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Sanofi Q4 Profit Plunges, Sees Flat To Lower Earnings In FY13

2/7/2013 3:35 AM ET

French drug major Sanofi SA (SNY: Quote,SNYNF.PK) reported Thursday a sharp decline in fourth-quarter profit, hurt by margin pressure and lower pharmaceutical sales that reflected generic competition and EU austerity measures, among others. Looking ahead, the company said its first half of 2013 will be hit by patent expirations, while it expects to resume growth in the second half driven primarily by continued strong performance from growth platforms. Sanofi shares declined around 4% in Paris.

For fiscal 2013, the company projects business earnings per share flat to 5 percent lower than last year at constant exchange rates. The company added that it is on track to meet 2012-2015 objectives for sustainable growth.

Chief Executive Officer Christopher Viehbacher stated that the year 2012 was a turning point for Sanofi with the loss of exclusivity in the U.S. for several significant legacy drugs, including blood thinner Plavix and blood pressure drug Avapro.

In its fourth quarter, net income attributable to equity holders of Sanofi was 410 million euros or 0.31 euros per share, a decline of 71.5 percent from last year's 1.44 billion euros or 1.08 euros per share.

Business net income for the quarter, which excluded certain items, declined 24 percent to 1.57 billion euros or 1.19 cents per share.

Net sales, however, edged up 0.2 percent to 8.53 billion euros as exchange rate movements had a positive effect of 1.9 percentage points. At constant exchange rates, net sales dropped 1.7 percent.

Revenues from vaccines and animal health divisions improved 24.2 percent and 7.7 percent, respectively. This was partially offset by lower pharmaceutical sales that reflected generic competition, EU austerity measures, the loss of sales of Copaxone and the disposal of Dermik.

Plavix's sales were down 68.8 percent reflecting generic competition in the U.S., following the loss of exclusivity on May 17 last year, despite growth in emerging markets.

The worldwide presence of Aprovel/Avalide decreased 41.7 percent due to generic competition in the U.S. and Europe, and sales of Lovenox fell on generic pressure in the U.S.

Sanofi noted that the sales of its growth platforms increased 11.5 percent, with growth exceeding 20 percent for Vaccines, Diabetes, 'new Genzyme' and 'Other Innovative Products.'

In the quarter, gross margin dropped to 67.9 percent from 72.9 percent last year. For fiscal 2012, Sanofi's business net income dropped 7 percent to 8.18 billion euros or 6.20 euros. Annual net sales increased 4.7 percent to 34.95 billion euros.

Further, the company proposed a dividend of 2.77 euros per share.

In addition, Sanofi said it is on track to deliver its cost savings program of 2 billion euros by 2015. In 2013, Sanofi targets at least 500 million euros of savings.

Looking ahead, the company said the loss of exclusivity in the U.S. would impact first-half business net income by about 800 million euros at constant exchange rates.

In Paris, Sanofi shares are currently trading at 66.69 euros, down 2.68 euros or 3.86 percent.

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by RTT Staff Writer

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