(Reuters) – Sanofi Chief Executive Paul Hudson faces pressure from investors awaiting announcements on how much he intends to allocate to research and development (R&D) spending and expected profits , while the manager seeks to renew the group’s range of drugs and restore shareholder confidence. On the stock market, the pharmaceutical group’s action fell by 15% on October 27, when Paul Hudson abandoned its operating margin objective for 2025, as part of a plan to list its “Consumer Health” activity on the stock market and to increase R&D spending.
Paul Hudson, who was hired four years ago to revive the company’s drug portfolio, has promised better profits in the longer term. He did not wish to detail his plans before the December 7 investor day.
The leader, whose current term began last year and expires in 2026, is expected to give more details on how much he plans to spend on each experimental drug, as well as their commercial potential, investors told Reuters.
“The first step is to present the data and the reasons to believe in these plans,” said Dan Lyons, portfolio manager at Janus Henderson Investors.
Sanofi stock has underperformed its competitors in recent years, with investors concerned that the group is too dependent on its best-seller, the anti-inflammatory Dupixent.
Although new drug launches this year have revived confidence, Paul Hudson was already under pressure since losing the coronavirus vaccine race and last year’s failure of a cancer treatment drug. of the breast.
The abandonment of the outlook for 2025 was particularly controversial because it broke with the group’s tradition of sticking to its financial targets, said fund managers, including Markus Manns of Union Investment.
“The Sanofi story has been one of margin expansion and profits for many investors,” commented David Song, portfolio manager and investment partner at Tema ETF.
Sanofi did not respond to a request for comment.
EXPENSES SCREENED BY INVESTORS
Relative to sales, Sanofi’s R&D budget, valued at 15.6% last year, is well below the industry average of between 20 and 22%, said Fabian Wenner, an analyst at Julius Baer.
“Sanofi needed to catch up, but the announcement was too sudden a change for shareholders,” he said, adding that he too wanted a detailed breakdown of expenses.
Among the drug candidates, frexalimab against multiple sclerosis, amlitelimab against eczema and a pneumococcal vaccine are attracting particular attention and will be subject to phase III tests starting next year.
According to Tema ETF’s David Song, a one-year delay in earnings growth might be acceptable in exchange for the prospect of higher profitability beyond 2025. “Shouldn’t investors give credit to managers who care about creating long-term value for shareholders?
(Report by Ludwig Burger, French version by Augustin Turpin, edited by Kate Entringer)
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