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Sanofi (NYSE:SNY)
Q3 2018 Earnings Conference Call
October 31, 2018, 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, welcome to the Sanofi Q3 2018 earnings results conference call and live webcast. I am Emma, the Chorus Call operator. I would like to remind you that all participants are in a listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register the questions at any time by pressing * and 1 on your telephone. For operator assistance, please press * and 0. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Mr. George Grofik, Vice President and Head of Investor Relations at Sanofi. Please go ahead, sir.

George Grofik -- Vice President of Investor Relations 

Good morning and good afternoon to everyone on the call. Thank you for joining us to review Sanofi's third quarter results. As usual, you can find slides of this call on the investors page of our website at sanofi.com.

Moving to slide two, I would like to remind you that information presented in this call contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. We refer you to our Form 20-F document on file with the SEC and also our Document de Référence for a description of these risk factors.

With that, please advance to slide three and let me introduce our speakers today. With me are Olivier Brandicourt, Chief Executive Officer and Jean-Baptiste de Chatillon, Executive Vice President and Chief Financial Officer. Olivier will discuss key highlights of the quarter. Jean-Baptiste will then review the financials in detail and we will close with a Q&A session.

Joining us for Q&A will be Olivier Charmeil, Executive Vice President, General Medicines & Emerging Markets, Karen Linehan, Executive Vice President, Legal Affairs and General Counsel, David Loew, Executive Vice President, Sanofi Pasteur, Alan Main, Executive Vice President, Consumer Healthcare, John Reed, Executive Vice President, Global R&D, and Bill Sibold, Executive Vice President, Sanofi Genzyme.

With that, I'd like to turn the call over to Olivier.

Olivier Brandicourt -- Chief Executive Officer

Thank you, George, and good morning, good afternoon to everyone. Welcome to our third quarter earnings conference call. We'll start with slide five. Sanofi delivered strong financial results in the third quarter. On a CER basis, our third quarter sales grew by 6.3% to €9.4 billion and our business EPS increased by 11.2% to €1.84. This excellent performance was in line with the new growth phase we had indicated, which would begin in the second half of the year.

On slide six, we delivered organic sales growth in the third quarter of around 3%, which excludes a contribution from Bioverativ. In other words, we have reached the point where the underlying dynamics of our business are more than offsetting the impact of LOE on Lantus and sevelamer.

On slide seven, you can see the sales picture across our five GBUs. The highlight was, again, the double-digit growth in our specialty care business, Sanofi Genzyme. However, we also benefited in the quarter from the anticipated return to growth in our vaccine business and from solid growth in CHC. Of course, the LOE continued to be visible in the performance of DCV and GM, but in each case, the year on year impact was less than in the second quarter.

Turning to slide eight, we are now looking at sales by franchise and geography. As in prior quarters, our diversified business structure clearly benefited us as we navigated our way through the LOE headwinds in mature markets. In particular, you see an impressive performance from our emerging market business, with sales up 10%.

The recovery of Pentaxim supply in China was an important contributor to this performance, but we also delivered broad-based growth across our franchises, with specialty care growing very rapidly.

Expanding onto the next slide, on our Specialty Care franchise, sales grew by around 16% in the third quarter cost and structure and by close to 35%, including the acquisition of Bioverativ. Each of our franchises contributed to growth in the quarter. If we take those in turns, our Rare Disease franchise reported another solid quarter, with sales up 9%, led by a strong performance across core franchises of Pompe, up close to 14%, Guacher, up 8%, and Fabry, up 12%.

Meanwhile, a return to growth in the Multiple Sclerosis Franchise was lead by a 13% increase in sales of Aubagio. Our Legacy Oncology franchise was driven by emerging markets and we look forward to expanding our portfolio with the launch of Libtayo, which I will touch on later.

Turning to our Rare Blood Disorder franchise, sales continued to grow, although the 9% increase was lower than in the previous two quarters, importantly, the underlying performance remains good, with Eloctate continuing to benefit from the growth in prophylaxis therapy and an increase in its share in moderate to severe patients, up to 18% in the US. Finally, we continue to be pleased with the rollout of our new Immunology franchise, which generated close to a quarter of €1 billion in sales.

On slide 10, I would want to expand a little on our Immunology franchise. Dupixent is clearly the core driver of this franchise and reported another strong quarter. Sales grew by nearly 30% sequentially to €225 million. Volume growth in the US remained excellent and ahead of biologic launches in dermatology. Importantly, US growth was demand-driven, with trade inventory steady at around four weeks in the quarter and total prescriptions up 16% sequentially.

Sales of Dupixent outside the US are also gaining momentum. You may recall we launched in Japan in the second quarter and we launched in four more countries in the third quarter, taking the total to 13. What is especially pleasing is that our experience in new launch markets is generally replicating that in the US in terms of outperforming biological analogs.

We recently received approval for the asthma indication, which I will discuss in more detail on the next slide. However, we also submitted a supplemental BLA for Dupixent in adolescent AD under the breakthrough therapy designation in the third quarter. If approved, this will allow the benefits of the drug to be extended to patients as young as 12 years.

Additionally, we also reported topline results from two phase III trials in nasal polyposis, which met all primary and secondary endpoints. This will allow us to fight for approval in this area of high unmet need and further expand the drugs used in type 2 comorbid indications.

If I switch briefly to Kevzara, our immunology asset for RA, we continue to make good underlying progress, although inventory movement slightly affected sales this quarter. In recent months, Kevzara has captured around 40% of new prescriptions in the subcu IL-6 category and demand for the category is growing at over 30% per year. Market access is set to broaden in 2019, so we remain optimistic on the outlook for Kevzara.

