Sanofi - ADR

Q2 performance beat expectations (good): Net sales +17.8% YoY to €11.6bn (largely volume-driven, plus a couple hundred million positive gross-to-net adjustments). Business EPS +33.3% YoY (underlying +21% excluding buybacks/one-offs). Gross margin +3.7pp (notably helped by reversal of inventory provisions tied to Sarclisa SC approval); underlying gross margin up ~1.7pp from mix/efficiency. OpEx grew +13.1%, but OpEx % of sales fell by 1.5pp demonstrating cost discipline.

Growth drivers & portfolio momentum (good/surprising): - Pharma launches up nearly +50% YoY led by Ayvakit, ALTUVIIIO, Sarclisa. - Dupixent +37% YoY in Q2, driven largely by volume (more patients). - Dupixent scale milestone (surprising): sales exceeded €5bn in the quarter for the first time; >15m patients on treatment globally. - Vaccines slightly down (-5% YoY) mainly due to difficult influenza comps, partially offset by Beyfortus +54% to €108m and Heplisav-B +43% pro forma to €113m. - Launch portfolio now 13% of sales, growing >60% in Q2—breadth across multiple disease areas.

Upgraded 2026 guidance; but expect deceleration in H2 (forecast/challenge): - Guidance upgraded (details to be shared by CFO): now expects ~10% sales growth at constant exchange rates for full-year 2026, with business EPS growing slightly faster than sales. - H2 headwinds: tougher comps; Dupixent new indication annualizing and Ayvakit consolidation started July 2025. Also fewer gross-margin one-offs in H2: no further Regeneron development balance reimbursement; reduced benefits from share buybacks.