Sanofi is facing investor discontent as its CEO, Paul Hudson, unveiled the latest chapter in the “Play to Win” strategy alongside the release of third-quarter earnings. The company reported third-quarter sales of €11.96 billion, falling short of consensus estimates of €12.09 billion. The stock price of Sanofi plummeted nearly 20%, with analysts suggesting the timing of the plan was unfavorable.
Despite the disappointment in earnings, Sanofi’s revenues were buoyed by specialty care and vaccines, showing growth of 13.5% to €4.6 billion and a 0.6% decline to €3.1 billion, respectively. The immunology star Dupixent contributed significantly to specialty care revenues, generating €2.85 billion during the quarter. Sanofi’s new hemophilia A therapy, Altuviiio, also performed well, mitigating the impact of Aubagio generics in the U.S. On the immunization front, the company’s flu vaccine business suffered due to low shot uptake, although the new RSV antibody for infants, Beyfortus, managed to generate €137 million shortly after its launch.
The “Play to Win” update includes plans to spin off Sanofi’s consumer healthcare business, potentially in the fourth quarter of next year, following a trend in the industry with similar moves by GSK and Johnson & Johnson. Additionally, Sanofi intends to implement cost-cutting measures to save up to €2 billion from 2024 through the end of 2025, focusing on R&D investments and optimizing the performance of approved drugs.
Specifically, Sanofi plans to save around €700 million by prioritizing best- or first-in-class pipeline assets and reallocating pipeline resources from oncology to immunology. The company reemphasized its 2023 guidance and indicated expectations for the next two years, with mid-single-digit business earnings per share (EPS) growth anticipated for this year and the next. Sanofi is maintaining its commitment to achieving more than €22 billion in immunology sales and more than €10 billion in vaccine sales by 2030.
Despite these plans, analysts at ODDO BHF expressed their surprise at the timing of the announcements and noted that the company’s share price was likely to be under pressure. Many questions from investors regarding Sanofi’s pipeline and R&D investment rationale were deferred, with further details expected during an upcoming R&D Day scheduled for December 7. This event marks approximately four years since the initiation of Paul Hudson’s strategic changes at Sanofi.
