Sanofi-Aventis has just seen phenomenal growth; for the nine months ended 2016, the pharmaceutical’s sales are up by 13 percent year-on-year, while costs only rose by three percent. As a result, gross profit has popped by 43 percent, while the bottom-line has shot up six-fold over last year.

Sanofi-Aventis has seen a spate of impressive quarters since the start of the year. However, the remarkable 9MCY16 figures come from the latest quarter (July-September), with a near-30 percent growth in sales and bottom-line skyrocketing from negative territory to Rs364 million. Sources told BR Research that there has been significant volume growth during the period. Moreover, there were certain changes and restructurings in the operations, driving efficiencies.

All units reported double-digit growth, particularly antibiotics and the consumer healthcare portfolio. This has been in spite of a reported decline in exports. However, exports form a minor portion of total sales (six percent as of 2015), so this didn’t have much of an impact on the financials.

Finally, the company managed to obtain a price increase on some of its products at the start of the calendar year. However, the new price could only be implemented on newly manufactured products, and was not applicable on the existing inventory. It seems that this could have been another factor in driving the growth in the third quarter. The net margins have finally reached a respectable level as compared to last year, and the company continues to perform well.

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SANOFI-AVENTIS


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Rs (mn)                            9MCY16  9MCY15      YoY


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Sales                               9,449   8,328      13%


Cost of Sales                       6,257   6,092       3%


Gross Profit                        3,192   2,236      43%


GP Margin                             34%     27%       up


                                                   690 bps


Distribution & Marketing expenses   1,604   1,557       3%


Administrative expenses               225     233      -3%


Other expenses                        151      34     344%


Other income                           27      81     -67%


Finance cost                          131     234     -44%


Taxation                              502     149     237%


Net Profit                            607     109     457%


NP Margin                              6%      1%       up


                                                   510 bps


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Source: company notice to PSX.


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