Modern medicine is constantly progressing forward to help create a healthier world and respond to developing medical issues. In this quickly-changing industry, Sanofi (SNY) appears to be continuing on as a respectable company. Recent news stories show both good and bad signs for the company, but as a whole, I think it is still in a good position. I do not think the stock will be seeing significant changes as a result of these news events.
In the face of health-related crises, medical companies have a chance to meet a great need and make a great name for themselves. Sanofi is currently attempting to do this, as it has recently revealed a vaccine that could save millions from the mosquito-borne disease called dengue. The World Health Organization claims that up to 20,000 people around the world die from dengue each year. Sanofi believes this vaccine is "five years ahead of any known similar interventions." Testing may confirm the effectiveness of the vaccine by September of this year, but this will begin to have positive effects on the company more immediately. If nothing else, it gives the company a good image and demonstrates its commitment to global health and progress.
Sanofi may be encountering some fierce competition from Novo Nordisk (NVO), but this will probably have a limited effect for the time being. Novo Nordisk has recently announced the results from the latest trial of its degludec, which is an insulin product that would compete with Sanofi's Lantus. The results indicated that degludec was significantly more effective than Lantus in reducing the rates of hypoglycemia at night for adults with type 2 diabetes. This means that Novo Nordisk will likely take business away from Sanofi as a result of its supposedly-superior product.
One might assume that these results would have a positive impact on Novo Nordisk stock and a negative impact on Sanofi stock. This may not immediately be the case, however, since U.S. health regulators have extended the review period for Novo Nordisk's degludec, which also goes by the name of Tresiba. The Food and Drug Administration requested for more data clarification and analyses, and in response, Novo Nordisk has already delivered a large amount of new information. This delay will certainly be a setback for the stock, but analysts do not believe this is an indication that the approval will be declined. Novo Nordisk stock will still improve, and Sanofi stock will still struggle more as a result, but these may be quite subtle for a little while longer.
The diabetes portion of the industry is in the news for another major event as well. A variety of companies are looking to acquire Amylin Pharmaceuticals (AMLN), which is a company that specializes in diabetes drugs. Sanofi is involved in the bidding war, but AstraZeneca (AZN), Merck (MRK), and Bristol Myers Squibb (BMY) also continue to be potential buyers. The sale is expected to go be completed by July, so this is something for investors to watch closely. As has been seen in the news with Novo Nordisk, the diabetes market is becoming much more competitive. It would benefit Sanofi or any other company to gain a little bit of an edge in this part of the industry. Until things become more solidified, however, it is unlikely that this will have a major impact on these stocks.
The progress of another company will be much more beneficial to Sanofi. The Animal and Plant Health Inspection Service has awarded a conditional license to GenVec (GNVC) for using its vaccine for foot-and-mouth disease in cattle. This is GenVec's first approved product and should have a positive impact on the company. It should help build up the confidence that investors have in the company, as it demonstrates its capabilities. This will also benefit Sanofi, however, as GenVec has licensed the rights to "develop and commercialize this proprietary vaccine technology" to Merial-Sanofi's animal health division. As a result, Sanofi should be able to benefit from and contribute to the success of another company.
Sanofi's Merial has also continued to be in the news as Cipla has attempted to appeal a ruling about its infringement on a Merial patent. The U.S. Federal Circuit has upheld the previous decision though. This will help Merial maintain a great strength over its competitors in the animal health industry and should have a small-but-positive effect on Sanofi stock.
Its collaboration with GenVec is not the only successful partnership for the company, furthermore, as Sanofi continues to maintain good relationships with its other collaborators as well. Demonstrating this, Isis Pharmaceuticals (ISIS) recently held its annual shareholder meeting and claimed, "We've been very pleased with the contributions from Sanofi and the commitment of Sanofi since the acquisition of Genzyme." This will not have any direct impact on the company or the stock, but it does show that it is staying on the good side of others in the field. This will help the company in a long run and may open up more opportunities for beneficial collaborations.
Many are waiting to see what happens in Europe, but Sanofi is one company that is already dealing with the growing situation in Greece. Sanofi, Roche, Bayer, and Novartis (NVS) are holding off on deliveries in the country until they receive payment for the current bill of 600 million euros. This is adding further turmoil to the country, but it does show that these companies also have good business sense. They understand the difficult situation and are proceeding with caution, so as not to get dragged down with it. There is no doubt that this is all quite unfortunate, but Sanofi does seem to be proceeding rationally. Sanofi and Novartis stock will not be positively affected by this, but they will not be negatively affected either, as a result of their caution.
The potential competition from Novo Nordisk is certainly bad news for investors in Sanofi, but Sanofi has a lot of other things going for it as well. I do not think these positive stories will completely trump the negative one, but they will offset it. Investors should watch the diabetes-related pharmaceutical industry closely as it grows more competitive. I still think that Sanofi is in a good position, however, when it comes to the industry as a whole. I expect it to maintain a consistent stock price as a result. As the Novo Nordisk approval has been delayed, it may even make some slightly positive movements in the near future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.