On slide 11, I want to finish my remark on specialty care by highlighting three important new approvals, which will help to further drive this GBU. On October 19, we received FDA approval for Dupixent as an add-on maintenance treatment in patients with moderate to severe asthma, age 12 years and older with an eosinophilic phenotype or with oral corticosteroid-dependent asthma.

The label we received is the broadest of any biologic asthma treatment. We are well-positioned to compete very effectively in this market given this different label. Our strong clinical data and our convenient at-home administration. Furthermore, we believe we have a unique advantage over other biologics as a significant proportion of these patients suffer from type 2 comorbidities in which Dupixent is either approved in the case of AD or in which we expect to get an approval in the case of nasal polyposis and eosinophilic esophagitis.

We were also pleased to receive FDA approval for Libtayo in advanced cutaneous squamous cell carcinoma. This is the first and only drug to be approved in the US in this potentially life-threatening form of skin cancer. The launch is under way with our partner Regeneron and we expect the European approval decision to follow in the first half of 2019.

Finally, we received European approval for Cablivi for the treatment of the rare clotting disorder known as acquired TTP. Launch is under way in this potentially serious condition and we hope also to receive FDA approval by the action day of February 6th, 2019. Of course, we plan to invest appropriately behind these launches to optimize their success.

On slide 12, I'm turning now to vaccines. Here, our third quarter sales grew by 8%, led by the rapid supply recovery of Pentaxim in China as we successfully resolved the supply constraint. This in turn drove 20% growth in our PPH franchise.

Sales of our flu portfolio in the Northern Hemisphere grew by 3%, despite what we anticipate will be a slightly greater weighting toward Q4 delivery than in the prior year. This performance was driven by our differentiated portfolio with Flublok making a strong contribution in the US and Vaxigrip QIV performing well in Europe. Indeed, our overall European vaccines performance remains strong, supporting our decision to take full control of this business.

We were also able in the quarter to share positive initial phase III data for MenQuadTT, our fully liquid next generation follow-on to Menactra. Taken together, we now expect sales of our vaccine's GBU to grow in the mid to high-single-digit range in the second half of '18, which is slightly above our previous mid-single-digit expectation.

Turning to DCV on slide 13, we were pleased to see Praluent pick up momentum, with sales up 64% in the quarter. We gained category share mainly due to our exclusive coverage by Express Scripts. Of course, our improved access came at the cost of significantly higher rebates as we have previously indicated.

In total, we have improved the utilization management criteria for close to 40% of our US commercial lives, which represents around 50% of sales in this channel. For 2019, while our payer coverage looks a bit lower than 2018, the quality of this coverage has improved. The change in commercial coverage is largely due to certain plans, which have already publicly announced their decisions to exclude Praluent from their formulary in 2019, in addition to CVS, which became effective earlier this year.

Moving to our Diabetes franchise, sales declined by 9% in the quarter, consistent with our 2015-2018 guidance. Similar to prior quarters, we achieved solid growth outside the US, mainly in emerging markets, but this was more than offset by a 24% decline in US sales. Our non-US sales now account for around 60% of the franchise and in the US, we achieved good early sales of Admelog due to access in Managed Medicaid.

When we look to our US diabetes contracting situation for 2019, we have maintained broad coverage for our Glargine products on the majority of US formularies. Our commercial coverage is essentially unchanged and we experience a modest reduction in coverage in part D, which represents around a third of our total Glargine volumes.

As expected the negotiations with payers were highly competitive and you should anticipate average pricing to decline further. I'm nevertheless pleased with our overall level of expected coverage for the coming year.

Turning to our CHC business on slide 14, sales grew by 4.1% in the quarter, with balanced growth across all geographies and key categories. The main driver continued to be our emerging markets region, where we achieved a 5% increase in sales, mainly led by Latin America and Africa-Middle East.

In contrast with the previous two quarters, our material market regions also showed consistent sales growth with Europe and the US each up approximately 3%. Overall, our broad geographic footprints and leadership position in CHC continues to drive growth ahead of the average of our global peers based on the latest market research data.

We are also free in line with our expectations from a growth and synergy point of view following the acquisition of the BIC-HC business in early 2017. On slide 15, as I touched on earlier, our market-leading emerging market business continues to be a strength or Sanofi with sales up 10% in the third quarter and 8% for the first nine months.

Our four regional groupings here delivered either high-single-digit or double-digit growth, as in prior quarters, China remained the particular highlight, with strong growth in both pharmaceuticals and vaccines.

To follow on to my previous point about China on slide 16, we decided during the quarter to further focus and refine our GBU structure. This recognizes both the growing importance of emerging markets, especially China, but also the possibility to gain operational benefits by combining our established product and DCV portfolios in mature markets.

As a consequence, in 2019, we will implement a new structure in which our Gen and DCV business units will be reorganized into two new GBUs. Our primary care unit, which will be led by Dieter Weinand will join us from there and our China and emerging market unit, which will be led by Olivier Charmeil. We expect significant benefits to arise from the greater focus in each new GBU.

On my final slide, I want to update you on key upcoming R&D milestones. In terms of regulatory approval, we expect decision on several key opportunities, namely Cablivi in aTTP in the US, Lybtio in CSCC in Europe, and Dupixent in adolescent AD in the US. We also expect the [inaudible] label update from the FDA in April.

