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Sanofi Shares Plummet as Company Prepares for Impact of Investment and Tax Changes

James L. Flint

• October 27, 2023

Shares of Sanofi, the French pharmaceutical giant, experienced a significant drop after the company issued a warning about the expected impact on business earnings for the following year. Sanofi's decision to increase investment in research and development, along with changes in global tax regulations, are anticipated to cause a decline in profits.

As of 0809 GMT on Friday, Sanofi's shares were down 16% at EUR84.83.

Sanofi projected that business earnings per share (EPS), a key metric that excludes exceptional items, will remain relatively flat in 2024 compared to this year's performance, excluding the impact of an anticipated tax-rate change. However, when factoring in the expected consequences of the tax changes, business EPS is predicted to decrease by a low single-digit percentage.

The company also expects its effective tax rate to rise from 19% this year to 21% in 2024.

Looking ahead to 2025, Sanofi anticipates a significant rebound in business EPS driven by sales growth and an extensive cost-cutting plan. The company aims to achieve 2 billion euros ($2.11 billion) in savings from 2024 until the end of the following year.

Barclays analysts highlighted that investors will likely focus on the preliminary guidance provided by Sanofi for 2024 and 2025 business EPS.

These new forecasts were disclosed alongside Sanofi's strategy to separate its consumer-healthcare business from its pharma operations. The company also released its third-quarter results, which narrowly missed consensus estimates.

Net sales for the third quarter declined to EUR11.96 billion from EUR12.48 billion in the same period last year, while business net profit dropped by 11% to EUR3.20 billion. Sanofi attributed the decrease in earnings to the loss of exclusivity of its Aubagio drug for relapsing multiple sclerosis.