Drugmaker Sanofi-Aventis SA said net profit rose 61 percent to euro1.7 billion ($2.2 billion) in the second quarter, thanks to lower restructuring costs, but warned that earnings may fall for the full year.
The Paris-based company said core earnings may drop by up to 4 percent this year as a result of the U.S. Food and Drug Administration's approval of a generic version of its Lovenox, an injected drug for preventing life-threatening blood clots.
So-called business net profit — a measure of earnings which excludes writedowns and acquisition costs — will be flat to down 4 percent at constant exchange rates this year, the company said, because of the threat to its blockbuster treatment from Momenta Pharmaceuticals' enoxaparin compound.
Sanofi had previously forecast 2 to 5 percent annual growth.
The warning came alongside Sanofi-Aventis' quarterly earnings report which showed that despite the expected hit from lost Lovenox earnings, the company's longer term goal of becoming less dependent on patented blockbusters by 2013 remains on track.
Chief Executive Christopher Viehbacher confirmed other targets, which include keeping sales in 2013 at the same level as the euro27.6 billion made in 2008 excluding new sales from acquisitions. It also includes euro2 billion in cost cuts over the same period in order to maintain net profit in 2013 at the same level as the euro7.2 billion made in 2008.
Speaking on a conference call with reporters, Viehbacher said Sanofi had "initiated legal activity" to challenge the approval of Momenta's drug.
Viehbacher's declined to comment on recent news reports that Sanofi-Aventis was preparing a takeover bid for Cambridge, Mass.-based Genzyme Corp. "It's impossible to commment on rumor and speculation," Viehbacher said, adding that the loss of Lovenox's patent protection "doesn't change anything for us" in terms of merger and acquisition planning.
"We are under no pressure to do any deals," Viehbacher said.
Earlier this month, shares of several companies — including Genzyme — jumped in trading after rumors surfaced that Sanofi was chasing a big U.S. acquisition.
Like other major international drugmakers, Sanofi has been making deals to acquire small companies or rights to promising experimental drugs to help offset inadequate progress from internal research programs and looming revenue declines as blockbuster drugs get generic competition.
Genzyme has been struggling for months with manufacturing problems that have reduced production of two key drugs for genetic diseases, Cerezyme and Fabrazyme.
Sanofi-Aventis shares slid 10 percent during the second quarter and have slid another 8 percent in July.
Since he became Sanofi's CEO in December 2008, Viehbacher has arranged dozens of mostly mid-sized acquisitions. Those include a $1.9 billion March deal in which the company bought Tennessee-based Chattem Inc., maker of Gold Bond skin products and Icy Hot pain relief packs, in a strategy to expand its U.S. health care business.
Sanofi-Aventis' business net profit rose 7.6 percent in the second quarter to euro2.48 billion, on revenue of euro7.8 billion.
Raymond James Euro Equities analyst Eric Le Berrigaud said the results were slightly better than expected at both the net and revenue levels, thanks mainly to exchange rate changes.
In early trading on the Paris stock exchange, Sanofi-Aventis shares rose 0.3 percent to euro45.58.
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Associated Press writer Daphne Rousseau contributed to this article.