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Sanofi’s Consumer Healthcare Expected to Be Long-Term Driver

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Consumer Healthcare

In 2Q17, Sanofi’s (SNY) Consumer Healthcare business reported revenues of 1.2 billion euros, which is a 42.5% YoY rise on a CER (constant exchange rate) basis and a YoY fall of 0.10% on a CER and CS (constant structure) basis. In the first half of 2017, Consumer Healthcare earned revenues of 2.5 billion euros, which is a YoY rise of 42.6% on a CER basis and a 2.4% YoY rise on a CER and CS basis. The performance of this business was muted in 2Q17 due to the early and short cough and cold season in Europe. While this seasonal trend benefited the company’s performance in 1Q17, it did so at the expense of 2Q17 revenues.

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Sanofi had Consumer Healthcare sales of 308.0 million euros in Europe in 2Q17, which is a 7.8% fall on a CER and CS basis. It reported revenues of 293.0 million euros from the US market in 2Q17, which is a 2.5% YoY rise on a CER and CS basis. The performance was mainly driven by a robust uptake of pain and allergy drugs such as Allegra and the recently launched Xyzal Allergy 24HR (24-hour), partially offset by reduced sales of the digestive drug Zantac due to retailers delisting DUO fusions.[1. DUO fusions are drugs that act in two different ways.] The company reported Consumer Healthcare sales of 401.0 million euros, which is a YoY rise of 4.6% on a CS basis, mainly due to increasing demand in Russia.

Sanofi makes up 0.51% of the First Trust Value Line Dividend ETF’s (FVD) portfolio holdings.

Growth projections

Sanofi expects to accelerate the integration of Boehringer Ingelheim’s Consumer Healthcare business and recognize about 95.0% of the acquired Consumer Healthcare business sales by the end of 2017. The consolidation of its Consumer Healthcare business will enable Sanofi to compete more effectively with peers GlaxoSmithKline (GSK), Perrigo (PRGO), and Mylan (MYL).

Sanofi has projected a 4.0%–5.0% long-term annual growth rate for its Consumer Healthcare business. The company, however, anticipates variability in revenues due to seasonal factors that affect conditions such as coughs, colds, allergies, and pain. However, the company is confident that its strong position in emerging markets will help it offset most of the challenges in Consumer Healthcare.

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