Sanofi results point to strong CHC rebound in Q2

Sanofi has raised its full year 2021 EPS guidance after reporting a 12.4% rise in sales (at constant exchange rates) in Q2 2021 to €8.7bn (US$10.3bn). Consumer Healthcare sales increased by 11.9% to €1.1bn (US$1.3bn), primarily reflecting a low base for comparison in the same period last year, as well as a strong performance of Digestive Wellness and Pain Care. This largely offset a weak cough & cold season.

Sales in USA increased by 12.5% to €287mn (US$341mn); Europe rose by 7.7% to €319mn (US$379mn); and Rest of the World was up 14.3% to €483mn (US$573mn). Digestive Wellness growth (+36.8%) was powered by strong performances from probiotic Enterogermina, antispasmodic Buscopan, laxative Dulcolax and liver care treatment Essentiale. Mental Wellness (+23.9%) and Pain Care (+20.6%) also generated high CHC growth for Sanofi in Q2, while other categories were either flat or declining.

Source: Sanofi

Nicholas Hall commented: I wrote last week that the first Q2 results were highly encouraging, but that we needed to wait for the other top players to report. This week we review a crop of additional results, and they do indeed confirm that sales are significantly ahead of Q2 2020; but it is noticeable that the latest reports are consistent in reminding us that sales in Q2 2020 were relatively weak, although consumer purchases remained strong. The real comparison is with Q2 2019, measured against which growth is much more modest, in the range of 3% CAGR. This managing of expectations is perfectly understandable as none of the companies wants to create aspirations that will be difficult to meet later on.

So how do we interpret this data from the top players? On the one hand, it’s disappointing as 3% is below the 4.1% benchmark we’ve created to judge market growth – a combination of population increase and inflation. On the other hand, the industry has come through its worst crisis in a generation, and although a lot of attention has been paid to the high-growth categories of immunity and disinfection, many more categories were adversely affected. Furthermore, we know that not all the top players are representative as typically they underperform the market, with the highest growth typically coming from local and regional players.

My take on this, combined with the upturn in our own business I outlined last week, is that we are feeling our way forward to a revival in consumer demand and indeed industry confidence. But there is a lot of lost time and opportunity to make up, and it does seem that the top echelon of the industry is responding by adapting its structure (for example, the spin-off of GSK Consumer) or streamlining the business – Sanofi, for example, has disposed of a number of tail brands, either by divestiture or creating new distribution arrangements.

Find the perfect candidate to complete your team with assistance from Nicholas Hall’s executive recruitment service CHC TalentSelect. With over 40 years’ experience in consumer healthcare and an extensive network of contacts, we can help you find the right person for the job. To start your search, please contact maricar.montero@NicholasHall.com.

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