LONDON -- Sanofi-Aventis SA Friday reported better-than-expected third-quarter profit but sales fell, reflecting adverse currency movements and competition from generics.
But the world's third-largest drug maker by prescription drug sales raised its full-year outlook to reflect an improved performance across its business during the first nine months of 2008.
Sanofi-Aventis said it now expects adjusted earnings per share excluding selected items to grow at around 9% in 2008, based on 2007 exchange rates.
For the quarter ended Sept. 30, net profit was €1.33 billion ($1.72 billion), or €1.02 a share. Adjusted net profit, which excludes costs related to acquisitions and restructuring, rose 1.9% to €1.89 billion from €1.85 billion, ahead of analysts' forecasts of €1.86 billion.
Adjusted earnings per share excluding selected items, which are the measure used by Sanofi-Aventis for its outlook, rose 5% to €1.45 from €1.37.
Sales fell 2.4% to €6.85 billion, hit by adverse exchange rates between the euro and the dollar as well as the discontinuation of sales of multiple sclerosis drug Copaxone in North America.
Sales of vaccines, which rose 9.4% to €947 million, outgrew the pharmaceutical business, which increased by 4.9% to €5.9 billion.
Older products such as insomnia drug Ambien and cancer treatment Eloxatin continued to be hit by competition from low-cost generic copies, while direct sales of Copaxone in North America stopped after Sanofi-Aventis's distribution deal with Teva Pharmaceutical Industries Ltd. ended in March.
Insulin pen Lantus also helped lift sales, growing 29% to €612 million in the quarter.
Blood-thinner Plavix, Sanofi-Aventis' second best-selling product [Lovenox is the biggest], advanced 5.7% to €630 million, but sales in Europe rose a modest 0.9%, hit by the launch of generic copies in Germany. Still, the market share by volume for Plavix in Germany is currently around 80%, despite competition from the generic version, the drug maker said. Sanofi-Aventis comarkets Plavix in the U.S. with Bristol-Myers Squibb Co.
Sanofi-Aventis earlier this month withdrew its controversial anti-obesity drug Acomplia from the European Union after the European regulator recommended its suspension on concerns over its psychiatric side effects. Sales of the drug, which had been seen as a potential multibillion-dollar seller, were just €27 million in the third quarter.
The Paris-based drug maker said it has discontinued the development of two experimental drugs, AVE2268 for diabetes and smoking-cessation treatment surinabant. This further setback to the pipeline follows the discontinuation of four other experimental products in the second quarter.
Sanofi-Aventis this year acquired Czech generic drug maker Zentiva NV and U.K. vaccine specialist Acambis PLC in a bid to diversify its operations and reduce its reliance on its key products, which are being threatened by generic competition.
Analysts expect the arrival of former GlaxoSmithKline PLC executive Chris Viehbacher at the helm of Sanofi-Aventis on Dec. 1 will overhaul the company's research-and-development strategy and step up the hunt for new products to replenish its drug pipeline.
Still, UBS analyst Gbola Amusa, said he is concerned about the number and quality of products brought forward to replace the 10 late-stage drugs that Sanofi-Aventis recently discontinued. "We see a heightened risk that Sanofi turns to an expensive M&A deal rather than ceasing investment in less productive R&D activities," said Mr. Amusa, who has a "neutral" recommendation on the stock.
One of the bright spots in Sanofi-Aventis' pipeline is Multaq, a heart drug that the French drug maker has resubmitted to the U.S. Food and Drug Administration, after it was initially rejected in 2006. A recent study suggested that Multaq reduced the risk of death in patients with irregular heartbeats. Further data for the drug, which has been granted priority review by the U.S. regulator, are expected at an American Heart Association meeting in New Orleans next month.
Sanofi-Aventis shares, which in the past 12 months have lost around 20% of their value, rose 0.8% to €47.55 in a lower Paris market.‹
Sanofi Reports 4Q08 Annualized Lovenox Sales of $3.8B
[The sales figures are in Euros, Sanofi’s reporting currency, and the growth rates are in constant local currencies, which is a way to track the growth in volume and price irrespective of currency swings. (Sanofi does not report quarter-over-quarter growth in local currencies, and hence meaningful quarter-over-quarter numbers are hard to come by.) Note: the sales figures below are annualized, i.e. they are 4x the 4Q08 numbers. ]
Worldwide Lovenox sales rose 8% year-over-year to an annualized rate of €3.0B, which is $3.8B at the current exchange rate. The breakdown by geography is as follows:
US: €1.79B (60% of total), +7 YoY, EU: €884M (30% of total), +11% YoY RoW: €324M (11% of total), +8% YoY === Total: €3.00B, +8% YoY
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