Sanofi weighs M&A opportunities to replenish pipeline, lifts 2026 growth targets

By Bhanvi Satija

LONDON, Oct 30 (Reuters) - French drugmaker Sanofi said on Friday that dealmaking will be an important part of replenishing the company's drug pipeline under new CEO Belen Garijo, following a series of trial setbacks last year.

Chief Financial Officer François Roger told journalists after third-quarter results that the company was increasingly interested in acquisitions that would give it access to drugs in later stages of development, or already on the market, as it seeks to boost growth.

"These assets are more expensive," he said, adding that Sanofi would look at larger deals than its historical range of $2 billion to $5 billion.

Shares in the company rose 5% in morning trade.

Since taking over in May, Garijo has embarked on a strategic review, promising investors faster decision-making. She has overhauled her executive committee to expand Roger's role to include business development and hired former Roche executive Paulo Fontoura to lead R&D efforts.

Analysts estimate that the company 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 in a statement on Friday.

Roger said the company will look at areas of strength such as rare diseases, vaccines and immunology.

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

Garijo is expected to provide more updates on the strategic review before the end of the year.

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.

Previously, it had expected sales growth of 10% at constant exchange rate and profit per share to grow slightly faster than sales.

Sanofi expects profit per share for the next five years to grow faster than sales.

"That's part of our ambition to deliver what we call profitable growth," Roger said.

Sanofi also reported third-quarter business operating income of €5.43 billion, compared with market expectations of €4.32 billion, according to a company-provided analysts' consensus.

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, led by a Dupixent beat, were €14.44 billion, up 14.3% at constant exchange rates and ahead of the €13.25 billion analyst estimate.

Dupixent sales reached €5.69 billion, about 10% above expectations.

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(Reporting by Bhanvi Satija in London; Editing by Muralikumar Anantharaman and Elaine Hardcastle)