2023-10-27 06:01:41 ET
Sanofi ( NASDAQ: SNY ) shares plunged 16% premarket on Friday after the drugmaker reported its third quarter results and laid out plans to spin off its consumer healthcare business.
As part of a strategic update to its Play to Win strategy, the French pharmaceutical company outlined plans to increase R&D investment in its drug-development pipeline; a two-year, up to €2B cost saving initiative, with most of the savings to be reallocated to fund innovation and growth drivers; and separate the consumer healthcare business at the earliest in Q4 2024 through the creation of a publicly listed entity headquartered in France.
"The intended separation will seek to create two entities, each better equipped to pursue its own business strategy, resourcing and capital allocation and enabling each to focus on long-term growth in its respective markets," said the company in a statement.
In addition, the company reported Q3 sales growth of 3.2% and business EPS decline of 2.1% at constant exchange rates. Specialty Care growth and strong launch uptake of Beyfortus and ALTUVIIIO contributed to solid Q3 results, the company noted.
Sanofi ( SNY ) also reiterated its 2023 guidance of mid-single digit business EPS growth at constant exchange rates. Excluding the impact of the expected tax rate change, 2024 EPS is expected to remain roughly stable to 2023 levels owing to the increased R&D investment.
However, the company no longer targets a 32% operating profit margin for 2025 given its continued expenditure and pricing headwinds in general medicines.
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Sanofi stock dips on plans to spin off consumer healthcare unit