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Sanofi warns of ailing profits during two-year revamp

Sanofi warns of ailing profits during two-year revamp

Paris: French pharmaceuticals giant Sanofi said that profits would stagnate for the next two years, prompting a heavy sell-off of its shares on the Paris stock exchange.

The profit warning came alongside an announcement of a major restructuring drive for the drugs company, which includes streamlining its product portfolio and a possible spin-off of its animal-health division.

Sanofi said it expects “no significant growth” in net earnings per share in 2016 and 2017.

In early Paris bourse trading, Sanofi shares reacted with a 4.7-percent fall to 88.95 euros.

Sanofi said its portfolio revamp was to yield 1.5 billion euros ($1.63 billion) in savings by 2018, most of which would be reinvested in the launch of new drugs.

“The group’s businesses will remain diversified but with a portfolio that is focused on areas where we can be leaders,” Sanofi director-general Olivier Brandicourt said in a statement.

Sanofi plans to launch 18 new products over 5 years, including six major drugs — Toujeo, Praluent, Dengvaxia, sarilumab, LixiLan and dupilumab — which alone could generate 12 to 14 billion of euros of sales over the next decade, Sanofi said.

A massive increase in research and development costs was to accompany the launches, thus placing Sanofi on a “sustainable growth trajectory over the long term”, Brandicourt said.

Sanofi said it may also seek takeover targets and could spin off its animal-health unit Merial because the subsidiary’s synergies with the rest of the group were “limited”.

Sanofi posted a 37-percent increase in net profit for the third quarter to 1.6 billion euros.

In its latest Global Innovation rankings, consulting firm pwc declared Sanofi to be France’s most innovative company.

Source: AFP
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