Sanofi-Aventis's Earnings Hurt by Generic Competition

French drug manufacturer sanofi-aventis posted a decline in Q2 earnings Wednesday on generic competition, restructuring costs and currency effects from the strong euro. The company reported a 6.3% drop in net profit to €1.678 billion ($2.3 billion) from €1.79 billion in the year-ago quarter. Operating profit was down 5.1% to €2.329 billion. Net sales slid 2% to €6.939 billion from €7.08 billion. Analysts were expecting operating profit of €2.499 billion and sales of €7.038 billion. Sales of sleeping pill Ambien and cancer drug Eloxatin were hurt by new generic competition, with Ambien revenue dropping 42%. Sales of the blood thinner Plavix showed a recovery from a Q1 overhang of a generic that has since been pulled from the market. Plavix is marketed in the U.S. by Bristol-Myers Squibb. Sanofi affirmed its guidance of sales growth of around 9% this year and announced a buyback of up to €3 billion worth of shares by May 2008. "The share buyback is a good move," said Kepler Equities analyst Matthias Steger. "The stock is without a doubt undervalued.''

Sources: Dow Jones, Reuters, MarketWatch, Bloomberg
Commentary: Plavix Patent Upheld; Bristol-Myers Shares Rise on Renewed Buyout Chatter • Sanofi-Aventis and Bristol-Myers Squibb Victorious Over Apotex in Plavix Case • Investing in Cancer Treatment: Six Stock Ideas
Stocks/ETFs to watch: SNY, BMY. Competitors: MRK, PFE, LLY. ETFs: PPH, IHE

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