Sanofi share has been flat for a decade, despite continuously increasing dividend every year. They also have the fourth-biggest selling drug in the world: Dupixent, which they co-developed and co-owned with Regeneron.
They make €47B in revenue last year, €19B from Dupixent.
But Dupixent is losing its US exclusivity in the US on March 2031, and this is primarily why investors are discounting the company. They are trading at \~9x forward earnings and \~12x trailing earnings (or \~19x on some platform, depending on which earning metrics they use).
EPS growth has been volatile and flat in the past as well, as they made multiple acquisitions throughout the years to fill in their pipeline. Some worked, some don't, but Sanofi paid a lot of premium for these.
These, combined with the patent cliff fears, has depressed the share price even further lately. Based from what I read, investors are waiting for future acquisitions to replace Dupixent.
But, their other drugs, mainly ALTUVIIO, Ayvakit, and Sarclisa (which also just got approved in EU) is growing quickly and expected to make a combined €3 billion in revenue this year. Still far away from Dupixent numbers, but there is still 6 years of growth until the 2031 deadline.
Management will also extend and expand dupixent for other use cases, etc. after 2031, as is usual with pharma companies, with a plan stretching up to 2045.
Then there is the new CEO, with a strong track record of doubling the net income of her previous company, Merck KGaA.
I think this is an interesting combination of a defensive pharma + a potential turnaround. Once or if the market realises that Sanofi pipeline is strong enough to endure post-Dupixent, the share could rerate. We see similar situation happened last year with the other Merck & Co. ($MRK), where the market suddenly realises that they are strong enough for a post-Keytruda era.
Although with Sanofi, the pipeline is weaker compared to Merck & Co., and the trajectory isn't obvious at the moment, investors are being paid 5% annually while we wait.
Thoughts? I think this is worth watching at least.
My full analysis: https://open.substack.com/pub/economiyaki/p/sanofi-2031-patent-cliff-5-dividend?utm\_source=share&utm\_medium=android&r=2wzuop
