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Sanofi confident for 2019 despite third-quarter sales slip

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Sanofi confident for 2019 despite third-quarter sales slip
FILE PHOTO: The logo of Sanofi is seen at the company's research and production centre in Vitry-sur-Seine, France, August 6, 2019. REUTERS/Charles Platiau/Files   -   Copyright  CHARLES PLATIAU(Reuters)
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By Matthias Blamont

PARIS (Reuters) – Sanofi <SASY.PA> expressed confidence for the fourth quarter and confirmed its full-year objectives on Thursday after posting lower third-quarter sales, hit by a fall in revenue at its primary care and vaccines businesses.

The French drugmaker also warned that a new procurement scheme adopted in China to cut purchasing costs of drugs would lead to a decline in two of its key treatments in the country next year.

Shares in Sanofi were down 1.6% at 83.89 euros by 1430 GMT, underperforming a 0.16% drop in the wider market <.SXDP>.

“Focus remains on the Dec 10 capital markets day,” Jefferies analysts wrote in a note to clients, at which the group’s newly appointed chief executive Paul Hudson is expected to unveil Sanofi’s middle and long term strategy.

Investors and analysts have been speculating over the past weeks over possible divestments such as the sale of the company’s consumer healthcare unit.

Hudson did not go into details during a call with analysts on Thursday, but said the company could be better at cost control and cash flow management.

Sales at the Sanofi vaccines unit were down 9.8% at constant exchange rates in the third quarter as a result of a decision by the World Health Organisation this year to delay its choice of recommended compositions of influenza virus vaccines.

Chief Financial Officer Jean-Baptiste de Chatillon told reporters the company expected more invoices to translate into sales in the fourth quarter.

“We started manufacturing flu products late in the season. It is really about balance between the third and the fourth quarter,” he said.

Over the first nine months of the year, vaccine sales rose 3.9% to 3.8 billion euros (£3.3 billion).

Quarterly sales of Sanofi’s primary care unit, which includes diabetes and cardiovascular medications, were down 17.5% to 2.2 billion euros, reflecting falling prices for diabetes products in the United States, the world’s largest health market.

In China, Sanofi’s second individual market, the implementation of a nationwide healthcare savings programme is expected to lead to net price cuts.

As a result, sales of the group’s antiplatelet drug Plavix and hypertension treatment Aprovel may drop by as much as 50% next year.

However the company confirmed it was targeting a 5% increase in earnings per share this year, helped by another strong performance of its rare diseases Genzyme unit.

Its third-quarter net income edged up 0.2% to 2.4 billion euros, above expectations. Overall sales were down 1.1% to 9.5 billion.

(Editing by Jason Neely and Jan Harvey)

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