We also have a number of pivotal readouts due during the coming quarters, including Isatuximab in multiple myeloma, and Sutimlimab in cold agglutinin disease. And lastly, we expect a number of proof of concept read-outs. This includes our SERDs in breast cancer and our CEACAM ADC in solid tumor.

So, the coming quarters will remain very busy for our R&D organization. Now, it gives me great pleasure to hand over to our new CFO, Jean-Baptiste de Chatillon.

Jean-Baptiste de Chatillon -- Executive Vice President and Chief Financial Officer

Thank you, Olivier. Good afternoon and good morning to everyone. It's a great pleasure to be here on my first Sanofi earnings call.

On slide 19, before discussing the details of the P&L, I would like to highlight the impact of forex on our reported third quarter figures. Currency movements reduced reported sales by 20% or €232 million, while business EPS was impacted by 3% or €0.05. The diminished impact compared with the previous two quarters was largely a result of strengthening of the US dollar.

Looking forward, based on October various exchange rates, we expect the impact on 2018 business EPS to be around -6%, which is unchanged from our estimate in July.

Looking on slide 20 at the third quarter P&L, the 11.2% increase in business EPS benefited from the strong topline growth, which Olivier described, together with a reduction in the effective tax rate to 22%, which is in line with expected rate. In addition, there was a small benefit from the reduced share count as a result of [inaudible] changes.

On slide 21, our BOI line needs a little explaining as there are a number of pushes and pulls. In particular, the growth in OpEx was somewhat inflated by the acquisition of Bioverativ and Ablynx. I will discuss this in more detail on the next slide. The year on year change in operating income was also adversely impacted by a high base for comparison in Q3 2017, as it included close to €70 million of noncomparable gains.

However, more than offsetting the movement in other operating income, we booked a substantial increase in associate contribution, which was mainly driven by discreet items in the equity accounting treatment of our ownership in Regeneron, including adjustments related to [inaudible] versus US GAAP on the prior period to update on actual reported results. Taking these elements together, BOI grew by 6.4% and we maintained our BOI margin at just over 32%.

On slide 22, looking now in more detail at our cost line, the gross margin decreased by 70 basis points to 71.6%. The reduction was partly driven by the continued erosion of sales from our US loss of exclusivity on a slightly lower gross margin ratio for our vaccines business, partially offset by our growing specialty care franchise. For the first nine months our gross margin was broadly unchanged at 71.3%.

For the full year, we continued to expect our gross margin to be between 70% and 71% at constant exchange rate. To give you more precision in your modeling it is reasonable to assume we may land in the middle of this range or close to our 2017 ratio, which was 70.6%.

Looking next at OpEx, R&D and SG&A expense grew by 9.5% and 1.6% respectively at constant exchange rate as we invested in new launches and in our late-stage pipeline. Overall, OpEx grew by 4.5%.

As I mentioned, growth was impacted by consolidation of Bioverativ and Ablynx. Excluding these acquisitions, overall OpEx would have grown by just 1.3%. R&D would have been up 4.5% and SG&A down 0.6%, which we believe indicates continued discipline in cost management. For the full year, we expect OpEx to grow around 4% at constant exchange rate, which is a slight bump up from our previous guidance of 3% to 4% as a result of launch investment.

On slide 23, I am providing an update on our financial position. At the end of September, net debt to that €18.7 billion, an increase of nine months largely reflected net spend of $13 billion on acquisitions on payment of our annual dividend. In addition, we repurchased around €1 billion of shares over the period and we received €2.1 billion in proceeds from divestment, most of which related to the EU generics business disposal. Over the year to date, our free cashflow was €3.2 billion.

On slide 24, we are raising the bottom end of our full-year guidance for business EPS, now expected to grow between 4% and 5% at constant exchange rate. This expresses our confidence in the quality of our results on strength of our business. The impact of forex on reported business EPS is expected to be around -6%, as I mentioned earlier.

When considering your fourth quarter models, you should keep in mind that the divestment of Zentiva will have an adverse impact of roughly €200 million on revenues. You should also note that while the comparable quarter in 2017 included 10% per share impact or €0.10 per share impact related to [inaudible], this was partly offset by an abnormally low tax rate of 18.7%.

Turning to 2019 or to pre-empt any questions you may have on the outlook, we will provide guidance in the usual way with our fourth quarter results on February 7th. We are, of course, confident in the new growth phase we have entered. However, we would not want you to extrapolate the type of double-digit EPS growth we have just reported for the third quarter.

For your modeling consideration, you should note that in addition to the dilutive impact of the EU generics disposal in the first nine months, we expect an increased contribution to the Part D coverage gap of approximately $240 million. Furthermore, we intend to fully support the launches of Dupixent in asthma, Caplivi, and Lybtayo, which will put, of course, pressure on SG&A. Finally, we continue to expect a lag in the gross sales due to higher rebates.

With that, I would like to turn the call back to Olivier.

Olivier Brandicourt -- Chief Executive Officer

Thank you, Jean-Baptiste. Before I close, I want to draw your attention to this slide, which captures the evolution of our business in terms of new product contributions versus LOE. We said in July that the adverse impact of LOEs had peaked in the first half. Here, you see clearly that it is the case. What this also shows is that our new product launches are now delivering revenues greater than the LOE impact. So, this really supports our confidence that Sanofi is entering a new growth phase.

So, in summary, on slide 27, we delivered a strong Q3 performance with the anticipated return to growth. We received three new approvals, which will help fuel our specialty care business and we have taken further action to focus our structure to support our growth ambition.

