sanofi-aventis raises FY07 guidance despite setbacks

French pharmaceutical giant, sanofi-aventis (S-A) has raised its FY07 adjusted EPS growth guidance from six to nine per cent, based on Q1 FY07 results.

Barring major adverse events, such as major adverse events on anti-thrombotics Lovenox (enoxaparin) and Plavix (clopidogrel) in the US, S-A expects a growth in FY07 in the range of nine per cent, up from its original prediction of six per cent. The estimate was calculated using a rate of EUR 1.00 to USD 1.25, despite the end of patent protection for insomnia treatment Ambien IR (zolpidem) in the US in April 2007 and the arrival of generic competition for chemotherapy treatment Eloxatin (oxaliplatin) in the EU. Sensitivity to the EUR/ USD exchange rate is estimated at 0.6 per cent of growth for a USD 0.01 movement.

For Q1 FY07, net sales were EUR 7.2bn, up 6.9 per cent on Q1 FY06. Net sales growth for the pharmaceuticals arm was 6.2 per cent, in line with the Q4 FY06 growth rate. Operating income increased 12.4 per cent, while an 11 per cent growth in adjusted EPS excluding was recorded, resting at EUR 1.41, compared with EUR 1.27 for Q1 2006.

Q1 FY07 net sales of other pharmaceutical products fell 1.8 per cent to EUR 2.1bn, compared with EUR 2.2bn in 2006. Net sales of the antibiotic Ketek (telithromycin) halved year-on-year to rest at EUR 30m, from EUR 59m in Q1 FY06, due to restrictions on the indications for the product.

Table 1: Net sales of major drugs (Q1 FY07)

Healthcare reforms in Europe, which were introduced by Germany and France during 2006, continued to depress sales in the region. Germany reported a sharp fall, as parallel imports of Plavix and Lovenox continued. France also experienced negative growth, but was helped by winter diseases.

The introduction of Eloxatin generics across the EU accounted for the one per cent drop for total EU sales. The US is now S-Aís highest growth region in terms of sales, with strong sales of Ambien/ Ambien CR, Lantus (insulin glargine) and vaccines.

Table 2: Regional net sales (Q1 FY07)

In Q1 FY07, adjusted net income fell 2.6 per cent to rest at EUR 2.1bn, while adjusted net earnings per share was EUR 1.57, 3.1 per cent lower than the Q1 FY06 figure of EUR 1.62, based on the number of outstanding shares of approximately 1,351.1m in Q1 FY07 and 1,344.4m in Q1 FY06. Net debt, which was EUR 5.8bn at the end of FY06, stood at EUR 4bn as of 31 March 2007.