SANOFI

Analysis of Sanofi share price

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Sanofi's quarterly results drive the stock higher

29/04/2021 - 13h13

Sanofi's share price opened the session higher this morning following the publication of its results for the first quarter of 2021 above analysts' expectations. Explanations and details.

Elements that can influence the price of this asset:

Analysis N°1

Since the Sanofi group operates in the health sector, you should monitor the development of life expectancy and the main health problems which can generate additional income.

Analysis N°2

Sanofi's partnerships can also provide some leads about Sanofi's development and growth possibilities, and in particular with regard to partnerships with bio-technology and research companies.

Analysis N°3

The Sanofi group obviously faces strong competition from other large pharmaceutical companies around the world. Particularly the generic drugs market which could disfavour the company.

Analysis N°4

In that respect, patents filed by the group following the launch of new products and the end dates of these patents should also be monitored.

Analysis N°5

The policies of medical treatment and reimbursement of medicines by the different countries in which Sanofi sells its products also have an impact on the group's sales.

Analysis N°6

Finally, monitoring the regulations concerning the approval of medicines worldwide which may increase or reduce the sales of Sanofi is also important.

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General presentation of Sanofi

The Sanofi group is the European leader in the pharmaceutical industry. Its activity affects various sectors of activity related to pharmaceutics such as the production of pharmaceuticals and generic drugs which represents almost 85.1% of the group's turnover along with the production of human vaccines or even veterinary products with almost 14.9% of turnover.

Due to more than 75 production centres around the world, the group supplies both Europe with 27.4% of its revenue along with the United States with nearly 33.5% of its turnover, Japan with 5% of its turnover, Asia with 11.5%, Latin America with  7.6%, Africa and the Middle East with  6.5% and the rest of the world with  8.5%.

The Sanofi share price is currently listed on compartment A of the Euronext Paris market in France. The Sanofi group is also included in the composition of the French national index CAC 40.

Analysis of Sanofi share price
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The major competitors of Sanofi

The Sanofi group is unfortunately not the only one in its sector of activity which is also very highly competitive. As a result, it's important to know who the main adversaries of the group are in order to follow the news and major publications. Here is a quick overview of Sanofi's most important competitors:

Pfizer

First of all, the Pfizer group is undoubtedly Sanofi's main competitor. This American pharmaceutical company was founded in 1849 and is present in more than 150 countries around the world today. It's one of the leaders in its sector of activity worldwide, particularly in terms of market capitalization. The group also employs over 81,800 people around the world, including nearly 3,000 in France. It regularly carries out mergers with other competing companies in order to increase its profitability and its worldwide positioning.

Novartis

Another major Sanofi competitor to be monitored is the Novartis group, which is a Swiss pharmaceutical group created in 1996 following the merger between the Sandoz and Ciba-Geig companies. Its head office is based in Basel.

Merck

Among Sanofi's other major competitors is the German company Merck, which also specializes in the pharmaceutical sector as well as in the chemical sector. The group is currently based in Darmstadt in the State of Hesse.

GSK

Also known as GlaxoSmithKline, the GSK Group is a British multinational and one of the leaders in the pharmaceutical industry worldwide. It was created by the merger of Glaxo Wellcome and SmithKline in 2000. The British group now employs over 95,490 people in more than 116 countries around the world. GSK is also recognized as one of the most innovative companies in the world, thanks to its strong investments in research and development. GSK has two different branches of activity with the GlaxoSmithKline Laboratory and GlaxoSmithKline Consumer Healthcare.

Roche

The Swiss pharmaceutical company Roche is also a competitor of Sanofi to be taken seriously. It's one of the main global companies in this sector of activity. Since 2004, the company has carried out two different types of activities, the pharmaceutical sector and the diagnostic sector. The Roche group operates in more than 150 countries around the world, but its headquarters are still in Basel, Switzerland. The company currently employs over 94,000 people.

AstraZeneca

Finally, the last major competitor is the AstraZeneca group which is a pharmaceutical group resulting from the merger between Astra and Zeneca in 1999. The group currently employs nearly 63,000 people worldwide in the fields of research, development and manufacturing as well as the sale of pharmaceutical products and the provision of services for medical care.


The major partners of Sanofi

For many years, Sanofi has forged strategic partnerships with various companies engaged in activities related or not to its own. Here are the main alliances of the Sanofi group and its main partners.

GDF-Suez

In 2013, Sanofi also joined forces with GDF-Suez in a joint project aimed at reducing worldwide energy consumption.

Google

In 2015, the Sanofi group announced a partnership with Google by pooling their skills and know-how in the fight against diabetes with easier detection of glucose levels.

Denali Therapeutics

In 2018, the Sanofi group set up a partnership with the Denali Therapeutics company aimed at jointly developing different molecules for the potential treatment of different neurodegenerative and inflammatory systemic diseases. As a result, Sanofi has planned to pay Denali 125 million dollars initially as well as other future payments according to the progress of the stages for a total amount greater than one billion dollars.

