Emerging markets boost quarterly Sanofi results

FRENCH DRUGMAKER Sanofi posted better-than-expected quarterly results, bolstered by strong emerging markets, breaking with a trend of earnings misses by European rivals AstraZeneca and GlaxoSmithKline.

Sanofi performed strongly in China, Brazil and Russia – crucial areas for international drugmakers as sales in their home markets decline due to patent expiries and government cuts in healthcare spending.

Its sales to emerging markets in the quarter rose 9.9 per cent at constant exchange rates, in sharp contrast to an anaemic 2 per cent gain at GSK and just 1 per cent at AstraZeneca.

The booming middle classes of Asia and Latin America are expected to offer robust growth for makers of prescription drugs in the years ahead, but selling medicines into countries such as China, Russia, Brazil and Turkey can be tough.

“ strong performance in emerging markets in particular will please, as will reiteration of guidance,” Deutsche Bank analysts said in a note to investors.

Sanofi shares have risen about 8 per cent in the last year.

The Paris-based company confirmed that earnings could decline between 12 and 15 per cent this year as top-selling drugs previously protected by patents, including blood thinner Plavix, are hit by competition from cheap copies.

Sanofi posted a 12.5 per cent rise in first-quarter business net income to €2.44 billion, driven by a strong performance in emerging markets, biotech unit Genzyme and diabetes drug Lantus. Consumer healthcare products and cost savings also helped drive earnings higher. The result beat the average estimate in a Reuters analyst poll of €2.217 billion.

Sanofi said group sales rose 9.4 per cent to €8.51 billion, thanks to a weaker euro, though they slipped 0.6 per cent at constant exchange rates and adjusting for the consolidation of Genzyme.

Sales at Genzyme rose 13.7 per cent to €400 million after it resumed delivering rare disease drug Fabrazyme from a newly approved plant in Massachusetts. Genzyme had been forced to ration the drug in 2009 due to production problems that also led to shortages of another rare disease drug, Cerezyme. – (Reuters)