FRANCE — Pharmaceutical giant Sanofi is doubling down on research and development (R&D) with an ambitious pipeline of 12 potential blockbusters, aiming to justify increased spending that led the company to abandon its 2025 income target.
Despite a nearly 20% dip in shares following the announcement of higher R&D investment, Sanofi is placing its bets on groundbreaking medicines, three of which carry the potential for peak sales exceeding €5 billion (US$5.4 billion).
Houman Ashrafian, head of research at Sanofi, emphasized the “unprecedented” nature of the potential blockbusters in the pipeline, underscoring the company’s commitment to strategic R&D focus.
The move, however, comes at a cost, as business earnings per share (EPS) are projected to stagnate in the upcoming year, and the previous 2025 target of a 32% margin in business operating income has been scrapped.
Sanofi aims to generate over €10 billion (US$10.8 billion) in annual sales by 2030 from its recently launched and future pharmaceutical assets.
The highly successful anti-inflammatory drug Dupixent, co-developed with Regeneron, is expected to play a pivotal role in achieving this goal, with anticipated low double-digit annual sales growth up to 2030.
The drug, initially used for conditions like atopic dermatitis, is being explored for its potential in treating chronic obstructive pulmonary disease (COPD), commonly known as “smoker’s lung.”
The latest guidance for Dupixent suggests 2030 sales of about €22 billion (US$23.7 billion), surpassing expectations and receiving positive reactions from analysts.
CEO Hudson acknowledges that the case for investing in Sanofi stock is a “show-me story,” emphasizing the need for scientific successes to sway market sentiment.
Sanofi’s bullish approach extends to two other products with the potential for over €5 billion (US$5.4 billion) in annual sales: the eczema drug amlitelimab and the multiple sclerosis treatment frexalimab, both set for costly phase III trials in the coming year.
Additionally, an early-stage experimental pill against psoriasis and inflammatory conditions, belonging to the class of drugs known as tumor necrosis factor or TNF inhibitors, holds significant commercial potential.
CEO Paul Hudson expressed confidence in the strength of Sanofi’s pipeline, projecting sustainable growth through 2030 and beyond.
The company aims to convince the market that the pipeline is compelling enough to justify the recent disappointment stemming from the downgrade.
Sanofi’s forecast indicates almost double the revenue expected from new drugs, with a 50% increase in late-stage trials in 2024 and 2025 due to additional R&D investment.
Sanofi’s investment thesis is now centered around being an R&D “show-me story,” challenging the market to recognize the innovative potential that lies within its robust pipeline.