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Morningstar | Sanofi's New CEO Looks Well Positioned to Lead, but Complexities of the Company's Culture Remain

Sanofi's wide lineup of branded drugs and vaccines and robust pipeline create strong cash flows and a wide economic moat. Growth of existing products and new product launches should help offset weakening pricing in the insulin market. Sanofi's existing product line boasts several top-tier drugs, including long-acting insulin Lantus. The drug's ability to work well for an entire day sets Lantus apart from other insulins. Further, given the complexity in marketing and manufacturing insulin, we don't expect the typical major generic competition following the drug's 2015 patent loss. However, increasing branded and biosimilar competition and a deteriorating pricing environment will likely lead to continued sales declines for Lantus over the long term. Offsetting the Lantus weakness, Sanofi's vaccines and consumer products should continue to post growth as these products are less susceptible to patent losses. Sanofi has compiled a robust group of late-stage pipeline products that complement its existing lineup and should help mitigate patent losses. In particular, immunology drug Dupixent looks well positioned to reach peak sales over $6 billion, with an initial focus on the moderate to severe atopic dermatitis market. We expect additional indications in areas such as the recently added severe asthma indication will help the drug add additional patients.The company also harnesses its research and development group to bring new drugs to emerging markets. While pricing in emerging markets is not usually as strong as in developed markets, the company can still leverage its investment in developing new drugs for developed markets by bringing the drugs to emerging markets. The rapid economic growth in emerging markets has created new geographic markets for Sanofi's drugs. A history of acquisitions and robust cash flow from operations means Sanofi could take advantage of further growth opportunities through external collaborations. We expect Sanofi's acquisition focus on rare disease drugs will continue following several deals in this area, including Genzyme and more recently Bioverativ.