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Sanofi shares dip as 1Q earnings hit by loss of patent protection for blockbuster diabetes drug

Last updated: 11:10 27 Apr 2018 EDT, First published: 06:10 27 Apr 2018 EDT

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The weaker dollar hit earnings in the first-quarter and Sanofi expects that to continue throughout the year

French pharma giant Sanofi SA (NYSE:SNY) disappointed with its first-quarter earnings on Friday as its diabetes division continued to struggle.

Net sales fell 8.7% on a reported basis to €7.9bn in the first three months of the year, dragged lower by a weaker dollar, while net income slumped to US$1.0bn.

Wall Street analysts had been looking for income of €1.4bn and sales of €7.9bn.

Sanofi’s results were impacted by a poor performance from its diabetes division after its blockbuster drug, Lantus, lost patent protection in the US and is now coming under pressure from cheaper generics.

To fill that revenue gap, the company has been spending heavily on acquisitions over the past year or so, snapping up biotech firms Bioverativ for US$11.6bn (€8.4bn) and Ablynx for €3.9bn.

“In the first quarter, the performance of our global operations, coupled with disciplined expense management, allowed us to manage the impact of the losses of exclusivity for Lantus and sevelamer in the US,” said chief executive Olivier Brandcourt.

“Furthermore, with the consolidation of Bioverativ and the acquisition of Ablynx, we have established the foundation for a global Rare Blood Disorder franchise which will further enhance our leadership in Specialty Care.

He added: “Importantly, we continue to execute on our business priorities and position the Company for a new period of growth which is expected to begin in the second half of 2018.”

Sanofi confirmed its full-year expectations and expects earnings per share to grow between 2-5% at constant exchange rates.

However, it did flag a possible 7% hit to earnings from currency movements this year.

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