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Sanofi Consumer Sales Slow As Pandemic-Driven Surge Ends, But OTC Xyzal Line Still Shines

Sanofi Consumer Sales Slow As Pandemic-Driven Surge Ends, But OTC Xyzal Line Still Shines

Source : 'HBW Insight'

Widespread dips in sales, particularly in Europe, after consumers stopped pandemic-driven stockpiling of OTC drugs and nutritional products, and the removal of OTC allergy Zantac in the US took big chunks out of Sanofi’s consumer health care sales in its latest quarter.

However, the boost to the French pharma’s consumer health sales from Xyzal Allergy 24HR’s launch as the first OTC product with latest antihistamine ingredient switched in the US, levocetirizine, didn’t slow during the second quarter. With its earnings report on 29 July, it noted 76.9% growth in Xyzal OTC line sales from the year-ago quarter, at constant exchange rates, to €23m ($27m) globally.

 

CEO Paul Hudson said during a same-day earnings briefing, though, that Xyzal sales didn’t lift the rest of the consumer business during the April-June period.

“Q2 benefited from a strong US spring allergy season, but the overall picture reflected the reversal of the pantry loading, which boosted sales in the first quarter as well as the impact of reduced consumer foot traffic in pharmacies,” Hudson said.

Sales for consumer health care globally were down 8% from the year-ago quarter at €1.02bn ($1.18bn), calculated at constant exchange rates. Consumers didn’t sustain the same rate of buying OTC and nutritional products they did in the first quarter when they stocked their cabinets in response to the COVID-19 pandemic.

With consumers stockpiling pain relief and cough/cold OTCs and other self-care products globally at the onset of the novel coronavirus during the first quarter, sales grew 4.2% for Sanofi’s consumer health to €1.3bn ]) ($1.4bn). ("Sanofi Benefits From Stockpiling In Q1 Predicts LongTerm Uplift In Supplements Demand" "HBW Insight" )

Sanofi didn’t have market exclusivity for its OTC switch and Xyzal's patents had expired and generics of the Rx product were available before an OTC formulation of the product became available in the US. However, approval of a 24-hour product formulated for children helped Xyzal Allergy enhance the firm's OTC antihistamine market share play. ("Xyzal Switch Extends Sanofi Into OTC 24Hour Childrens Antihistamine" "Pink Sheet" )

Sales of the firm’s Mucosolvan (ambroxol) cough product brand grew 20% to €18m ($21.1m), although the company’s largest allergy brand, Allegra Allergy (fexofenadine), slipped 1% to €103m ($120.8m).

Overall, Sanofi’s US consumer health sales slumped 5.2% to €281m ($331.2m) as the recall of Zantac represented a €40m ($46.9m) hit to the topline.

The US Food and Drug Administration in April requested immediate removal of ranitidine-containing drugs while also encouraging the industry to make the products more stable. After testing found levels of the probable carcinogen N-nitrosodimethylamine (NDMA) increases in ranitidine over time in storage, especially at higher temperatures, the FDA for the first time requested withdrawal of an OTC drug that is not defective and otherwise compliant with regulations. ("US FDA Requests Ranitidine Removal But Also Encourages Research For Stable Formulations" "HBW Insight" )

Like other OTC ranitidine marketers, Sanofi previously had voluntarily recalled Zantac in the US and Canada as the threat of NDMA contamination emerged. ("OTC Zantac Recall Sanofi Heeds To Potential Ranitidine Contaminant" "HBW Insight" )

Europe was hardest hit in Sanofi’s consumer business during the quarter as sales slumped 13% to €297m ($349.9m). Outside the US and Europe, its consumer product sales declined 6.2% to €446m ($525.6m), although nutritional product sales grew 7% to €115m ($135.5m) and its pain remedy sales increased 1.5% to €118m ($138.9m).

Sanofi’s OTC digestive remedies were its slowest-selling category in the quarter; sales dropped 26.2% globally to €194m ($228.5m). Worldwide, sales in the nutritionals category, which includes vitamin brands Cenovis and Ostelin, grew 4.5% in the quarter to €154m ($181.4m).

Hudson noted market research data suggested that overall, the global OTC market contracted about 8%-10% in April and May.  

He said Sanofi continues progress on establishing a standalone consumer health division as outlined in 2019 to “unlock value and entrepreneurial energy by growing faster than the market over mid-term,” the exec had said. ("Sanofi Forms Standalone Consumer Healthcare Unit Prelude To SpinOff" "HBW Insight" )

Sanofi’s total net sales, which in addition to consumer health includes the specialty care, general medicines and vaccines businesses, slipped 3.4% in the quarter to €8.2bn ($9.65bn). Net income in the quarter at constant exchange rates grew 5.6% to €1.6bn ($1.9bn).

Market analysts don’t expect, and note that the the Paris-based firm reported.firm also doesn’t, that the second-quarter consumer health sales slip will hurt its full-year results.

“We expect an acceleration of growth through the remainder of the year as the healthcare operating environment begins to normalize,” said Morningstar’s Damien Conover in a same-day research note.

At Credit Suisse, analysts pointed out that “despite the headwinds induced by the COVID-19 pandemic,” Sanofi revised its full-year upward and expects its earnings per share grow between 6% and 7% at current exchange rates.

 

By Eileen Francis