Sanofi (NASDAQ:SNY) delivered better-than-expected adjusted earnings per American depositary share (ADS) of 99 cents in the second quarter of 2023, surpassing the Consensus Estimate of 88 cents. Earnings rose by 0.6% on a reported basis and 8.1% on a constant currency rate (CER) basis.

However, the company’s net sales experienced a decline of 1.5% on a reported basis, reaching $10.85 billion (€9.97 billion). The decrease in sales was attributed to exchange rate movements, which negatively impacted sales by 4.8 percentage points in the quarter. On a CER basis, sales rose by 3.3%. Nonetheless, the sales figure missed the Consensus Estimate of $11.47 billion.

Sales performance varied across different regions. While sales in the United States declined by 1.7% on a CER basis, they rose by 8.5% in the Rest of the World, which includes key markets like China, Japan, Brazil, and Russia. In Europe, sales increased by 3.8%.

The Biopharma segment, comprising Global Business Units (GBUs) of Specialty Care, General Medicine, and Vaccines, saw a 3.7% rise in sales to €8.74 billion. Within this segment, the Specialty Care GBU reported strong growth of 11.8% to €4.4 billion, driven by the success of Dupixent and vaccines.

Dupixent, a key product for Sanofi, generated sales of €2.56 billion in the quarter, marking a 34.2% increase year over year. While Dupixent sales were robust, they fell slightly below expectations. Notably, sales of Dupixent in the United States surged by 33.2%, driven by strong demand for approved indications such as atopic dermatitis, asthma, chronic rhinosinusitis with nasal polyposis indications, eosinophilic esophagitis, prurigo nodularis. The drug’s new prescription share and total prescription share in the United States rose by 53% and 32%, respectively.

Among other products, Aubagio sales declined by 58.2% to €216 million due to generic competition in the United States and Canada. Kevzara, on the other hand, recorded sales of €92 million, representing a 22.1% increase.

Sanofi’s newest rare blood disorder drug, Altuviiio, which is a once-weekly factor VIII therapy for hemophilia A, recorded sales of €18 million in the second quarter since its launch at the end of March in the United States.

Moving to Vaccines, this GBU saw sales rise by 9.1% to €1.22 billion in the quarter, primarily due to increased sales of Polio/Pertussis/Hib (PPH) vaccines and contractual shipments of VidPrevtyn Beta, Sanofi’s recombinant COVID-19 booster vaccine, in Europe and the United Kingdom. However, sales of flu vaccines declined by 10.4%.

Sanofi’s Consumer Healthcare (CHC) standalone unit generated sales of €1.22 billion, experiencing a 0.7% increase, supported by growth in Europe and the Rest of the World region.

Despite the mixed quarterly results, Sanofi raised its guidance for 2023 adjusted earnings growth at CER to a mid-single-digit range, compared to the previous expectation of a low single-digit range. The company anticipates a negative currency impact in the range of 6.5%-7.5% on earnings, revised from the previous forecast of 5.5%-6.5%

Overall, Sanofi’s performance was influenced by factors such as Dupixent sales, competition from generics for some products, and the impact of exchange rates on sales. The company’s newer products, Beyfortus RSV vaccine, Altuviiio, and Tzield, are expected to drive revenue growth, offsetting the potential impact of generic competition on Aubagio.

Following the earnings release, Sanofi’s stock experienced a 2.9% decline in pre-market trading, possibly due to the mixed results and softer Dupixent and Vaccine sales. However, the stock has shown a promising 10.5% rise year to date, outperforming the industry’s 1.8% increase.

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