Sanofi's not running pell-mell toward buyouts, CEO says, after reporting 'quiet' quarter

If you’re looking for new drama at Sanofi this year, you might just be disappointed. After reporting slight beats on fourth-quarter sales and earnings, the French drugmaker said Wednesday it’s expecting no big financial swings and no big rush toward dealmaking in 2017.

The former is likely to be good news for Sanofi investors, who were blindsided in 2015 by the news that its diabetes sales engine was sputtering. At the time, Sanofi slashed its diabetes forecast for 2016 and beyond, predicting flat sales at best for 2016 and 2017.

The latter? Perhaps less welcome—but perhaps a bit coy.

Sanofi is "not in a hurry to do M&A,” CEO Olivier Brandicourt said in a discussion of the 2016 results in Paris.

That’s not how it looked last spring, however, when Sanofi ran hard after Medivation, the cancer-focused biotech. Initially rebuffed, Sanofi went hostile with its bid, and after a who’s who of pharma and biotech jumped in with bids, eventually lost out to Pfizer and its rich $14 billion offer. 

Or last fall, when Sanofi reportedly jumped at the chance to bid for Actelion, a Swiss-based drugmaker that Johnson & Johnson had been pursuing. That deal didn’t work out either; after walking away initially, J&J snapped up Actelion for $30 billion in a sale-plus-spinoff arrangement.

Then again, grabbing either of those deals under the circumstances might have meant overpaying, something Sanofi maintains it will not do. “The only principle we will follow is to create value for shareholders and always consider the strategic fit,” Brandicourt said (as quoted by Reuters).

The company has certainly been under pressure to make some kind of deal—and under pressure elsewhere, too. Sanofi is scrambling to defend its PCSK9 cholesterol drug Praluent in a fierce patent dispute with Amgen, which makes the rival drug Repatha. If Sanofi and its partner Regeneron can’t persuade an appeals court to stay an injunction, Praluent could be removed from the market, at least temporarily, next month. That would put the drug way behind in an already tough fight for prescriptions in that field.

But Sanofi does have some successes to tout in Q4: Sanofi’s Genzyme unit—with its rare disease meds and multiple sclerosis treatments—delivered another round of double-digit growth in Q4, Brandicourt pointed out in a video interview. In fact, despite serious competition in the multiple sclerosis market, where it competes against Biogen’s once-high-flying Tecfidera and Novartis’ Gilenya, Sanofi’s Aubagio grew by more than one-third to $367 million for the quarter, pushing up the 2016 total to €1.3 billion. Meanwhile, its newer injectable, Lemtrada, delivered €425 million for 2016, its second full year on the U.S. market.

Sanofi’s vaccines business also soared during 2016, thanks to record flu vaccine sales and strong growth in its pediatric combo shots, both of which put up double-digit growth. The entire unit grew by 8.8%, despite still-lackluster performance from the dengue vaccine Dengvaxia, once pegged as a sure blockbuster. The total for the unit? €4.57 billion.

And as for the diabetes franchise, its fourth quarter sales came in a bit better than expected at 1.9% growth, despite a 9%-plus shrinkage for its top-selling basal insulin, Lantus, thanks to some bad news-good news developments: Biosimilar competition in Europe took its toll, and U.S. biosimilar erosion is expected to take a bigger one this year. That’s the bad news; the good is that part of Lantus’ decline came from patients switching to Sanofi’s newer product Toujeo, if on a less-than-ideal scale. Toujeo brought in €649 million for the year, compared with Lantus’ €5.7 billion.

The company is also looking ahead to a couple of new launches as well, counting on the new meds—Dupixent (dupilumab) for eczema and sarilumab for rheumatoid arthritis—to chip in as Lantus drops. Set back by a manufacturing issue at a Sanofi plant in France, the two meds are now awaiting FDA approval; the company reminded investors Wednesday that the plant had won tentative backing from regulators.

Related: The top 10 drug launches of 2017

Overall, it was a “quiet quarter,” Bernstein analyst Tim Anderson said in a Wednesday note. “Fundamentally, Sanofi’s outlook remains mixed with little growth in 2016/2017, few positive catalysts, and a lead franchise in diabetes still in flux,” Anderson said. The firm kept its “Market Perform” rating on the stock.