Sanofi, buoyed by Dupixent and rare disease drugs, expects a brighter 2019

Sanofi’s growth momentum seems to have returned after years of diabetes-related decline. With a major contribution from Dupixent—plus some help from new blood disorder treatments added through recent acquisitions and a renewed focus on oncology—Sanofi is looking at a brighter 2019.

Dupixent maintained its growth pace in the fourth quarter with a Street-beating performance. Its sales of €280 million ($317 million) checked in above the previous quarter’s €225 million. Total prescriptions jumped 25% sequentially, "bolstered by the branded DTC campaign and the recent U.S. launch in asthma," according to Sanofi.

Looking ahead for 2019, CEO Olivier Brandicourt said Sanofi is pleased with Dupixent’s U.S. payer progress, with more than 90% of adult asthma patients now covered. Given its continuous international launches and potential regulatory approvals in adolescent asthma and nasal polyps, "we remain very confident in the prospects for Dupixent," the chief executive said on the company’s fourth-quarter earnings call.

On the other side of the coin, the diabetes franchise is still suffering as expected. Lantus sales plummeted about 20% to €866 million in the fourth quarter, as lower net price and changes in Medicare Part D coverage continued to wreak havoc. Toujeo’s €211 million also came in below analysts’ expectations, thanks again to a sharp 29% sales decline in the U.S.

And the hematology franchise Sanofi brought in with its $11.9 billion acquisition of Bioverativ also suffered a quarterly slowdown, according to Brandicourt. Hemophilia A drug Eloctate generated sales of €196 million in the fourth quarter, up 4.3%, while hemophilia B therapy Alprolix returned only €95 million. Brandicourt, though, insisted that "underlying performance remained solid."

Cablivi, the first marketed product from Sanofi's Ablynx deal, launched in Germany last October and delivered €3 million in the fourth quarter. Analysts have high hopes for the acquired thrombotic thrombocytopenic purpura (aTTP) treatment, projecting the treatment to bring in $500 million in peak global sales. That number could be put to an early test in 2019, as Sanofi just nabbed an FDA nod and expects to roll out later in the first quarter.

And another high point: Multiple sclerosis delivered a pleasant surprise in the fourth quarter, ODDO BHF analyst Martial Descoutures wrote in a Thursday note to clients. The franchise, though hurt by a 14% sales slide for Lemtrada, managed to grow 6.6% to €542 million, thanks to Aubagio's €446 million, an increase of 12.6%.

Vaccines also represented a bright spot in Sanofi's fourth-quarter performance. Flu vaccine sales swelled by 17.1% to reach €596 million in the fourth quarter, which Sanofi attributed to more shipments and the successful launch of differentiated recombinant flu shot Flublok in the U.S.

Overall, Sanofi has recently upped its ante on oncology and invested heavily in rare blood disorders under its specialty pharma business. It raises the question: Will Sanofi move away from consumer healthcare as its Big Pharma peers did in 2018? The answer is a resounding "no" from Brandicourt.

"We think we have now the right structure […] we have a very strong [consumer health] business we believe," Brandicourt said on Thursday’s call. "More specifically in emerging markets, it’s very complementary to what we’re doing in pharma," he said, adding that the French drugmaker is "committed to a reduced diversification we have today at Sanofi."

As ODDO BHF's Descoutures noted, Sanofi’s OTC franchise looked disappointing in the fourth quarter, with a sales increase of just 1.9%, versus 3.3% in the previous nine months. That figure compares to a 16% increase in Genzyme sales after taking out currency fluctuation and recent M&A deals. But Brandicourt appears confident that Sanofi's "broad geographic footprint and leadership position in [consumer healthcare] continues, and continues to drive growth ahead of the average of our global peers."

Buoyed by nearly €9 billion in sales and a 4.7% lift in earnings per share in the fourth quarter, Sanofi is now guiding toward EPS growth of between 3% and 5% for 2019, while the consensus forecast is at the lower end of the range, according to Descoutures.

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