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Sanofi Sees Lower 2012 Earnings After Strong End To 2011 - Update

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French drug giant Sanofi SA (SNY,SNYNF.PK) on Wednesday said it expects up to a 15 percent drop in 2012 earnings amid looming generics threat as it loses patent exclusivity for two of its key products. Meanwhile, the company's fourth-quarter 2011 profit surged from last year helped by the acquisition of U.S. biotech firm Genzyme and increased sales from diabetes drug Lantus.

Net income attributable to equity holders of the company surged to 1.44 billion euros ($1.91 billion) in the fourth quarter from last year's 437 million euros. Earnings per share rose to 1.08 euros from 0.33 euros. Quarterly results of both periods included items such as amortization of intangible assets and restructuring costs.

Business net income, a non-GAAP measure, grew to 2.08 billion euros from 1.84 billion euros in the previous year. Business earnings per share were 1.56 euros, up from 1.41 euros in 2010.

Net sales increased 8.8 percent to 8.51 billion euros from 7.82 billion euros in the year-ago period, with Emerging Markets, Diabetes, Consumer Health Care and Animal Health segments growing at a double-digit pace. Exchange rate movements had a negative effect of 0.4 percentage points.

The Group's growth platforms - Emerging Markets, Diabetes, Vaccines, Consumer Health Care and Animal Health and New Products - together with the recently acquired Genzyme accounted for 66.4 percent of total sales in the quarter, up from 58.4 percent in the prior-year period.

Pharmaceuticals sales climbed 10.5 percent to 7.22 billion euros, reflecting positive contribution of 831 million euros from Genzyme that was acquired early last year.

Within the segment, Diabetes business grew sales by 12.5 percent and Lantus sales increased nearly 18 percent. Oncology product Eloxatin's sales surged 119 percent to 325 million euros due to further recovery of sales in the U.S.

Blood thinner Plavix' sales grew 2.2 percent to 529 million euros. Product sales growth are on a currency-neutral basis.

The worldwide presence of Aprovel dropped 11.1 percent to 421 million euros, reflecting the growing penetration of losartan generics.

Sales from vaccines segment dropped to 818 million euros from 890 million euros, reflecting the impact of early supply of seasonal influenza vaccines in the third quarter in the U.S.

For the year 2011, net income attributable to equity holders grew to 5.69 billion euros or 4.31 euros per share from 5.47 billion euros or 4.19 euros per share in the previous year. Net sales advanced to 33.39 billion euros from 32.37 billion euros.

The drugmaker announced a proposed dividend of 2.65 euros per share, corresponding to a payout ratio of 40 percent.

Looking ahead, Sanofi expects the loss of patent exclusivity for Plavix and hypertension drug Avapro in the U.S. to impact business net income in 2012 by around 1.4 billion euros. Considering this impact, the performance of growth platforms and contribution from Genzyme, among others, business earnings per share are seen dropping 12 to 15 percent from 2011 at constant exchange rates.

Sanofi said this objective is in-line with the mid-term plan presented last September for a return to growth over 2012-2015, adding that production recovery is well underway at Genzyme.

Sanofi's Chief Executive Officer, Christopher Viehbacher said, "Beyond the remaining patent cliff in 2012, the robust performance of our diversified growth platforms, the reduced exposure to future patent expiries and progress on R&D, position Sanofi for a period of sustainable growth."

The stock closed on Tuesday in Paris higher by 1.30 percent at 56.53 euros on a volume of 2.8 million shares.

by RTTNews Staff Writer

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