And with that, over to you, George.

George Grofik -- Vice President of Investor Relations 

Thank you, Olivier. And we will now open up the call to your questions. As a reminder, we'd like to ask you to limit your questions to two each.

Questions and Answers:

Operator

We will now begin the question and answer session. Anyone who wishes to ask a question may press * and 1 on their touchstone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press * followed by 1 at this time.

The first question comes from the line of Peter Verdult with Citi. Please go ahead.

Peter Verdult -- Citigroup -- Analyst

Hi, it's Peter Verdult here from Citi. Just to questions, maybe first to David -- if we just go a little deeper into the dynamics of Vaccines, how much of the guidance upgrade for H2 is simply due to the Pentaxim supply issues resolving quicker than expected versus either you having better visibility or a stronger outlook on the flu business or increasing demand in China following the issues facing the local industry.

And then my second question, if I may, for John Reed -- could you talk a little about the changes that you've started to make to the R&D organization and processes since taking over? I realize it's early days, but I'd be interested in anything you'd be willing to shed light on there. And then just going to the early stage pipeline, which assets are more promising, in your view? I'm particularly interested in your thoughts on TGFb, BTK, and some of your early stage oncology efforts in SHP2. Thank you.

Olivier Brandicourt -- Chief Executive Officer

Thank you, Peter. So, David, Pentaxim in China?

David Loew -- Executive Vice President, Sanofi Pasteur

Yeah, Peter. So, put that Pentaxim in China business in perspective, out of the 8.2% growth, which is the equivalent of €157 million, Pentaxim in China was represented €52 million. So, that's about a third of our growth or in absolute, that's 2.5% of the growth rate of the 8.2%. Out of this 2.5% growth absolute, part of it is, of course, coming from the restocking and I would say it's probably roughly half of it -- so, let's say 1.2 -- and the rest is really shot in arm.

We see that the shots in arm are developing very well. We were able to release the Pentaxim earlier than what we have estimated originally. We saw the Chinese authorities accelerating the release and we have, of course, now a relatively significant demand, one, because you had Pentaxim catch on of like those two or those three, but you also have a high-demand because of the vaccine scandal in China.

So, our outlook has improved for Pentaxim in China. Outside of the US, that means Pentaxim in China, we are growing still 6%. Why is that? So, we have seen across all the franchises very solid growth. You asked your second question regarding flu. The Flublok launch is going very well.

We are actually exceeding slightly our expectations, which is why we have upped the guidance. What we have observed also on flu is that fever, which had a little bit of a delay in releasing the doses of the whole industry -- they took about a two-week delay -- that has led to a situation where the Fluzone high-dose has not kicked in so much in Q3. It's going to come into Q4. So, that's kind of the second reason why we upped our guidance there.

Olivier Brandicourt -- Chief Executive Officer

All right. Well, Peter, I'll remind you that John started three or four months ago, so not yet a huge change, but early plan. So, go ahead, John.

John Reed -- Executive Vice President, Global Head of R&D

Thanks for your question. I'm really enjoying the early days here at Sanofi and working with the team to continue our evolution as an R&D organization. In terms of the organizational direction, we've been focusing on what we call the 4Ps of pipeline, pace, in other words the speed with which we deliver patients and people.

Maybe I'll just make a couple comments about pipeline. Going forward, we are excited to be continuing the momentum we have to press forward with more first in class and best in class molecules. We're looking at further ways that we can build our newfound strengths and biologics, particularly with an antibody platform that Ablynx brings to us.

So, we're seeing more and more representation of the pipeline in biologics. And our mix of investments in therapeutic areas is really emphasizing what we see as the three growth areas for the future of oncology, immunology, rare diseases, including rare blood disorders. So, we're really excited about the progress we're making.

You referenced wanting to get thoughts from me about what we see in the pipeline as potentially exciting molecules. Well, there certainly are several in the area of oncology. We've made a lot of progress in the last year. We now have 12 molecules in the clinic if you count our collaboration with Regeneron. Among those, several have shown early signs of encouraging advocacy such as our antibiotic drug conjugate that's targeting the CEA molecule for solid tumors, as well as oral CERD drug. So, we're really excited about the progress we're seeing there.

In immunology, dupi continues to amaze. We've referenced the new data from nasal polyposis as another example where every endpoint, primary, secondary was hit at a statistical level of significance. It didn't require that you are a mathematical wizard in order to see the benefit.

Then finally, in the area of rare, including rare blood disorders, I'm really excited about some of the molecules there, such as venglustat, an oral brain-penetrant molecule that modules that ceramide glycolipid pathway, a molecule that we're developing for the indications as well as the Bioverativ portfolio with the next-generation version of eloctate and sutimlimab, which are molecules that have shown early proof of concept and will be moving into pivotal studies next year.

So, the pipeline has a lot of momentum right now and it's great to be on board here at Sanofi.

George Grofik -- Vice President of Investor Relations 

Next question, please.

Operator

The next question comes from the line of Florent Cespedes with Société Générale. Please go ahead.

Florent Cespedes -- Société Générale -- Analyst

Good afternoon, gentlemen. Thank you very much for taking my questions. Two quick ones -- first, a big picture question for you, Olivier -- as you are now back to growth, the question remains how sustainable is this growth when you have new product launches, but what about the cost control and also what are the expenses you have to launch the new products? If you could, give us some color, your thoughts on the profile of the company and the sustainability of the growth going forward. That's my first question.

