The March Towards Obscurity

The March Towards Obscurity

“Moving to our Diabetes franchise, sales declined by 12% in the quarter. This was consistent with our 2015, 2018 guidance. Similar to prior quarters, we achieved good growth in Emerging Markets and stable sales in Europe, but this was more than offset by a 30% decline in U.S. sales due to pricing pressure and the loss of Part D business.”

This quote comes from our good friend Olivier during Sanofi’s earnings call which was this past Tuesday. It also explains why we did not get up early Tuesday morning to listen to the call. The fact of the matter is when it comes to diabetes Sanofi is marching towards obscurity.

Later in the call during Olivier added this;

“All right. Thank you very much, John. Your question, Jo, on Diabetes, clearly, we can’t give you too much details. And we’re not going to guide you on Diabetes anymore because our three years guidance will be over by the end of 2018. But you have to consider different factors, right. So clearly the sales declined in the quarter by 12%, and again, that is actually very consistent with what we told you in our 2015, 2018 guidance.

Now Diabetes becomes very different from what it was in the sense that the dynamics of that franchise now differ very much by region, and you have emerging countries starting to play a very significant role. So we do have achieved double-digit growth in Emerging Markets and more specifically, as you know, in China. We have stabilized our business in Europe, but of course this is still not sufficient to offset the 30% decline in the U.S. sales, which have been a continuation of what we have said during the first quarter, which is due to a combination of pricing pressure and the loss of the 5 million lives in the Part D business. However, the non-U.S. sales were up altogether by 6% and they are now representing 62% of that franchise. So, I think that’s an important number to keep in mind.

On the other side of that equation, if you compare with the same quarter two years ago, our U.S. sales of Lantus have more than half now, and they’re representing about 30% of our global Diabetes franchise. If you compare that number to the 50%, it represented about, at the same quarter two years ago in 2016, of a franchise in the U.S., which, by definition, was much larger. So, you can see why we expect these headwinds to frankly diminish quite significantly in the coming quarters. And, over time, the balance between these factors should result in a reduction of the rate of decline.

Now, I can’t tell you exactly what’s happening next year. You mentioned the further biosimilar competition, which is one dimension. But we also have on the positive trend Toujeo is doing very well in Europe and doing well in Emerging Markets. And we see an upswing with Soliqua and we still need to get the full benefit of Admelog. So, you do have a lot of moving pieces in that franchise, but we remain optimistic that the U.S. decline will definitely become a much lesser factor.”

Now we have no idea whose coaching Olivier but whoever it is certainly has a flair for corporate double speak. No matter how they try to tap dance around the truth the facts speak for themselves. Let’s put this in terms everyone can understand, when it comes to diabetes Sanofi has nothing but problems. Problems that will not be solved by their pipeline.

The reality is Sanofi should have sold this franchise when it had value. Something we knew wouldn’t happen as that would be tantamount to admitting they had failed. So, in typical Sanofi fashion what do they do but throw good money into a dying franchise. They insist they can make a comeback when their history in diabetes indicates the opposite. Lilly and Novo Nordisk should be thanking their lucky stars that Sanofi can’t get it together with Amedlog. As we have said many times this is a company that would screw up a winning lottery ticket.

And just in case anyone believes that their partnership with Google, OnDuo will come along and save the day, think again. We have boatloads of confidence in Google but when it comes to diabetes partnerships Sanofi’s track record is less than stellular, and that my friends is being overly kind.

But there is a silver lining among the dark clouds as we now don’t have to get up early in the morning to listen to their earnings call. We can sleep in and read the transcript at our leisure. So, in that regard Sanofi’s march towards obscurity does have an upside.