Sanofi refines expectations on drop in sales at diabetes arm

By Matthias Blamont

PARIS (Reuters) - Sanofi confirmed its 2017 outlook after it posted slightly lower-than-expected third-quarter results, and gave a more precise range on expectations of a sales decline at its embattled diabetes business.

The French drugmaker said currency-adjusted sales at its diabetes franchise would likely shrink by 6-8 percent per year between 2015 and 2018.

It had previously seen a 4-8 percent drop due to persistent pricing pressure in the United States, the world's largest health market.

Third-quarter business net income fell 1.1 percent at constant exchange rates to 2.141 billion euros ($2.5 billion). Total sales rose 4.7 percent to 9.05 billion euros with revenue from the diabetes and cardiovascular unit down 14.8 percent.

Analysts polled by Reuters were expecting business net profit of 2.148 billion euros and net sales of 9.33 billion.

Year-to-date, diabetes sales in the U.S are down 20.2 percent and Sanofi warned of an accelerated decline in the fourth quarter.

"This reflects the phased impact of exclusions in commercial formularies at CVS and United Health as well as a high basis of comparison in the fourth quarter of 2016," the company said.

U.S. pharmacy benefit manager CVS and United Health said last year they had taken off Sanofi's main insulin drug Lantus from the list of medicines they reimburse on behalf of health insurers in favour of Eli Lilly's cheaper biosimilar drug Basaglar.

Biosimilars are cheaper copies of protein-based biotech drugs such as Lantus, which are no longer protected by patents. They cannot be precisely replicated like conventional chemical drugs but have been shown to be equivalent in terms of their general efficiency, as well as on the side effects.

Sanofi Chief Executive Olivier Brandicourt told journalists that the company had, however, secured coverage for Lantus and Toujeo, its next-generation insulin, on "the vast majority of formularies in the U.S. for 2018."

Sanofi's biotech arm Genzyme and its vaccines division Sanofi Pasteur recorded another quarter of double-digit growth while the consumer healthcare division, boosted by an asset swap deal with Germany's Boehringer Ingelheim struck last year, saw revenues rise 48.5 percent to 1.13 billion euros.

($1 = 0.8581 euros)

(Reporting by Matthias Blamont; Editing by Sudip Kar-Gupta)