The second question is for Alan on consumer. The US reported 3% growth this quarter. Same kind of question -- how sustainable is it? Do you still have the pressure from the private label there? If you could give us some color on that front, that would be very helpful. Thank you very much.

Olivier Brandicourt -- Chief Executive Officer

All right. Thank you, Florent. Alan, do you want to start with your sector?

Alan Main -- Executive Vice President, Consumer Healthcare

Yeah. Thanks for the question, Florent. Yeah, we did see a recovery in the US performance with growth just below 3%. That was driven by our allergy cough-cold portfolio, which was up about 8% and our pain portfolio -- as you know, we have a large share of the topical pain market there of almost 11%.

So, again, we saw some positive momentum with our allergy portfolio, although it's off the same allergy season. We do get a second peak in the US, as you know, what's called the ragweed season. We saw positive momentum in both Nasacort and Xyzal. So, overall, the first nine months of US CAC sales were down by 3% because of our weaker allergy season, as I mentioned, I think, in the last quarterly call, but we're seeing a positive momentum coming into the year-end.

So, overall, we're happy with the recovery and we believe that we will continue to see growth in the US market in the next few months.

Olivier Brandicourt -- Chief Executive Officer

All right. Thank you, Alan. Florent, I'm not going to give you the guidance for '19, as you know. We're staying with '18. But you can see here what are the drivers. So, we're now expecting to grow 4% to 5%. So, we set it. This new growth phase is a result of Lantus and Sevelamer US generic impact having annualized. We have resolved some Pentaxim supply constrain in China. We have this very strong growth of both Dupixent, a little less Kevzara and Praluent, but they are growing.

We have the three launches we mentioned in the initial remarks. Admelog is also very encouraging during this quarter. We're launching Dupixent in asthma. We have this increasing contribution from Bioverativ and as Alan has just highlighted, CAC has now reached a growth rate which we were anticipating and it's specifically encouraging in emerging markets and more particularly in China. So, those are the growth drivers. They are definitely there to remain.

Now, for cost savings, because that's also the nature of your question, we have achieved, as you remember, the 1.5-unit cost savings. Now, most of it entirely reinvested into the business, but we achieved it one year earlier. You can see that in the first months of '18, we have continued to show strict cost management and that's more specifically visible on our G&A line. We are not finished in terms of simplification. That's a very important piece. Our primary care business unit and what we're putting together is a very good example of how we are trying not only to simplify, but of course to be even more disciplined in our cost line.

So, I would say more to come on the cost discipline programs in the future and I would just stop here. You want to say anything else, Jean-Baptiste, on the cost side, maybe?

Jean-Baptiste de Chatillon -- Executive Vice President and Chief Financial Officer

As you know, we are in this acquiring phase. So, we are really looking at being as efficient as possible, which is putting the right level of [inaudible] in front of our challenges. So, yes, we will, of course, fuel the growth with the Genzyme, having higher resources to face the launches, but we will keep a good discipline as has been done with the €1.5 billion plan. You see our G&A trend in this quarter. So, we have strong discipline but we want to keep the momentum of the growth and we look at what's necessarily for it.

As I mentioned, we will have OpEx growth of the full year, I said between 4% and 5%. So, that reflects the acquisitions we've just done. But of course, going forward, we want to keep the SG&A bids as controlled as possible.

Olivier Brandicourt -- Chief Executive Officer

Very good. Thank you very much, Jean-Baptiste.

Florent Cespedes -- Société Générale -- Analyst

Thank you very much for your points. They're very helpful.

Olivier Brandicourt -- Chief Executive Officer

Next question please.

Operator

The next question comes from the line of Luisa Hector with Exane. Please go ahead.

Luisa Hector -- Exane BNP Paribas -- Analyst

Hi there. Thank you for taking my questions. I wonder if we can get a bit more information on the Dupixent launch. How is the reimbursement looking for 2019 in the US and are you ready for the reimbursement or do we still need to see that pick up over time? And any comments on how you will differentiate yourself in asthma now that you have the label? I know you've touched upon the breadth of the label, but anything else when you compare yourself to the existing injectables in terms of administration at home versus having to go into the office? Any color there?

And then the second question would be on your Regeneron collaboration. How soon can we expect that to turn profitable or is it still very much in that launch phase with heavy costs, still? Thank you.

Olivier Brandicourt -- Chief Executive Officer

Thank you very much, Luisa. Let's start with Dupixent and the differentiation in asthma and where we are in terms of coverage.

Bill Sibold -- Executive Vice President and Head of Sanofi Genzyme

So, it's Bill. Thank you very much for the question. Let me start with asthma and our thoughts on the label here. We're really excited about this label. We think it's the broadest asthma label. We think that we have the best efficacy. We've got a unique mechanism of action. We have the ability to work in comorbidities of type 2 disease and we're the most convenient. So, I think on all those fronts, we feel very comfortable that we can compete not only by having the broader label, but we think that our efficacy really stands out.

One of the things I'll point to the in the label as well is this indication for OCS-dependent patients. That is something that makes us quite unique. Again, I think that's -- that is irrespective of the eosinophil level. Overall, we're excited on all those fronts. I will recall, as I said, from a convenience perspective, we're a subcu administration. If you look at the others, they are all IV administration. So, that will be certainly very convenient for patients.

Just regarding a little bit about the question of how is Dupixent doing overall, I think you heard from Olivier we continue to have very positive trends in atopic dermatitis. More than 63,000 patients have been prescribed Dupixent in the US. We have just strong across all of our metrics continued results here. So, about 600 new patients are receiving a filled Dupixent restriction on a weekly basis.

