赛诺菲(SNY) - 2023 Q3 - Quarterly Report

Q3 2023 Performance Highlights Overall Performance In Q3 2023, Sanofi achieved robust performance driven by strong growth in Specialty Care and new products (Beyfortus®, ALTUVIIIO®), with sales increasing 3.2% at constant exchange rates (CER) despite a 2.1% decline in Business EPS, while reaffirming its full-year 2023 Business EPS guidance Key Financial Indicators for Q3 and 9M 2023 | Indicator | Q3 2023 | Reported Change | CER Change | 9M 2023 | Reported Change | CER Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | IFRS Reported Net Sales | €11,964 million | -4.1% | +3.2% | €32,151 million | -0.4% | +3.9% | | IFRS Reported Net Income | €2,525 million | +21.6% | — | €5,955 million | +13.2% | — | | IFRS Reported EPS | €2.01 | +21.1% | — | €4.76 | +13.3% | — | | Business Operating Income | €4,028 million | -10.4% | -1.0% | €10,087 million | -2.2% | +4.1% | | Business Net Income | €3,196 million | -11.4% | -1.9% | €8,072 million | -1.6% | +4.8% | | Business EPS | €2.55 | -11.5% | -2.1% | €6.45 | -1.5% | +4.9% | | Free Cash Flow | €1,853 million | -31.2% | — | €4,982 million | -16.1% | — | - CEO Paul Hudson highlighted Dupixent®'s continued strong performance, the anticipated launch of Beyfortus®, and robust uptake of ALTUVIIIO® in the hemophilia market as key growth drivers this quarter, reflecting the company's strategy execution for sustainable growth through innovative medicines[4] - The company reaffirmed its full-year 2023 Business EPS guidance, expecting mid-single-digit growth at constant exchange rates, which includes an anticipated one-time COVID-19 vaccine revenue of approximately €400 million in Q4[3] Business Unit Highlights Specialty Care was the primary growth engine, increasing 13.5% year-over-year, with Dupixent® sales surging 32.8%, while Vaccines remained stable due to Beyfortus® offsetting flu vaccine declines, and General Medicines core assets along with Consumer Healthcare also saw moderate growth - Specialty Care: Grew 13.5%, primarily driven by Dupixent® (€2.847 billion, +32.8%) and ALTUVIIIO®, offsetting generic competition for Aubagio® in the US - Vaccines: Sales remained stable (-0.6%), with the strong launch of Beyfortus® offsetting declining flu vaccine sales - General Medicines: Core assets grew 3.1%, but were impacted by declines in non-core assets like Lantus® (-32.9%) - Consumer Healthcare (CHC): Sales increased 4.6%, mainly driven by Digestive Health and Allergy products[2] Strategic Update: Next Chapter of Play to Win Strategy Strategic Initiatives Sanofi announced the next phase of its "Play to Win" strategy, focusing on increased R&D investment for long-term growth, implementing strategic cost savings to reinvest in innovation, and a significant plan to spin off its Consumer Healthcare (CHC) business into a separate, France-headquartered listed company as early as Q4 2024 - Increased Innovation Investment: Boosting R&D pipeline investment to fully realize long-term growth potential - Cost Optimization: Launching a strategic cost-saving plan, with most savings reinvested into innovation and growth drivers - Consumer Healthcare Spin-off: Announcing plans to spin off the Consumer Healthcare business into an independent listed company as early as Q4 2024 - Reaffirmed Capital Allocation & Guidance: Reaffirming capital allocation policy and 2023 Business EPS growth target, while providing preliminary outlooks for 2024 and 2025[10] Overall Financial Performance Sales Performance by Region Total sales in Q3 2023 reached €11.964 billion, growing 3.2% at CER but declining 4.1% on a reported basis due to a 7.3 percentage point negative currency impact, with Rest of the World (+5.9%) and Europe (+4.5%) being key growth drivers, while the US market saw more moderate growth (+1.0%) Q3 and 9M 2023 Sales by Region | Region | Q3 2023 Sales (€ million) | CER Change | 9M 2023 Sales (€ million) | CER Change | | :--- | :--- | :--- | :--- | :--- | | US | 5,648 | +1.0% | 13,636 | +3.0% | | Europe | 2,707 | +4.5% | 7,741 | +5.6% | | Rest of the World | 3,609 | +5.9% | 10,774 | +4.1% | | of which: China | 728 | -2.5% | 2,268 | -3.8% | - US: Strong performance of Dupixent®, Nexviazyme®, and new launches Beyfortus® and ALTUVIIIO® partially offset generic competition for Aubagio®, and declining sales of Lantus® and flu vaccines - Europe: Growth driven by Dupixent®, Praluent®, and new launches Beyfortus® and Nexviadyme® - Rest of the World: Growth primarily driven by Dupixent®, General Medicines core assets, and Consumer Healthcare - China: Growth in Dupixent®, Praluent®, and Plavix® was offset by declining sales of Lantus®, Lovenox®, and Aprovel®[13] Business Operating Income (BOI) Q3 Business Operating Income (BOI) was €4.028 billion, a reported decrease of 10.4% and a 1.0% decline at CER, with the BOI margin decreasing to 33.7% (34.5% at CER), primarily impacted by exchange rates and operating costs - Q3 2023 BOI: Decreased 