By Ludwig Burger
(Reuters) -Sanofi forecast moderate earnings growth that undershot expectations, saying demand for bestselling asthma and eczema drug Dupixent would be partly offset by competition for its multiple sclerosis pill Aubagio and product launch costs.
The Paris-based drugmaker said on Friday it expected 2023 adjusted earnings per share to grow by a "low single digit" percentage, not taking into account an expected negative currency impact of between 3.5% and 4.5%.
Aubagio, with 2 billion euros ($2.2 billion) in sales last year, will face competition from cheaper products over the next few months after losing patent protection, Sanofi (EPA:SASY) said.
Sanofi shares were down 3% at 1107 GMT, having earlier fallen as much as 5.2% to their lowest since mid-November with JP Morgan analysts saying investors had expected a better 2023 outlook and a more benign view on foreign exchange headwinds.
The company reaffirmed its target to achieve sales of Dupixent, jointly developed with Regeneron, of 10 billion euros this year, up more than 20% from 8.29 billion euros in 2022.
"The results today were mixed and there's still the impression that Sanofi has a relatively weak development pipeline," said Markus Manns, portfolio manager at Germany-based Union Investment, which holds Sanofi stock.
Sanofi shares have yet to recover from a plunge in August following disappointing trial results of a once-promising breast cancer drug candidate put the strength of its development pipeline in doubt. Legal claims that heartburn drug Zantac caused cancer have also weighed on the stock.
Analysts have said that this year's expected market debut of two new products, to balance out reliance on Dupixent, would be important tests of the company's marketing prowess and a chance to regain investor confidence.
These products are haemophilia A treatment Altuviiio, requiring fewer injections than standard therapy, and Beyfortus from a partnership with AstraZeneca (NASDAQ:AZN), which is a preventive once-a-year shot against the common RSV airways infection in infants.
But for this year, marketing and sales expenses to boost those launches would drag earnings lower, finance chief Jean-Baptiste de Chatillon said in a media briefing.
'HOME-GROWN INNOVATION'
Chief Executive Paul Hudson pushed back when asked in a press conference whether Sanofi was too dependant on Dupixent.
"When you don’t have a mega-blockbuster people say: don’t you need a mega-blockbuster to be a success?" he said, adding the intellectual property on the product with multiple uses was protected beyond 2031.
"We understand the requirement to be ready for the 2030s and beyond and we’d like to see more of our own home-grown innovation accelerate," said Hudson. But he added that three to five drug candidates with peak annual sales potential above 1 billion euros were in the pipeline over the next six years.
Sanofi reported a 20.7% rise in fourth-quarter business operating income, or adjusted earnings before interest and tax, to 2.72 billion euros ($2.96 billion), edging past an average analyst estimate of 2.69 billion euros posted on the company's website.
Revenue from Dupixent surged 42% to 2.4 billion euros during the quarter ended Dec. 31, slightly above a consensus of 2.37 billion euros.
The French drugmaker has forecast that Dupixent would generate up to 13 billion euros in sales in its best year as it seeks to widen its use across a number of inflammatory conditions.
Investors are expecting even more on average, partly on hopes that the injection will also succeed in a trial on smoker's lung, or COPD, a common disease that the company has so far excluded from its sales target.
"The Altuviiio launch is expected to be relatively strong but the market overall will for now wait for as-yet uncertain COPD trial data on Dupixent," said mutual fund manager Manns.
Analysts expect the study result to be published during the first half.
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