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Late October, Sanofi provided a comprehensive update regarding its Play to Win strategy, continuing to focus on executing transformative medicine and vaccines launches, driving agile and efficient resource deployment and enhancing R&D productivity.
The strategy came into being after Sanofi outlined disappointing third quarter earnings and a near-term outlook. In the third quarter, revenue and per-share earnings were below analyst forecasts, declining from the same period a year prior. Executives forecast continued earnings declines in 2024 due to higher tax rates.
As a result of changes to global tax regulations, Sanofi’s effective tax rate is expected to increase from 19% in 2023 to 21% in 2024. Due to the increased R&D investment, Sanofi expects 2024 Business EPS to remain roughly stable to 2023 levels excluding the impact of the expected tax rate change, and therefore decline low-single digits including the higher expected tax rate.
In 2025, Sanofi expects a strong rebound in business EPS growth, driven by continued sales growth supported by its leading franchises, the full benefit from planned efficiency initiatives, and its expectation of relatively stable R&D expenses year on year.
To counteract, Sanofi plans to increase investments in its pipeline to fully realize long-term growth potential, bolstered by successful launches and R&D progress.
To that end, Sanofi unveiled plans to increase its R&D investments to fully realize its pipeline potential, drive long-term growth and enhance shareholder value.
“We have made tremendous progress on our Play to Win strategy by bringing new and transformative products to market and building an industry-leading immunology pipeline, evidenced by our recent, strong flow of positive R&D data readouts. In this new chapter of our strategy, we are deepening our investment in R&D, taking steps toward becoming a pure play biopharma company, and further optimizing our cost structure. This will help us accelerate innovation and strengthen our growth drivers, while ensuring long-term profitability and enhancing shareholder value. We are excited to build on the success of our strategy and confident in the long-term value our investments will generate for all Sanofi stakeholders,” Paul Hudson, CEO of Sanofi, said.
Sanofi’s multi-year Play to Win strategy, which focused on growth, innovation, and efficiency, has positioned Sanofi for long-term success and achieved significant progress since 2019, including:
Given Sanofi’s decision to support the full realization of its pipeline’s long-term potential, its continued investment around the new launches, as well as pricing headwinds in General Medicines, the Company will no longer target a 32% BOI4 margin for 2025 while maintaining a focus on long-term profitability. The company reiterates its goal to generate over €22 billion in sales in immunology, and over €10 billion in sales in vaccines by 2030.
Vaccines have been lucrative for the company, back in 2021 the U.S. Food and Drug Administration (FDA) Center for Biologics Evaluation and Research approving to Sanofi Pasteur, the vaccines global business unit of Sanofi, an additional influenza manufacturing facility located in Swiftwater, PA.
Sanofi’s strategic mission is to transform the practice of medicine through breakthrough science that improves people’s lives. To that end, the Company is accelerating its R&D investments to deliver high-value innovation. In an effort to keep with the overall pharma trend to move away from over-the-counter products and focus on higher-profit novel medicines, Sanofi has announced last spring its plans to acquire the biotech firm Provention Bio for a staggering $2.9 billion. The move was supposed to help Sanofi regain its dominant position in the lucrative U.S. diabetes market and bolster its medication pipeline after a series of setbacks.
These further investments will strengthen and sustain the Company’s long-term trajectory of profitable growth by fueling existing or new clinical development.
As previously announced, Sanofi will host an R&D Day for investors in New York City on December 7, 2023, where the Company will provide further insights into its pipeline and new growth avenues. The meeting will include presentations from Sanofi’s new Head of R&D, Houman Ashrafian, as well as key members from the research and development teams.
“This is an exciting and important moment for Sanofi’s R&D journey, as we double down on our investments from a position of strength in order to unlock our pipeline’s full potential. Our investments will follow Sanofi’s strategy of transforming medicine through breakthrough science, enabling greater access to medicines and vaccines that benefit the patients and communities we serve”, Houman Ashrafian, Head of Research and Development at Sanofi, said.
Sanofi announced new steps to further its ongoing effort to improve its cost structure, launching efficiency initiatives across the Biopharma business that will free operational resources to support the accelerated R&D investments and unlock value-creation opportunities. This will include prioritizing its investments in R&D and modernizing its approach to commercial delivery. Sanofi is targeting savings of a total of up to €2 billion from 2024 to the end of 2025, of which most will be reallocated to fund innovation and growth drivers.
Following the announcement in December 2019 of the creation of a standalone Global Business Unit, Sanofi’s Consumer Healthcare (“CHC”) has grown into a leading consumer healthcare platform with a presence in 150 countries and over 11,000 employees, dedicated resources in R&D, manufacturing, information technology as well as its distinct sustainability roadmap.
Sanofi announces its intention to separate the CHC Business as it increases its focus on innovative medicines and vaccines. The intended separation will seek to create two entities, each better equipped to pursue its own business strategy, resourcing and capital allocation and enabling each to focus on long-term growth in its respective markets. Sanofi believes that the separation will unlock further opportunities for CHC to leverage its portfolio of leading brands and continue to drive growth and shareholder value. Sanofi is reviewing potential separation scenarios, but believes that the most likely path would be through a capital markets transaction, by creating a listed entity headquartered in France.