# Analysis-Meagre medicine cabinet leaves Sanofi unloved Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-08-22 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Sanofi's Struggles: Path to Recovery Meta Description: Sanofi faces stock rout and setbacks, pressuring CEO Hudson to deliver new medicines and boost share price amidst challenges in drug development and URL: https://financedigest.com/analysis-meagre-medicine-cabinet-leaves-sanofi-unlovedhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-08-22t040432z1lynxmpei7l024rtroptp4sanofi-results-1736815415922-compressed.jpg) By Ludwig Burger FRANKFURT (Reuters) – Sanofi’s recent stock rout underscores the pressure on the French [drug](https://www.financedigest.com/tonixs-long-covid-drug-fails-to-meet-mid-stage-trial-goal.html) maker to redouble its efforts in the hunt for new medicines. Chief Executive Paul Hudson is entering his fourth year at the helm next month and has presided over a number of setbacks, most recently the failure of breast cancer pill amcenestrant, which Sanofi had touted as having strong commercial potential. The ensuing drop in the share [price compounded losses from an investor scare over litigation linked to alleged cancer risks of heartburn drug](https://www.financedigest.com/bristol-myers-pfizer-abbvie-drugs-likely-to-face-u-s-price-negotiation.html "Bristol Myers, Pfizer, AbbVie drugs likely to face U.S. price negotiation") Zantac days earlier, resulting in a more than 14% slump over eight days. My belief is that (the stock price) recovery will come because of an incredible disconnect between the fundamentals of the company and its valuation,” [finance chief](https://www.financedigest.com/bootmaker-dr-martens-warns-on-profit-as-finance-chief-walks.html "Bootmaker Dr Martens warns on profit as finance chief walks") Jean-Baptiste de Chatillon told Reuters on Wednesday. He cited remaining [drug](https://www.financedigest.com/tonixs-long-covid-drug-fails-to-meet-mid-stage-trial-goal.html) candidates under [development as well as strong financial](https://www.financedigest.com/financial-services-technology-development-in-2023.html "Financial Services technology development in 2023") performance thanks to fast-growing bestseller Dupixent, Sanofi’s star eczema and asthma treatment. The growth will be fuelled again by very strong [assets coming](https://www.financedigest.com/analysis-watch-out-risk-assets-the-rout-in-bonds-is-coming-your-way.html "Analysis-Watch out risk assets, the rout in bonds is coming your way") up,” said de Chatillon, pointing to a haemophilia drug project and potential new treatment for childhood respiratory infections. For Markus Manns, portfolio [manager at Germany-based Union Investment](https://www.financedigest.com/mg-appoints-former-head-of-axa-investment-managers-andrea-rossi-as-new-ceo.html "M&G appoints former head of AXA Investment Managers Andrea Rossi as new CEO"), which holds Sanofi stock, this is misplaced optimism following the failure of amcenestrant. This is a massive setback and there is a very thin [pipeline left when compared with companies](https://www.financedigest.com/russia-sanctions-european-gas-companies-polish-part-of-gas-pipeline.html "Russia sanctions European gas companies, Polish part of gas pipeline") such as Roche or AstraZeneca. It’s unfortunate, if Sanofi does not accept that,” he said. Sanofi has also encountered major setbacks in the [COVID-19 vaccine](https://www.financedigest.com/u-s-donates-more-than-110-million-covid-19-vaccine-doses-abroad-white-house.html "U.S. donates more than 110 million COVID-19 vaccine doses abroad -White House") race, losing the market to BioNTech-Pfizer and Moderna. That is piling pressure on Hudson, a former Novartis executive, who was tasked with reviving the [share price](https://www.financedigest.com/netflix-cuts-prices-in-some-countries-to-boost-subscriptions-shares-drop.html "Netflix cuts prices in some countries to boost subscriptions, shares drop") and simplifying the business centred on vaccines, immunology, rare diseases and oncology. The shares have risen 5% since the start of his tenure, but have underperformed the European [drug](https://www.financedigest.com/tonixs-long-covid-drug-fails-to-meet-mid-stage-trial-goal.html) sector, [amid worries about the increasingly](https://www.financedigest.com/over-50-of-businesses-increased-their-cyber-security-budget-last-year-amid-attacks.html "Over 50% of businesses increased their cyber security budget last year amid attacks") bare cupboard of potential blockbuster drugs. Underperforming Sanofi: https://graphics.reuters.com/SANOFI-DRUGS/PIPELINE/lbvgnadgypq/chart.png SETBACKS Sanofi’s finances have been boosted by eczema and asthma drug Dupixent, growing at more than 40% in sales during the first [half with projected annual sales of up to 13 billion](https://www.financedigest.com/spotify-listeners-cross-half-a-billion-mark.html "Spotify listeners cross half a billion mark") euros ($13.1 billion). For now, Dupixent is [buying Sanofi time](https://www.financedigest.com/rising-oil-prices-buy-iran-time-in-nuclear-talks-officials-say.html "Rising oil prices buy Iran time in nuclear talks, officials say"). Its key patents will likely not expire before 2032, Manns said. But the oncology flop was not a one-off setback. Earlier this year, concerns over liver damage led to a halt https://www.sanofi.com/en/media-room/press-releases/2022/2022-08-08-17-08-40-2494173 in new patient enrolment in a trial of [multiple sclerosis drug](https://www.financedigest.com/the-multiple-sclerosis-drugs-market-to-sever-ties-with-mediocrity.html "The Multiple Sclerosis Drugs Market to sever ties with mediocrity") candidate tolebrutinib, part of a potential new drug class also contested by Merck KGaA, Novartis and Roche. After problems with two of the [company’s most important](https://www.financedigest.com/is-it-important-to-provide-media-coverage-for-your-company.html "Is it Important To Provide Media Coverage For Your Company?") development projects, Manns said he would have welcomed signals from management that efforts or deals to improve drug prospects would now be intensified. This is a bit of an added concern, if management does not acknowledge that,” said the [fund](https://www.financedigest.com/why-ai-can-be-the-key-to-success-for-fund-managers-in-the-post-covid-landscape.html "Why AI can be the key to success for fund managers in the post-COVID landscape") manager. SVB Securities analysts said the twin blow was “negative for sentiment for the [company’s R&D productivity and topline growth prospects,” cutting their price target](https://www.financedigest.com/britain-toughens-up-diversity-targets-for-uk-companies.html "Britain toughens up diversity targets for UK companies") though maintaining the view that the beaten down stock could yet outperform. Guggenheim analyst Seamus Fernandez thought the market reaction to the Zantac [legal threat was overdone but said investors](https://www.financedigest.com/wave-of-lawsuits-over-ftx-expected-but-investors-will-face-legal-hurdles.html "‘Wave’ of lawsuits over FTX expected, but investors will face legal hurdles") buying into the dip may need patience. These types of selloffs often [present an opportunity](https://www.financedigest.com/why-sustainability-presents-one-of-the-greatest-opportunities-for-the-financial-services-industry.html "Why sustainability presents one of the greatest opportunities for the Financial Services industry") for disciplined, long-term investors,” he wrote on Thursday. Zantac, a once-popular antacid, has drawn a flurry of US lawsuits alleging it causes cancer. Sanofi, GSK and a number of generic drug makers are accused in the [lawsuits of failing to properly warn users about health risks](https://www.financedigest.com/institutional-investors-back-shell-board-lawsuit-over-climate-risk.html "Institutional investors back Shell board lawsuit over climate risk"). The first court trials begin early [next year](https://www.financedigest.com/novartis-to-spin-off-generics-business-sandoz-next-year.html "Novartis to spin off generics business Sandoz next year"). Sanofi has said the Zantac claims are without merit. ($1 = 0.9944 euros) (Reporting by Ludwig Burger; Additional reporting by Natalie Grover; Editing by Josephine Mason and Elaine Hardcastle) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---