Deutsche Bank to the rescue of Sanofi is a shame. The analyst who, for the German bank, is in charge of monitoring the file, Emmanuel Papadakis, is not a big fan of the French group and yet, after the fall on the stock market in recent days, he raises his recommendation to ” keep”, with a price target maintained at 90 euros, slightly above the price at which the shares are currently trading.
In January, he had initiated the follow-up of Sanofi with a “sale” advice, arguing – be careful!, the list is long – of his excessive dependence on his star drug Dupixent (used in particular against asthma and certain dermatitis), the expiration of Aubagio’s patent in 2023 (treatment for multiple sclerosis), the structural risks posed by the competition of “RNA” technology to its stronghold of flu vaccines and the lack of progress in R&D material. On this point, Emmanuel Papadakis is not tender. In an update to his analysis this morning, he writes: “One could even say that the situation [des tests cliniques sur des médicaments qui en sont à] intermediate and advanced stages has further regressed…) since », after several failures, of its experimental treatment of advanced breast cancer in particular. More recently, Sanofi announced, at the beginning of the week, the suspension in the United States of its tests on the molecule tolebrutinib (against certain forms of multiple sclerosis and myasthenia), because of the suspicion of serious side effects on the liver.
Since then, Sanofi has fallen 12% on the stock market, as if suddenly the troubles around tolebrutinib reminded investors of the upcoming lawsuit against its heartburn drug Zantac, long sold over the counter in the United States. United States and Canada and which was pulled from the shelves in 2019, after the discovery of a potentially carcinogenic impurity in the product.
World’s best-selling drug
More than 2,000 complaints against Zantac have been filed in the United States and the first trial is due to open on August 22 in Illinois, followed by collective proceedings from September. Sanofi is not the only pharmaceutical group concerned. Initially, Zantac was marketed by GSK, its original manufacturer, which in 1983 received the green light from the American health authorities for marketing in the United States; the drug had already been approved in 31 other countries. The patent for Zantac, which in 1988 became the best-selling drug in the world and one of the first to exceed a billion dollars in sales per year, fell in 1997. From then on, generics flowed into the market. Zantac is first bought by Johnson & Johnson, then by Boehringer Ingelheim Pharmaceuticals and finally by Sanofi – the French owned it when, in the summer of 2018, European and American regulatory authorities recalled the drug valsartan hypertension manufactured by Chinese Zhejiang Huahai Pharmaceuticals, after the discovery of a carcinogenic impurity, N-nitrosodimethylamine (NDMA), in samples of drugs containing ranitidine, the molecule at the base of Zantac. In September 2019, the Food and Drug Administration (FDA), the American health authority, warns that it has found low levels of NDMA in it.
GSK, listed on the London Stock Exchange, lost 13% over the week, and Haleon, the former consumer health branch of GSK, which became independent less than a month ago, fell 14% in three days, before a slight rebound today.
The Zantac Affair “is not new, but the subject has, it seems, arrived in the consciousness of investors in recent days”, reacted yesterday, the analyst at Deutsche Bank, in view of the stock market plunges. He doesn’t believe it’s “of another glyphosate, but it’s very possible that we’re going to see liability in the billions of dollars. » The main federal-level proceeding will take place in Florida and is expected to begin in the middle of next year. These trials, in addition to those planned in California, will act as headwinds on Sanofi shares. But, writes Emmanuel Papadakis today, “We think the reaction is starting to get a bit over the top. » He does not recommend buying Sanofi on the stock market, but he also thinks that there is no reason, for the moment, for the shares of the French pharmaceutical group to fall lower.