Sanofi warns of lower diabetes drug sales this year

By Andrew Callus and Noëlle Mennella

PARIS (Reuters) - France's Sanofi (SASY.PA) warned revenue in its key diabetes division would fall this year after it was forced to offer discounts for its best-selling drug Lantus in the United States.

Global sales of Lantus, which accounts for almost a fifth of the company's revenue but is due to go off-patent in the United States this year, fell 5 percent at constant currency rates to 1.58 billion euros (£1.14 billion) in the first quarter - dragging down sales of Sanofi's biggest division, diabetes, by 3.2 percent.

The company said it expected the diabetes sales performance to be "indicative of the full-year performance of the division". Its shares were down 1.2 percent at 0824 GMT, lagging France's CAC 40 index (.FCHI) which was down 0.7 percent.

Lantus' U.S. sales fell 13.1 percent in the first quarter as the company was forced to offer rebates to maintain market share for future generations of diabetes treatments.

However Sanofi reported a slight rise in underlying profit in the period, beating expectations. The slump in diabetes, along with the effect of a 10.7 percent rise in the cost of sales due to a busy schedule of launches and regulatory approval requests, was countered by strong growth in its genzyme, generics, consumer healthcare and animal health divisions.

Sanofi's first-quarter business net profit rose 1.6 percent at constant rates to 1.73 billion euros ($1.9 billion). The increase on a reported basis was 11.6 percent thanks to the impact of a weak euro.

The result was above analysts' expectations of 1.56 billion, according to a consensus compiled for the company.

Sales grew 2.4 percent at constant rates, or 12.3 percent on a reported basis, to 8.81 billion euros.

Sanofi reaffirmed its targets for 2015 of "stable to slightly growing" earnings per share versus last year.

Sanford C. Bernstein analyst Tim Anderson called the result "overall, a decent Q1" and said research and development expenses were 3 percent below his estimates.

Sanofi, which sacked Chris Viehbacher from the chief executive role last year over Lantus' flagging market share and a failure to communicate effectively with the board, launched new diabetes treatment Toujeo in the U.S. market earlier this year and won EU approval for it earlier this week.

Chief Financial Officer Jerome Contamine told reporters he reaffirmed longer-term predictions made last November for flat to slightly higher diabetes sales in the period up to 2018.

(The story was refiled to correct the last paragraph to say slightly higher, not slightly lower)

(Editing by David Holmes and Pravin Char)