We've got breadth in prescribers. Over 12,000 prescribers now -- the thing that I really like to look at is the number of prescriptions per physician. About 68% of the prescribers have written at least two prescriptions, 51% have written at least three, and about 40% have written at least four. So, that's now a good sense of the breadth.

Regarding turning into 2019, we expect strong coverage still. Now, I will remind you that we are just starting with asthma. We are in payer discussions. We would expect this quarter to be able to announce some progress on our payer discussions. Clearly, as we get into Q1 and Q2 of next year, we think that we will have progressed pretty deeply with being able to give an update on where we stand. But we're expecting quite favorable coverage with Dupixent.

Olivier Brandicourt -- Chief Executive Officer

Thank you very much, Bill. Luisa, on your Regeneron question -- so, for the full year 2019, we still expect that the Regeneron MAbs collaboration will still be loss-making, as we are in a commercial investment period with the launches of Dupixent, Kevzara, and Praluent.

Now, of course, when you are modeling the profitability of the collaboration, you do have a number of different variables to consider. The launch period of Dupixent in asthma, the success of our new contracting strategy for Praluent, and the weight of uptake of Kevzara.

So, we're also investing in classes with the three compounds in classes with competitors, strong competitors. So, you are in asthma. You are in RA, even in the PCSK9 class. So, we may decide to reevaluate moving forward the level of resources we need to maximize launch success.

So, our basic scenario today for the collaboration is to turn profitable more in 2020. But of course, the precise timing depends on the balance between the different variables I just mentioned. So, that's what I would say.

Operator

The next question comes from the line of Graham Parry with Bank of America Merrill Lynch. Please go ahead.

Graham Parry -- Bank of America Merrill Lynch -- Analyst

Great. Thanks for taking my questions. I just wanted to follow-up on the cost-savings questions asked earlier. Perhaps, Jean-Baptiste, if you could just help us understand what experience your bring from the autos industry, obviously a fairly low-margin industry that could be applicable to pharma and when you expect to quantify any cost-savings or additional cost savings beyond the last $1.5 billion program, which is now completed.

Then secondly, on consumer, emerging markets growth has slowed down from double-digits to mid-single-digits in the quarter. Perhaps if you could, give us a little more color on what's behind that. Do you think emerging market consumers can continue to deliver high-single, low-double-digit growth going forward or are you now seeing an impact of a global economic slowdown in that segment of the division? Thank you.

Olivier Brandicourt -- Chief Executive Officer

Thank you very much, Graham. We'll start with Alan on consumer and emerging markets.

Alan Main -- Executive Vice President, Consumer Healthcare

Hi, Graham. I wouldn't read too much into one quarter in the emerging markets. We've seen a very strong year so far, particularly in Latin America, as you know, but we're also starting to see a recovery in Russian operations.

So, overall, we've seen Latin American business growing by 4.5% in this quarter, but very strong underlying growth in some of our key categories. We've had allergy, cough and cold growth up almost 18%, adjusted at 9%. We did have some stock issues as a result of supply following the Mexican earthquake to our Mexican operations. That impacted a little bit the third quarter. Again, we hope to recover that situation relatively quickly.

Again, as you know, emerging markets is quite a significant part of our portfolio. It's about €1.6 billion overall. That actually is why we're sometimes impacted a bit more on the forex side, which might impact a little bit on the consensus. But overall, we are very positive about the emerging market performance and that continuing into the future.

Olivier Brandicourt -- Chief Executive Officer

Thank you very much, Alan. Graham, we had a program, as you remember, even before Jean-Baptiste came on board. We created that business transformation office at the Ex Com level. Dominique Carouge is our head of that business transformation. He has worked the last six, seven months on identifying, streamlining initiatives which we are going to put in place very soon.

So, we had not, again, concluded that we were finished in terms of simplification and cost saving and I would say efficiency in general. We would have probably more to say on the subject of cost saving in the coming months. I can't tell you exactly when, but we'll definitely go back to you with more details.

Having said that, Jean-Baptiste, your experience in how much you can take advantage of that experience at Sanofi?

Jean-Baptiste de Chatillon -- Executive Vice President and Chief Financial Officer

Well, I think that a high-margin business or low-margin business doesn't change the equation. We are competing and we need to beat the competition and be better. That's what counts. So, efficiency is much more important than just cost-cutting. What I find very interesting coming into Sanofi, the capacity to pivot and to follow the bigger swing we have in growth from one franchise to another, which takes, of course, mergers to reduce costs on one hand, crucial growth on the other hand. That, of course, I will pursue actively with all the team.

Operator

Next question comes from the line of Jo Walton with Credit Suisse. Please go ahead.

Jo Walton -- Credit Suisse -- Analyst

Thank you. I've just got a couple of product-related questions, looking at the access data you've given us. Last year, when you gave us the expected coverage, you split it between preferred and non-preferred. You've just given us one number now. Perhaps the difference is not so relevant. But one product which has got a big dropdown next year is Toujeo.

And looking at consensus expectations, there's still the view this new product would show strong growth, presumably in the US as well as ex-US. Given the sharp down-draft in terms of access, do you think that is still realistic? I'd also like to ask about Admelog and the expectations there. It obviously had a very strong initial period. What sort of level of coverage do you think that will have next year? Thank you?

