Sanofi teases appetite for larger deals, lifts 2026 growth targets under new CEO Garijo

By Bhanvi Satija

LONDON, Oct 30 (Reuters) - French drugmaker Sanofi said on Friday it was prepared to pursue larger deals as it seeks to rebuild its basket of experimental drugs for future growth under new CEO Belen Garijo.

Shares in the company rose 5.3% in early trade and were among top gainers in Europe as the company raised its 2026 growth targets for the second time this year.

Garijo, who took the top role in May, is tasked with charting Sanofi's growth trajectory post early 2030s, when its blockbuster asthma drug Dupixent loses patent exclusivity. 

On Friday, finance chief Francois Roger said the company was increasingly interested in deals that would give it access to late-stage medicines or marketed products, and would consider acquisitions larger than its usual range of $2 billion to $5 billion.

"These assets are more expensive," he told journalists after third-quarter results.

NEW CEO HAS PROMISED FASTER DECISION-MAKING

Garijo has kicked off a strategic review and promised investors faster decision-making since taking over. She also overhauled her executive committee to expand Roger's role to include business development, and hired former Roche executive Paulo Fontoura to lead R&D.

Analysts estimate that Sanofi has about €20 billion to spend on deals, and believe it will need to use some of that before a raft of late-stage trial data is expected in 2027. 

"We have already begun taking action to improve R&D productivity. Business development and M&A will be critical to complement this transformation," Garijo said. More details on the strategic review are expected before the end of the year. 

Sanofi will stick to areas where it already operates, Roger said — immunology, rare diseases and vaccines. 

"We could consider potentially what we call white spaces or moonshots with unmet medical needs," he added.

OUTLOOK LIFTED, THIRD QUARTER BEATS FORECASTS

The company said it now expects sales and profit per share this year to grow by a low-teens and mid-teens percentage, respectively, helped by strong sales of Dupixent and cost management. 

Previously, it had expected sales growth of 10% at a constant exchange rate, and profit per share to grow slightly faster than sales. At least three analysts said the raise would lift market consensus for Sanofi's full-year earnings.

The company is focused on "returns rather than restructuring," Roger said, adding that Sanofi is investing heavily in artificial intelligence for R&D, which it expects could cut some development timelines.

Sanofi has identified areas where it can move faster and execute better, he said, and is working through simplifying processes and governance.

The French drugmaker posted third-quarter business operating income, a profit metric, of €5.43 billion, compared with market expectations of €4.32 billion.

Profit was helped by a larger share of sales from its newer launches, including hemophilia A treatment ALTUVIIIO, as well as better prices after discounts.

Total sales were €14.44 billion, up 14.3% at constant exchange rates, ahead of a €13.25 billion analyst estimate. Sales of Dupixent, for which it partners with Regeneron, reached €5.69 billion, about 10% above expectations. 

(Reporting by Bhanvi Satija in London; Editing by Elaine Hardcastle and Jan Harvey)