to growth as promised, with Dupixent and vaccines leading the turnaround

With competition to its diabetes and cardiovascular franchises hurting Sanofi, CEO Olivier Brandicourt pledged a return to growth starting from the second half of 2018. And thanks mainly to Dupixent and now-recovered vaccines sales, he kept his word.

The third quarter was the first quarter that sales from new products, led by Dupixent, topped the adverse impact of low-cost competitors to Lantus and Renvela, Brandicourt said on the company's earnings conference call Wednesday. The newcomers helped push total sales to €9.39 billion for the quarter, and earnings per share, in turn, reached €1.82 to beat analyst estimates.

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In what Brandicourt dubbed “a new growth phase” for Sanofi, dermatitis star Dupixent has continued to play the role of core growth driver. For the third quarter, Dupixent sales leaped by 28% over the second quarter's haul, reaching €225 million ($254 million). Total prescriptions jumped 16% in the U.S., according to Iqvia data cited by Sanofi. And those figures don't factor in the key U.S. asthma approval the drug just earned.

During the third-quarter earnings call, Genzyme chief Bill Sibold pointed to Dupixent’s asthma selling points, including its “best efficacy,” its unique approval in those who are dependent on corticosteroids and its convenience as a subcutaneous product rather than an IV. Based on those advantages, Leerink analyst Geoffrey Porges previously projected $2.5 billion in additional asthma sales for the drug.

Vaccines also bounced back in the third quarter from a temporary lull as Sanofi Pasteur quickly resolved a Pentaxim supply constraint in China. The vaccine franchise delivered growth of 8.2%, checking in with €2.07 billion third-quarter sales. What’s more, the company is now expecting its vaccines unit to grow by mid-to-high single digits for the remainder of 2018, slightly up from the previous mid-single-digit projection.

Two factors have mainly led to that rosier outlook, Sanofi Pastuer chief David Loew said on the call. First, Pentaxim catchup and high demand for foreign-made vaccines in the wake of a high-profile vaccine scandal is driving up Sanofi’s optimism for its vaccine business in China. And outside of China, Flublok—the only FDA-approved recombinant protein-based flu vaccine, which Sanofi obtained through its Protein Sciences acquisition—was just made available in the U.S. this flu season, and the launch has exceeded expectations.

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Like its Big Pharma peers Pfizer and AstraZeneca, Sanofi is also benefiting from a growing Chinese market.

“As in prior quarters, China remained a particular highlight, with strong growth in both pharmaceuticals and vaccines,” Brandicourt said on the call. For the third quarter, the country contributed sales growth of 17.7% to reach €644 million.

As part of a restructuring unveiled in September, Sanofi is creating a new China & Emerging Markets organization, which, starting from 2019 will take care of all diabetes & CV, established products and specialty care. A company spokesperson said the new unit highlights the importance of China, which is now Sanofi’s second-largest individual market behind the U.S.