Olivier Brandicourt -- Chief Executive Officer

So, my comment on keeping the broad coverage or the same coverage than last year, I think you have seen on one slide, we are keeping it in commercial when it comes to glargine, with the exception of Medicare Part D. As you know, CVS and Aetna are in the process of combining their businesses. So, CVS as excluded Lantus and Toujeo from their commercial formulary since the beginning of '17 then from 75% of their CVS SilverScript Medicare plans starting in January '18.

For '19, Aetna has chosen to exclude Lantus and Toujeo from their formulary, but in the Medicare Part D section as well. That is affecting about 3 million lives based on the 2018 lives, which profusely had access to Lantus and Toujeo under Aetna plans. So, that's what I would say on the access in the US for glargines.

Again, I did mention the pressures of competition and the pressure on pricing too. However, Toujeo, we have to look at it worldwide. It has been slightly declining in the US this quarter, but it has grown significantly in Europe. We are seeing very good early signs of growth also in emerging markets. So, I would say you're right to look at Toujeo as being a growing agent in our diabetes franchise in the future overall.

Now, Admelog in Q3, you've seen -- I think it was €26 million sales. This good result for the quarter was mainly due to our access and we were very clear in previous quarters about that in managed Medicaid. Our market entry strategy for Admelog at launch was really focused on accessing managed Medicaid channels as well as cash channels for uninsured and under-insured patients.

Now, if your question is related to what's coming in the future regarding commercial and Medicare channels outside of the managed Medicaid, this book of business, as you know, is very much split between two products, two branded products, which controls a vast majority of the market and this book of business is very much driven by exclusive contracts.

So, due to the timing of our launch of Admelog during the second quarter of '18, we'll likely not be contracted in Medicare in '19. And we see that happening, that type of access, in 2020, so just a comment on access of Admelog. But we're very pleased with what we've seen so far during the third quarter exclusively in managed Medicaid.

Operator

Next question comes from the line of Seamus Fernandez with Guggenheim Securities. Please go ahead.

Seamus Fernandez -- Guggenheim Securities -- Managing Director

Thanks very much for the question. I just wanted to ask a quick question on how the performance of the new hemophilia business is moving forward. It seems like you have pretty strong results in international markets, whereas the US appears to be slowing down quite a bit. I just wanted to get a sense of how you see the evolution of the hemophilia business going forward. Thanks so much for the question.

Olivier Brandicourt -- Chief Executive Officer

Thank you, Seamus. That's going to be a question for Bill. Bill, you have to talk about the difference between Eloctate and Alprolix and what happened in Canada.

Bill Sibold -- Executive Vice President and Head of Sanofi Genzyme

I think that makes sense. Overall, it was a 9% growth, as we talked about. That includes non-US sales of €66 million and Japan is the primary contributor there. Eloctate Q3, €193 million, which was 11% year over year. For the US, that was 14% and Japan, 24%. Alprolix generated €88 million in Q3, which was up 3%, including 6% in the US and 1% in Japan.

I think pointing our Canada here is important. There was a reduction year over year in Canada, which led to an overall impact of just over 4% on the growth rate such that the rate would have been 13% overall, removing Canada. And the reason for that is the loss of a tender that went into effect on April 1st of this year. We created strong demand and growth in Canada ahead of the tender and the removal of the use of the brand except in certain cases, particularly adults, our comparison to last year is impacted as a result.

So, overall, we are extremely excited about the business. We have what we believe are the best in class factor replacements and look forward to continued growth of that franchise.

Operator

Next question comes from the line of Richard Vosser with J.P. Morgan. Please go ahead.

Richard Vosser -- J.P. Morgan -- Analyst

Thanks for taking my question. A question on caplacizumab, please. Just thinking about the launch in, I suppose, Europe, and then potentially looking into the US, I'm thinking about the pricing strategy and the launch uptake expectations that we can think about there. Second question, just going back to flu -- just interested in the market share gains and uptake you're getting from Flublok, given its superior profile and how you expect that to develop forward in terms of market share gains, maybe incremental doses that you can get and growth of that franchise. Thanks very much.

Olivier Brandicourt -- Chief Executive Officer

Thank you, Richard. We'll start with Cablivi and the launch and the prices.

Bill Sibold -- Executive Vice President and Head of Sanofi Genzyme

Great. Thank you, Richard. We are really excited about Cablivi. As Olivier said, it is one of the three launches that we have going on in October alone, which is exciting for us as a company. Talking a little bit Cablivi for a moment, this is a real breakthrough therapy. We have just launched a few weeks ago in Germany. We see this as addressing really significant unmet needs.

These patients have really no indicated therapy, really, at the moment. This has been potentially a real lifesaver for them. We know the stats show that we decreased mortality. We decreased the number of days of plasma exchange. We decreased the days in the hospital and we decreased the days in the ICU and decreased the permanent organ damage. So, we also decreased recurrence. So, this is a really innovative product and we are very, very excited.

As it relates to -- to give you a little bit about the launch going on in Germany, we've spent a lot of time focusing on just where does these patients get treated. So, we have a good understanding of the centers in which they're being treated and we think it's about 70 target centers where we see a lot of the patients that are being treated.

We're still early and the referral patterns and so forth are still being established. It's going to take a little bit of time for the community to be educated by this and be ready to be thinking of Cablivi when they have the diagnosis of aTTP. To give you a sense here, the price in Germany is €160,000. That would be assuming 35 doses. So, recall you have the inpatient portion and then after you're discharged, you would continue on therapy with at-home administration for 30 days.

