Sanofi's Q1 2019 Growth Driven by Rare Diseases and Vaccines Amid Intensifying Competition in Hemophilia from Roche

French pharmaceutical company Sanofi has always been subject to the United StatesDiabetesOne of the pharmaceutical companies most severely affected by drug pricing pressures, yet market competition extends beyondDiabetesDrugs. The immense competitive pressure also had a significant impact on the substantial assets involved in Sanofi’s $11.6 billion acquisition of Bioverativ.

In a report to clients, ODDO BHF analysts highlighted the market competition currently faced by Sanofi. The company’s hemophilia A drug Eloctate (recombinant antihemophilic factor Fc fusion protein) generated €174 million in sales in the first quarter, falling short of the market expectation of €204 million. The 14.7% growth in sales was primarily driven by a 4.2% year-on-year decline in first-quarter U.S. sales of Roche’s new hemophilia A drug Hemlibra (emicizumab-kxwh). Nevertheless, the threat posed by Hemlibra should not be underestimated.

In October 2018, Hemlibra was approved for the treatment of patients with hemophilia A without factor VIII inhibitors, significantly expanding its indications. The drug is also considered a competitor challenging Eloctate and other hemophilia A therapies. Due to its more favorable efficacy outcomes and convenient subcutaneous administration regimen, analysts project that Hemlibra’s sales will reach $2 billion or more by 2025.

In 2018, Sanofi announced its $11.6 billion acquisition of Bioverativ, a U.S.-based hemophilia specialist, marking Sanofi’s largest deal in recent years and playing a pivotal role in strengthening its capabilities in rare disease therapeutics. The transaction is widely regarded as a key strategic move by Sanofi to shift its focus from reliance on primary care businesses toward the development of rare disease treatments.

But Sanofi CEO Olivier Brandicourt, on Friday (April 28), during the first-quarter earnings conference callMeetingRather than dwelling on the long-term future prospects of Eloctate, the focus has shifted to BIVV001, a drug for severe hemophilia A. BIVV001 is a next-generation factor VIII replacement therapy that has recently yielded positive clinical trial data.

Fortunately for Sanofi, despite Eloctate’s first-quarter sales falling short of expectations and a 17% decline in primary care business revenue, the company achieved overall growth in the first quarter, driven by strong performance in its rare diseases and vaccines divisions.

Genzyme, the rare disease subsidiary, and Sanofi Pasteur, the vaccine subsidiary, saw their revenues increase by 31% and 20%, respectively. Sales for each of the company’s vaccine categories rose during this period, reaching €873 million, which exceeded prior market expectations by 12.5%. Globally, the vaccine business will be a key focus area for Sanofi to drive future growth. According to the performance report, Sanofi’s vaccine business generated approximately RMB 38.609 billion in revenue in 2018, representing a 2.4% year-on-year increase. In addition to its own products, Sanofi’s vaccine division also benefited fromGlaxoSmithKlineDriven by the successful launch of the shingles vaccine Shingrix. Sanofi’s vaccine distribution company, VaxServe, achieved sales of €241 million this quarter, a 32% increase, partly due toGlaxoSmithKlineThe Launch of Shingrix.

InImmunologyDivision, Genzyme's atopic dermatitis drugs andAsthmaDupixent continues to gain momentum, with sales reaching €329 million and meeting the previously expected 6% growth rate. The company is seeking to expand the drug’s label to include another indication for the treatment of nasal polyps, with Sanofi stating that the study is in its early stages.

Sanofi’s Q1 2019 financial results, released on April 28, showed sales revenue of €8.391 billion, a year-on-year increase of 6.2%; net profit amounted to €1.137 billion, representing an 11.9% growth. In China, Sanofi’s business also grew by 22%, providing another dimension of momentum to its performance. DespiteDiabetesRevenue declined by 7%, but the downturn in this market appears to be a long-term trend in the sector. “Based on our first-quarter performance, despite challenging industry dynamics, we are confident in the growth prospects for our business for the remainder of the year,” said Brandicourt.

At last Friday’s meeting, Sanofi announced that it is adapting to the pressure from declining primary care pharmaceutical sales by focusing on new products and emerging markets, while striving to reduce operational costs. Brandicourt stated that Sanofi is “pulling all the levers” to cut costs and boost profitability, including implementing early retirement programs for employees in France and Germany. The company recently also announced layoffs in its U.S. primary care sales force, though specific figures were not disclosed.BioValleyBioon.com）