Sanofi’s Growth Drivers for 1Q16
What Drives Sanofi’s Valuation?
Sanofi’s growth rate
Sanofi (SNY) achieved ~0.7% growth in revenues at constant exchange rates in 1Q16 as compared to 1Q15. The company reported revenues of ~8.5 billion euros, which is ~1.9% lower than its 1Q15 revenues of ~8.7 billion euros.
Reorganization of the group
Sanofi’s business was reorganized effective January 1, 2016, and now consists of five business units:
Sanofi Genzyme, the specialty care business including rare diseases and oncology
Diabetes and Cardiovascular
Generic Medicines and Emerging Markets, including pharmaceutical sales for emerging markets
Sanofi Pasteur, the human vaccines business
Merial, the animal health business
Segment-wise performance 1Q16
Sanofi’s business is organized into three business segments:
Pharmaceuticals segment: Sanofi Genzyme, Diabetes and Cardiovascular Franchise, Established Pharmaceuticals, Consumer Healthcare, and Generics
Human Vaccines segment: Sanofi Pasteur
Animal Health segment: Merial
The Pharmaceuticals segment’s revenues decreased by 1.4% at constant exchange rates to ~7.2 billion euros in 1Q16, as compared to 1Q15. This segment is classified further into different franchiseS: Genzyme, Diabetes and Cardiovascular, Consumer Healthcare (or CHC), Generics, and Established Prescription Products.
The increase in revenues from Genzyme and Generics was more than offset by a decline in revenues for Established Products, Diabetes and Cardiovascular Products, and Consumer Healthcare Products.
Sanofi Pasteur’s revenues increased by 8.2% at constant exchange rates to 625 million euros. This was mainly driven by increased sales of meningitis vaccines, as well as polio, pertussis, and Hib vaccines, which was partially offset by adult booster vaccines.
Merial, the Animal Health segment, reported a double-digit growth of 17.5% at constant exchange rates to 760 million euros in 1Q16. This was driven by NexGard, a flea and tick product for dogs.
To diffuse any company-specific risk, investors can consider the First Trust Value Line Dividend ETF (FVD), which holds 0.5% of its total assets in Sanofi, or the VanEck Vectors Pharmaceutical ETF (PPH), which holds 5.4% of its assets in Sanofi.
PPH also holds 5.6% of its total assets in Pfizer (PFE), 5.5% in Bristol-Myers Squibb (BMY), 5.3% in Johnson & Johnson (JNJ), and 5.1% in Novo Nordisk (NVO).
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