Sanofi Raises Outlook on Strong Third-Quarter Profit
French drugmaker Sanofi-Aventis raised its full-year 2007 outlook on Wednesday as it reported a forecast-beating 9.1 percent rise in third-quarter profit, helped notably by vaccines and cost cuts.
Shares in the group opened 2.5 percent higher at 60.75 euros.
The world's third-biggest pharmaceuticals group also benefited, as expected, from a recovery in U.S. sales of blood thinner Plavix, following a period of temporary generic competition.
Adjusted net profit was 1.85 billion euros ($2.67 billion), against expectations of 1.71 billion in a Reuters poll of seven analysts. Sales, despite the negative impact of a strong euro against the dollar, rose 1.8 percent to 7.03 billion euros.
"I think the results are very superior to the consensus," pharmaceuticals head Hanspeter Spek told analysts in a conference call. "A striking development has been the strong performance of vaccines."
Sanofi raised its outlook for growth in full-year 2007 earnings per share excluding selected items to around 10 percent from around 9 percent previously, assuming an average euro/dollar exchange rate of $1.25. The exchange rate assumption was unchanged from that previously used.
Sensitivity to the euro/dollar exchange rate is estimated at 0.6 percent growth for a 1-cent movement in the exchange rate.
Early Flu Shots
Sanofi-Aventis said it was raising its outlook despite the end of patent protection for its sleeping pill Ambien IR in the United States in April and the arrival of generic competition for cancer drug Eloxatin in Europe.
Investor confidence in Sanofi has been hit this year by a damaging U.S. rebuff to Acomplia, an anti-obesity drug once touted as a potential $3 billion-a-year plus seller, and its shares now trade on less than 11 times forecast 2008 earnings, a discount of more than 20 percent to the European sector average.
Sanofi has an extensive pipeline of new drugs in development but analysts are worried that many are risky and, even if successful, will not reach the market until around 2011-2012.
But the company said it was adjusting its cost structure to the new situation and ratio of selling and general expenses to net sales fell to 26.3 percent in the first nine months of the year from 27.9 percent in the same period of 2006.
Vaccines proved a star performer in the three months to September, with sales up 49 percent at 943 million euros, driven by earlier shipments of flu vaccines compared to last year and strong demand for new cervical cancer shot Gardasil.
Acomplia, which is sold in 20 countries outside the United States, recorded sales of just 21 million euros in the third quarter.