Can New Launches Offset Sanofi's Soft Diabetes Business?
Sanofi (SNY) provided an update on its pipeline and upcoming product launches. The company expects to add up to 18 new products to its portfolio within the next seven years (between 2014 and 2020). These products are expected to generate cumulative sales of over €30 billion in the first five years on the market. Sanofi has launched 10 products between 2007 and 2013.
Sanofi intends to add three new products to its diabetes portfolio – Toujeo, Afrezza and Lixilan - by 2020. Toujeo, an investigational basal insulin, is under review in the U.S. and EU with decisions expected in the first and second quarter of 2015, respectively. Afrezza, an inhaled insulin therapy for adults suffering from type I and II diabetes, will be launched next year in the U.S. Meanwhile, Sanofi is evaluating LixiLan in a phase III program for type II diabetes with a regulatory submission expected in the U.S. by the end of 2015.
We note that Sanofi’s diabetes segment is one of its largest revenue contributors. However, the segment is under pressure with 2015 sales expected to remain flat. The company raised concerns regarding Lantus sales in 2015 which will be under pressure due to competitive pricing. We remind investors that Lantus is one of the largest selling products at Sanofi contributing around €4.6 billion to sales in the first nine months of 2014.
Apart from its diabetes launches, the company also plans to launch Gaucher disease treatment, Cerdelga, soon in the U.S. The drug is currently under review in the EU with an opinion from the Committee for Medicinal Products for Human Use (CHMP) expected by year end. Sanofi also expects to launch recently approved multiple sclerosis treatment, Lemtrada, in the U.S. in 2015.
Additionally, Sanofi plans to launch products in its cardiovascular (Praluent to be submitted in the U.S. and EU by year end), Vaccines (a dengue vaccine to be filed in 2015) and Immunology & Inflammation (sarilumab and dupilumab) portfolios.
Both sarilumab and dupilumab are being developed in collaboration with Regeneron Pharmaceuticals, Inc. (REGN). Dupilumab was recently granted Breakthrough Therapy designation by the FDA for the treatment of adults suffering from moderate-to-severe atopic dermatitis not adequately controlled with topical prescription therapy and/or for whom these treatments are not appropriate.
Sanofi currently has 14 candidates in its pipeline that are either in late-stage development or under regulatory review out of which 7 are vaccines and the rest are new molecular entities (NMEs). In addition to that it has 32 early- and mid-stage candidates including vaccines and NMEs.
The company expects its diabetes segment to remain under pressure till 2018. With many late-stage candidates having limited sales potential it will be interesting to see whether Sanofi will be able to offset its Diabetes segment loss with new product launches.
Sanofi carries a Zacks Rank #5 (Strong Sell). Some better-ranked companies in the health care space are Allergan (AGN) and AbbVie Inc. (ABBV). While Allergan holds a Zacks Rank #1 (Strong Buy), AbbVie carries a Zacks Rank #2 (Buy).
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