The European economic crisis hasn't put a dent in French pharmaceutical producer Sanofi's (NYSE: SNY) armor. The hard-charging stock has flourished since June, reaching 52-week highs and up over 15% year-to-date. For the average investor, however, wrapping your head around the intricacies of a complex medical company can be confusing -- should you trust Sanofi's gains, or has this stock hit its zenith?

Gains and setbacks
The big news for shareholders of the fifth-largest pharmaceutical company came in the FDA's recent approval of Aubagio, an oral treatment for multiple sclerosis from subsidiary Genzyme. That's a welcome victory for MS patients in and of itself, given that clinical trials demonstrated a 30% reduction in patient relapses. However, it could prove a positive for your portfolio as well.

Pharmaceutical rival Novartis (NYSE: NVS) brought in $530 million from its own MS pill Gilenya in 2012's first half. Analysts predict Aubagio's future sales range to range near $400 million by 2016. That's a lucrative deal in an MS market predicted by JPMorgan to swell to $14 billion by 2015.

Not bad at all for a company with an impressive pipeline of drugs and vaccines in advanced development. Unfortunately for investors, Sanofi recently hit the skids with its dengue fever vaccine. The company had estimated more than $1.3 billion in annual sales from the product. However, a Phase IIb trial produced disappointing results, quashing enthusiasm from medical professionals and investors alike.

Still, the vaccine proved highly effective against three of the virus' strains, and the product's development head urges patience for the results of a 31,000-patient Phase III trial before jumping to conclusions. If the dengue vaccine proves its clinical efficacy in the end, Sanofi shareholders will be all smiles. The World Health Organization estimates 50-100 million new cases of the disease a year, a colossal market for Sanofi's product.

Hit-and-miss recent developments contribute only fractions of one of the industry's major powers, however. Let's take a look at how the company stacks up.

A tough competitor
Sanofi's current pipeline boasts more than 45 drugs, vaccines, and other products in various stages of development. These cover everything from antibodies for inflammatory bowel disease to treatments for malaria, giving Sanofi a wide, diversified body of products with enormous potential markets.

The company's going to need that pipeline with 2012's hammer blow of expiring patents. Sanofi's blockbuster bloodthinner Plavix lost patent protection back in May after long holding the No. 2 spot in worldwide drug sales. Given that the drug in the past year pulled in almost $7 billion in the U.S. alone for the company and its Plavix partner Bristol Myers-Squibb, Sanofi will need to recoup the hit from generic drugs eating up market share in the coming years. Given the superior success of AstraZeneca's (NYSE: AZN) own bloodthinner, Brilinta, over Plavix, Sanofi's loss could be AstraZeneca's gain.

That's a tough pill to swallow for Sanofi shareholders, but the company still stands on solid ground. The drugmaker's Lantus diabetes drug holds protective patents until 2015, a positive note after pulling in an 11.6% increase in sales the past year. In total pharmaceutical sales, Sanofi realized a 4.9% increase in 2011 from the prior year.

Sanofi has also performed remarkably well with its acquisitions. In a high-profile case, its purchase of Genzyme led to the subsidiary's success with Aubagio. Genzyme recorded more 8% of Sanofi's pharmaceutical revenue in 2011, providing the drugmaker with another strong revenue stream. In more positive news, the company's acquisition of subsidiary Chattem boosted its consumer health-care profile. Sanofi's consumer health revenues jumped more than 20% year over year in 2011.

Looking at fundamentals, the company stacks up well when squaring off against some of the best in the business.

Company

P/E

Net Profit Margin

Return on Equity

Dividend Yield

Sanofi 13.9 17% 12.3% 3.9%
Abbot Labs (NYSE: ABT) 22.3 12.4% 19.2% 3%
Pfizer (NYSE: PFE) 18.1 15.8% 10.7% 3.6%

Source: Yahoo! Finance.

As icing on the cake, Sanofi recorded 30.3% of its sales in the high-growth emerging markets geography in 2011, marking 10.1% growth. That kind of success in areas with historically less access to medical care tantalizes of strong opportunities in the future to capitalize on developing economies.

What's not to like?
Sanofi might feel the pinch from expiring patents soon, but overall you should feel great about this top performer in the pharmaceutical industry. This drugmaker has made all the right moves to position itself strongly after the loss of Plavix and other high-sales products, with a bountiful pipeline and rock-solid financial health. If you're ready to get started investing in the medical field, riding Sanofi's stock to higher heights can cement a lucrative foundation for your portfolio.

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