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UPDATE 2-Sanofi takes gloomy view of diabetes drug sales

* Global diabetes sales to fall 6-8 pct annually until 2018

* Q3 business net income down 1.1 percent to 2.14 bln euros

* CFO sees L'Oreal keeping Sanofi stake for now (Adds details, shares, comments)

PARIS, Nov 2 (Reuters) - French drugmaker Sanofi disappointed investors with a more gloomy forecast for its struggling diabetes business on Thursday, while quarterly net income also slipped.

Shares in the French drugmaker fell 1.9 percent by 1000 GMT, among the worst performers on France's benchmark CAC-40 index , which was flat.

Sanofi said currency-adjusted sales at its diabetes franchise were likely to have shrunk by 6-8 percent per year between 2015 and 2018.

It had previously seen a 4-8 percent drop due to persistent pricing pressure in the United States, the world's largest health market.

Year-to-date, diabetes sales in the U.S are down by a fifth and Sanofi warned of an accelerated decline in the fourth quarter.

"This reflects the phased impact of exclusions in commercial formularies at CVS and United Health as well as a high basis of comparison in the fourth quarter of 2016," the company said.

U.S. pharmacy benefit manager CVS and health insurer United Health said last year they had removed Sanofi's main insulin drug Lantus from the list of medicines they reimburse in favour of Eli Lilly's cheaper biosimilar drug Basaglar.

Biosimilars are cheaper copies of protein-based biotech drugs such as Lantus, which are no longer protected by patents.

Sanofi Chief Executive Olivier Brandicourt told journalists that the company had, however, secured coverage for Lantus and Toujeo, its next-generation insulin, on "the vast majority of formularies in the U.S. for 2018."

Danish drugmaker Novo Nordisk, the world's top maker of diabetes drugs, on Wednesday forecast only muted growth in 2018 and warned that draft legislation in some U.S. states to make pricing more transparent could impact business in its largest market.

L'OREAL STAKE

Chief Financial Officer Jerome Contamine said he had not been advised by shareholder L'Oreal, the world's biggest cosmetics firm, of any plans to sell down its 9.2 percent holding in Sanofi.

The death of French billionaire Liliane Bettencourt in September refocused attention on how L'Oreal's founding family and major shareholder Nestle would manage their stakes in the company in the future.

There has long been speculation that L'Oreal could look to sell its stake in Sanofi to help pay for a repurchase of Nestle's L'Oreal shares should the Swiss group want to get rid of its 23 percent L'Oreal stake.

"We don't hear any intention from them to change their view, they clearly stick to their holding in Sanofi," Contamine said of L'Oreal.

"We cannot speculate on what Nestle will do and therefore what L'Oreal could do. However, we have consistently said that if L'Oreal was to sell part of its stake, we will assess the opportunity to buy back some shares directly from them," Brandicourt said.

NET INCOME SLIPS

Sanofi's third-quarter business net income fell 1.1 percent at constant exchange rates to 2.141 billion euros ($2.5 billion). Total sales rose 4.7 percent to 9.05 billion euros with revenue from the diabetes and cardiovascular unit down 14.8 percent.

Analysts polled by Reuters were expecting business net profit of 2.148 billion euros and net sales of 9.33 billion.

Sanofi's biotech arm Genzyme and its vaccines division Sanofi Pasteur recorded another quarter of double-digit growth while the consumer healthcare division, boosted by an asset swap deal with Germany's Boehringer Ingelheim struck last year, saw revenues rise 48.5 percent to 1.13 billion euros.

However, analysts at brokerage Berenberg described Sanofi's 7.14 billion euros sales volume in pharmaceuticals as weak. ($1 = 0.8581 euros) (Editing by Sudip Kar-Gupta)