Sanofi Shares Plummet after Diabetes Drug Warning
In today’s trading, French drug maker Sanofi (NYSE: SNY) witnessed a plunge in stock price after a decline in quarterly earnings was reported but also after a warning of pricing pressure on its US blockbuster diabetes treatment.
Shares declined 8.4% to $96.97, surrendering gains prior to the announcement. Net profit also slipped by 2.4% in the third quarter, this as the drug maker of the Lantus diabetes treatment experienced a higher charge in relation to restructuring of its French operations.
Net profit of roughly $1.4 billion was reported in the third quarter, which was down from $1.5 billion in the same quarter last year. Also included in the latest 2014 quarter was restructuring costs of $207 million.
In a statement from Christopher Viehbacher, Sanofi’s Chief Executive, the pricing pressure on Lantus in the US market could continue to hinder 2015 sales growth. In the quarter, sales of Lantus, as well as other diabetes treatments climbed 8.3% at constant exchange rates, a noted slowing from double digit growth reported in the prior quarter.
Viehbacker also said that overall sales increased 4.1% to $11 billion in the quarter thanks to growth in Latin America, Asia, and the United States, adding the target for annual earnings growth is between 6% and 8%.
During Viehbacher’s nearly six years as Chief Executive Officer, shares have more than doubled, costs have been cut, and focus shifted to biotechnology, animal health, vaccines, and over-the-counter medications.
In 2011, Sanofi bought US biotech firm Genzyme for over $20 billion and more recently, tried to offload several of its older off-patent drugs experiencing declining sales.
Speculation has come from a number of French newspapers that believe a rift between Viehbacher and other Sanofi board members regarding strategy could exist. However, when questioned about Viehbacher being replaced as a board member, the company denied such action was planned.
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