Sanofi SA Earnings - Q1 2025 Analysis
Positives
- Business EPS was €1.79, up 15.7%, reflecting strong sales performance, improved gross margin, and operating leverage.
- The company had a strong start to 2025, with a 9.7% sales growth in Q1.
- The company expects to drive double-digit CAGR growth from 2023 to 2030, generating roughly €22 billion by 2030.
- The company had a significant increase in Q1, 2 percentage points from last year.
- Net sales increased by 9.7% at constant exchange rates to €9.9 billion.
Q&A Highlights - Q1 2025
Analyst asked about increasing the next season immunization rate for Beyfortus, particularly in the US.
Thomas Triomphe, Senior Vice President of Sanofi's Vaccines Global Business Unit, explained that the company has a goal of increasing the immunization rate for Beyfortus, which is a vaccine for RSV prevention. The company is focusing on educating the healthcare community and raising awareness about the importance of vaccination throughout the season, as babies are at risk even during the non-peak months of the season. The company is also working on improving its distribution channels to ensure that Beyfortus is available to as many patients as possible.
Analyst asked about the potential impact of a 25% tariff on transfer prices into the US and how Sanofi could mitigate it.
Paul Hudson and FrançoisXavier Michel Marie Roger both acknowledged the speculative nature of the question and declined to provide specific details or scenarios. They stated that Sanofi has factored in tariffs affecting trade between the US and China into their confirmed guidance for the full year 2025, and that they are aware of the impact of tariffs on their business. They also mentioned that Sanofi is actively increasing its share of manufacturing in the US and is considering additional measures, potentially including investment in the US, to align their industrial footprint to the needs of their pipeline and future growth.
Analyst asked about the potential impact of a 25% tariff on transfer prices into the US and how Sanofi could mitigate it.
Paul Hudson and FrançoisXavier Michel Marie Roger both acknowledged the speculative nature of the question and declined to provide specific details or scenarios. They stated that Sanofi has factored in tariffs affecting trade between the US and China into their confirmed guidance for the full year 2025, and that they are aware of the impact of tariffs on their business. They also mentioned that Sanofi is actively increasing its share of manufacturing in the US and is considering additional measures, potentially including investment in the US, to align their industrial footprint to the needs of their pipeline and future growth.
Analyst asked about the drivers of the gross margin and how it is expected to progress through 2025 and into 2026.
The gross margin is expected to improve over the next couple of years due to the company's efforts to improve the efficiency of its industrial footprint and the product mix. The company has significantly worked in order to improve the efficiency of its industrial footprint over the last couple of years, and the benefits are starting to show now. The gross margin increased by 2 percentage points in Q1, and it is expected to continue to improve over the next couple of years.
Analyst asked about the softer demand and intensifying pricing pressure and whether it is baked into the company's guidance for this year.
The company is still in the pre-booking period for flu in the US, and it is too early to be definitive about the demand and pricing pressure. However, the company observed a soft vaccination coverage rate in the US last year, which turned out to generate some price competition during the pre-booking period. The company will provide more color on this during the next quarter's earnings call.
Analyst asked about the company's approach to trispecifics and whether they have thought about them.
The company is aware of trispecifics and their potential value in the biopharmaceutical industry. However, they are cautious about the geometric interactions between each of the heads and do not expect repeated incremental additional value. The company has a NANOBODY platform that allows them to generate tri or quadra specifics, but they are focused on their current pipeline and development programs.
Analyst asked about the company's commitment to Dupixent and their approach to new molecules in the atopic dermatitis space.
The company remains committed to Dupixent and is focused on developing new molecules in the atopic dermatitis space. They are aware of the under penetration of the marketplace and the potential for new molecules in that space. They are confident in their approach to coexisting with different mechanisms and believe that their efforts to improve the efficiency of their industrial footprint and the product mix will continue to improve the gross margin over the next couple of years.
Analyst asked about the posterior probability of the Bayesian study and the internal combination candidates, specifically IRAK4 degradation, which brings to mind.
The company cannot provide the posterior probability of the Bayesian study, but the data in the public domain in HS can be used to calculate it. Additionally, there are multiple rational combinations that the company is pursuing, but they will not disclose them at this time. The natural combinations with a TNF are super clear to people in the art, and the company will pursue many of them.