Regeneron

Even more recently, in 2019, Sanofi allied with its competitor Regeneron in the United States again aimed at developing an immuno-oncology treatment, focusing mainly on two flagship products already under clinical development.

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The factors in favour of a rise in the Sanofi share price:

First of all, the Sanofi group benefits from a very interesting positioning in its sector of activity. Indeed, Sanofi is none other than the fourth largest pharmaceutical group in the world. At the European level, its positioning is even more interesting since it is the leader in its sector. It should also be recalled here that Sanofi is currently the world leader in vaccines.

Another important strength of the Sanofi share is the very likely growth of the pharmaceuticals sector over the coming years. This anticipated growth is based on a number of different factors and structural factors.

The good distribution of the Sanofi Group's various activities is also a real strength. Indeed, the group generates 31% of its revenues from established products, 20.5% from diabetes treatments, 9.5% from consumer health products, 10% from products for the treatment of rare diseases, 5% from generics, 4% from oncology treatments, 13% from vaccines and 7% from veterinary health products. As a result, the company does not present a significant risk in any single health area and can offset some of its losses in other markets.

From a geographical point of view, the Sanofi Group has also succeeded in positioning itself strategically. This is particularly the case with its positioning in emerging markets, which account for 33% of the Group's sales, of which only 12% are in Asia and which are currently growing rapidly. The United States market accounts for 36% of sales and Western Europe accounts for only 22% of sales.

Analysts specializing in this market also stress the importance of the strategy implemented by the Sanofi Group, which has already proved its worth. Indeed, the company is focusing on reducing its dependence on a few key compounds. In this way, it is tending to reduce the impact of patents and the rise of generic drugs, which have been causing problems for many laboratories for several years now.

We can also appreciate the fact that the Sanofi Group is on the way to becoming one of the major names in healthcare for the general public worldwide with its range of non-prescription medicines. To this end, it has decided to sell its veterinary health division to the German company Boerhinger Ingelheim in exchange for the purchase of the Lysopaïne, Dulcolax and Surbronc brands, which are marketed worldwide. This decision is an intelligent way of positioning itself in this future-oriented segment.

Stock market investors and shareholders also appreciate the visibility this company offers on its future growth. The group announces the release of new drugs in advance. To remain one of the leaders in its sector, Sanofi can also count on its many innovations. Indeed, investments in research and development should reach 6 billion euros by 2020.

Finally, the Sanofi Group has the advantage of having very significant cash resources, i.e. more than 8 billion euros, which enables it to regularly launch share buyback programs with very attractive payouts to its shareholders.

The factors in favour of a drop in the Sanofi share price:

First of all, and despite the many efforts made by the Group and its diversification strategy, the rise of generic drugs continues to be detrimental to the Group. Indeed, competition in this segment is becoming increasingly intense and aggressive, particularly with regard to certain very popular products. This competition results in a loss of patents for the company and has a significant impact on its profitability.

On the other hand, while the medical and healthcare sector is still booming, it is also a very difficult sector from a certain point of view. Indeed, companies in this sector, such as Sanofi, have to cope with pressure from the public health authorities and therefore have to cut costs drastically, which of course leads to a loss of revenue. Again because of the authorities, these groups are increasingly facing very restrictive regulatory barriers that can slow down their growth and development.

In the US market, the group is currently suffering numerous losses following the launch of the generic drug Lilly, which directly competes with its treatment Lantus. As a result, Lantus is increasingly excluded from the list of treatments reimbursed by insurance companies. In addition, and still in the United States, the group has to bear the negative consequences of the delay in marketing its anti-diabetic injection pen.

The year 2017 has not helped to restore investor confidence either. For three quarters in a row, Sanofi experienced a significant drop in sales outside the veterinary health sector. As a result of these disappointing results, the Group has also lowered some of its targets. This applies in particular to diabetes treatment products, but also to generics.

More generally, and to conclude with the negative points of the Sanofi group, it should be noted that profits showed lower growth than those of its competitors. In 2017, the group announced that the return to profitability expansion would be postponed to 2018.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions.

Frequently Asked Questions

What is the origin of the Sanofi group?

It was in September 1973 that the history of Sanofi began when Elf Aquitaine decided to set up a subsidiary in the hygiene and health sector under the name of Omnium Financier Aquitaine for Hygiene and Health . The company was then made up of 10 people and served as a start-up funded by the French group thanks to an endowment of more than 500 million francs. It is this company which, after having developed, will become the Sanofi group.

What is the market capitalization amount of the Sanofi group?

Currently in 2020, the total market capitalization of the Sanofi group reaches 112.9 billion euros. It is one of the largest market capitalizations on the French stock market. It should also be noted that Sanofi's turnover for the last accounting year for 2019 was 32.126 billion euros. This turnover has been increasing in recent years.

Where to invest in the Sanofi share?

While many investors use stock market investment products to acquire shares in the Sanofi group, others favor live trading and use online trading platforms for this purpose. These platforms make it possible to speculate upwards or downwards on the price of this value thanks to CFD contracts or contracts on the difference and which concern numerous French and international stock market shares.

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