10.4% year-over-year to €4.028 billion; declined 1.0% at constant exchange rates[8] - Q3 2023 BOI Margin: Decreased 2.3 percentage points to 33.7%; declined 1.5 percentage points to 34.5% at constant exchange rates[8] Business Segment Performance Biopharma Q3 Biopharma sales grew 3.1% at CER to €10.719 billion, driven entirely by the strong performance of Specialty Care (+13.5%), particularly Dupixent®'s sustained high growth, while Vaccines sales remained stable (-0.6%) and General Medicines declined 6.6% - Q3 Biopharma sales increased 3.1% to €10.719 billion, primarily driven by Specialty Care (+13.5% growth), while Vaccines (-0.6%) and General Medicines (-6.6%) sales declined[14] - Q3 Biopharma Business Operating Income (BOI) decreased 11.2% to €3.748 billion (-2.0% at CER), with a margin of 35.0%[25] Specialty Care Specialty Care sales surged 13.5% (CER), primarily driven by Dupixent®'s exceptional performance, with sales growing 32.8% year-over-year to €2.847 billion, and new hemophilia A therapy ALTUVIIIO® contributing €46 million, strongly offsetting Aubagio®'s 60.5% sales decline due to US generic competition Key Specialty Care Product Sales Q3 2023 | Product | Sales (€ million) | CER Change | | :--- | :--- | :--- | | Dupixent® | 2,847 | +32.8% | | Aubagio® | 199 | -60.5% | | Fabrazyme® | 253 | +14.2% | | Nexviazyme® | 110 | +103.4% | | Sarclisa® | 97 | +34.2% | | ALTUVIIIO® | 46 | N/A | - Dupixent® maintained strong demand and growth across all approved indications and key markets (US, Europe, Rest of the World)[16] - Aubagio® sales significantly declined, primarily reflecting the impact of generic competition in the US market[16] General Medicines General Medicines sales declined 6.6% (CER), with core assets growing 3.1% driven by products like Praluent® (+44.6%) and Rezurock® (+48.3%), but non-core assets saw a 16.0% sales decrease, mainly due to a 32.9% drop in Lantus® sales and ongoing portfolio streamlining - The company completed its goal of reducing the non-core asset portfolio from approximately 300 to 100 products two years ahead of schedule, with plans to further reduce to approximately 85 by the end of 2025[18] Key General Medicines Product Sales Q3 2023 | Asset Category/Product | Sales (€ million) | CER Change | | :--- | :--- | :--- | | Total Core Assets | 1,512 | +3.1% | | Praluent® | 115 | +44.6% | | Rezurock® | 83 | +48.3% | | Lovenox® | 255 | -9.8% | | Toujeo® | 265 | -4.9% | | Total Non-Core Assets | 1,348 | -16.0% | | Lantus® | 343 | -32.9% | Vaccines Vaccines sales in Q3 were €3.098 billion, remaining largely stable (-0.6% CER), as the new RSV preventative Beyfortus® achieved €137 million in its first quarter with strong US and European demand, successfully offsetting a 6.2% decline in flu vaccine sales due to lower vaccination rates and increased competition Vaccine Product Sales Q3 2023 | Product Category | Sales (€ million) | CER Change | | :--- | :--- | :--- | | Flu Vaccines | 1,766 | -6.2% | | Polio/Pertussis/Hib Vaccines | 577 | -3.4% | | Beyfortus® | 137 | N/A | | Boosters | 185 | +10.1% | - Beyfortus® demonstrated strong initial performance with robust demand in "all-infant protection programs" in the US, Spain, and France[22] - Flu vaccine sales declined primarily due to a slight decrease in vaccination rates, increased competition in the US market, and shipment delays in the Rest of the World[22] Consumer Healthcare (CHC) Consumer Healthcare sales grew 4.6% at CER in Q3 to €1.245 billion, primarily driven by growth in Digestive Health (+8.0%) and Allergy (+14.1%) categories, with Europe and Rest of the World as key growth markets, though Business Operating Income was negatively impacted by exchange rates and cost inflation Consumer Healthcare Product Category Sales Q3 2023 | Product Category | Sales (€ million) | CER Change | | :--- | :--- | :--- | | Digestive Health | 366 | +8.0% | | Allergy | 176 | +14.1% | | Pain Care | 272 | +5.1% | | Cough & Cold | 131 | +7.9% | - The company completed the acquisition of US health and wellness brand Qunol on September 29, with its sales to be integrated into the Physical & Mental Wellness category[36] - Q3 CHC Business Operating Income decreased 15.7% (+0.9% at CER), with the margin falling from 25.9% to 22.8%, primarily due to exchange rates and cost of sales inflation[37] R&D Update Regulatory Update This quarter saw several significant regulatory achievements, including US FDA approval and CDC recommendation for Beyfortus® for RSV prevention in infants, approval of ALTUVIIIO® in Japan and Nexviazyme® in China, and FDA's priority review acceptance for Dupixent® in pediatric eosinophilic esophagitis (EoE) - The US FDA approved Beyfortus® (nirsevimab) for the prevention of respiratory syncytial virus (RSV) lower respiratory tract disease in neonates and infants[27] - The FDA accepted for priority review the supplemental Biologics License Application (sBLA) for Dupixent® to treat eosinophilic esophagitis (EoE) in children aged 1 to 11 years, with a target action date of January 31, 2024[27] - ALTUVIIIO® received marketing authorization in Japan for hemophilia A, and Nexviazyme® was approved in China for Pompe disease[31] Portfolio Update The R&D pipeline showed positive progress, with improved safety and efficacy in the Phase 3 interim analysis of fitusiran for hemophilia, and rilzabrutinib meeting its primary endpoint in Phase 2 for chronic spontaneous urticaria (CSU), while eclitasertib and alomfilimab development was terminated based on strategic adjustments - Phase 3 Progress: Fitusiran (siRNA therapy) showed improved safety with reduced thrombotic events and sustained protection in a Phase 3 open-label extension study for hemophilia treatment[29] - Phase 2 Progress: Rilzabrutinib (oral BTK inhibitor) met its primary endpoint in a Phase 2 study for chronic spontaneous urticaria (CSU) but did not meet the primary endpoint in the atopic dermatitis study[32] - Program Termination: The company decided to discontinue the development of eclitasertib (RIPK1 inhibitor) in cutaneous lupus erythematosus (CLE) and halt enrollment for alomfilimab (anti-ICOS mAb) in solid tumor patients[32] Corporate Social Responsibility (CSR) Update CSR Key Initiatives Sanofi continues its CSR advancements, delivering initial "Impact" branded affordable medicines to low-income countries via its Global Health Unit (GHU), inaugurating a new photovoltaic park at its Aramon site in France towards 2030 carbon neutrality, and achieving a high 87 score in S&P Global's ESG rating for its environmental, social, and governance excellence - Healthcare Access: The Global Health Unit (GHU) made its first deliveries of non-profit "Impact" branded medicines, including insulin glargine and enoxaparin, to the Republic of Djibouti and global NGOs[40][41] - Environmental Protection: As part of its 2030 carbon neutrality strategy, the company inaugurated a new photovoltaic park at its Aramon site in France, capable of meeting 11% of the site's annual electricity needs[47][48] - ESG Rating: For the second consecutive year, the company was recognized by S&P Global Ratings as one of the most committed companies to sustainable development, achieving a high score of 87/100, among the highest across all industries globally[51] Detailed Financial Results Business Net Income Statement Analysis Q3 Business Net Income was €3.196 billion, a 11.4% year-over-year decrease (1.9% at CER), with Business EPS at €2.55, down 11.5% (2.1% at CER), as gross margin faced pressure from exchange rates and cost inflation, and SG&A and R&D expenses slightly increased as a percentage of sales, collectively contributing to the profit decline - Q3 gross margin decreased 0.6 percentage points to 74.0%, with a slight increase of 0.1 percentage points at constant exchange rates, as Biopharma gross margin benefited from the Specialty Care product mix but was offset by Aubagio® generic competition and Lantus® price reductions in the US[56] - Q3 Selling and General Administrative (SG&A) expenses increased 4.6% at constant exchange rates, reflecting increased commercial investments and launch costs in Specialty Care and Vaccines[57] - Q3 Business Net Income decreased 11.4% to €3.196 billion, with the Business Net Income margin declining 2.2 percentage points to 26.7%[61] Capital Allocation and Net Debt For the first nine months of 2023, the company's free cash flow was €4.982 billion, a 16.1% year-over-year decrease, and net debt significantly increased from €6.437 billion at the end of 2022 to €10.577 billion as of September 30, 2023, primarily due to acquisitions of Provention Bio and Qunol, and dividend payments - For the first nine months of 2023, free cash flow before restructuring, acquisitions, and disposals was €5.713 billion, a 13.6% year-over-year decrease[64] - Net debt increased from €6.437 billion as of December 31, 2022, to €10.577 billion as of September 30, 2023, primarily driven by the acquisition of Provention Bio (-€2.58 billion), Qunol (-€1.335 billion), and dividend payments (-€4.454 billion)[64] Appendices Appendix Contents The appendices provide detailed financial data and supplementary information, including sales breakdowns by global business unit, product, and region, Business Net Income Statement, Consolidated Income Statement, reconciliation of IFRS Net Income to Business Net Income, net debt movements, currency sensitivity analysis, definitions of non-IFRS financial measures, and the CSR dashboard - The appendices contain the following key information: - Appendix 1: Sales by Business Unit, Product Line, Region, and Product - Appendix 2: Business Net Income Statement - Appendix 3: Consolidated Income Statement - Appendix 4: Reconciliation of IFRS Net Income to Business Net Income - Appendix 5: Net Debt Movements - Appendix 6: Currency Sensitivity - Appendix 7: Non-IFRS Financial Measures Definitions - Appendix 8: CSR Dashboard[68]