So, if you assume a five days inpatient and 30 days as an outpatient, so 35 days, that's how you can calculate the €160,000. We're getting ready for launch in the US as well, as Olivier said, February 6th, the action date, teams are being put in place. We're assessing that market, the referral patterns there, where we're going to target, and we're on track for approval from a commercial readiness perspective.

George Grofik -- Vice President of Investor Relations 

Olivier, please go back to Flublok.

Olivier Charmeil -- Executive Vice President, General Medicines & Emerging Markets

So, Richard, your question on Flublok -- as you know, this is our second flu vaccine, which is truly clinically differentiated, proven in clinical trials. Therefore, we do assume that we're going to gain significant market share, especially in the segment where it is differentiated, which is the 50 years and 65 years. It is, however, too early to still get to tell you exact figures because we are in the middle of the flu season.

We have seen with the shipments that the shipments are developing very positively. Now, we have to see how the shots in arm are going to behave and I think we can probably tell you more about it the beginning of next year, when we have much more data on the real shots in arm. But we are clearly very positive on Flublok and we are very satisfied with the uptick we have seen so far.

Operator

The next question comes from the line of Emmanuel Papadakis with Barclays. Please go ahead.

Emmanuel Papadakis -- Barclays -- Analyst

Thank you for taking the question. There was one minor detail. I wondered if you could give us any more granularity on that associate's line in terms of what was the true up versus the other items. It was a follow-up for John Reed. One of the assets noted in the pipeline was anything on diabetes. I was just interested to get your perspective on the assets you have in early development following some of the recent data in that space and your perspective on whether that is a competitive opportunity and indeed your outlook on that class of medicines overall.

Then the last question was just a follow-up dupi, the asthma label. You noted the comorbidity. There was quite a high degree of comorbidity with asthma and nasal polyps noted in the trial release. I just wonder if you could comment on how much of an incremental opportunity that will be when that eventually launches. Many thanks.

Olivier Brandicourt -- Chief Executive Officer

All right. Thank you, Emmanuel. So, Jean-Baptiste, the true up in [inaudible], how big it is.

Jean-Baptiste de Chatillon -- Executive Vice President and Chief Financial Officer

Thank you for this question. I should have given an indication. It's like half of the amount, which is linked to this true up plus the difference in accounting. So, that's the order of magnitude.

Olivier Brandicourt -- Chief Executive Officer

So, it's 50% of the total of 150 --

Jean-Baptiste de Chatillon -- Executive Vice President and Chief Financial Officer

153, yeah, half of it.

Olivier Brandicourt -- Chief Executive Officer

So, that's the answer, Emmanuel. Diabetes, John?

John Reed -- Executive Vice President, Global Head of R&D

Yeah, Emmanuel. Thanks for the question. We have several things in the clinic or close to the clinic. Efpeglenatide, of course, is the weekly GLP-1 agonist that we're developing, but then behind that, we have these next generation increases where we combine the activities of GLP-1 with either glucagon receptor agonism or GIP or both in a tri-agonist. So, we are exploring all of these different mechanisms.

The most advanced, in our case, is a dual agonist of GLP-1 together with glucagon receptor. We're still exploring ways to present that drug with enough titration scheme, etc. and looking at what the benefits of glucagon receptor agonism may or not be for the patients as we look at both glucose and glucose regulation as well as weight loss.

We're assessing from the recent data that has been presented the GLP/GIP combination that from the recent data in the field looks particularly exciting. So, we are really looking very hard at that whole portfolio of molecules and we'll be looking at what we can do to accelerate that program.

Olivier Brandicourt -- Chief Executive Officer

Thank you, John. Dupixent, Bill?

Bill Sibold -- Executive Vice President and Head of Sanofi Genzyme

Thanks, Emmanuel. First of all, we are really excited about the data release that we had with nasal polyps. What it does is confirm this effect that Dupixent has on type 2 disease. A way to think about is that's very much upper-respiratory, compared to the lung, which is a lower respiratory. So, really the one airway idea that we are having an impact on these various type 2 diseases.

There is quite a bit of overlap -- when I say overlap, comorbidity. In the QUEST study, for instance, our asthma study, about 13% of patients had nasal polyps history. In the sinus studies for nasal polyps, 59% of patients had comorbid asthma. So, again, we think that patients will be treated for the primary diagnosis and then if they have these other type 2 comorbidities, that is certainly going to make Dupixent more attractive for physicians than we believe for patients.

Operator

Last question comes from the line of David Evans with Kepler Cheuvreux. Please go ahead.

David Evans -- Kepler Cheuvreux -- Analyst

Thanks for taking my question. I just wanted to follow up on Eloctate. I was just wondering -- can you express your level of confidence that Eloctate will continue to grow sales through 2019 and 2020 given the changing competition in that market?

And secondly, on Dupixent in asthma, given your broader label, are there specific sub-populations within asthma where you think you can see especially fast uptake initially, for instance, with patients on oral steroids that have low eosinophils. Do you think Dupi can -- is it more a question that this will grow the overall market rather than take share? Thanks very much.

Olivier Brandicourt -- Chief Executive Officer

All right. Bill, maybe I can answer competency in Elcotate. First, patients on therapy, that continues to grow, maybe at a slightly slowing rate recently because the total switch market has slowed down slightly in the US. The Eloctate switch capture remains highest, as Bill said earlier in the market. We have a very high patient satisfaction, which is itself leading to a high retention rate. It continues to be the number one prescribed extended factors in the US with the largest number of patients. I think we have 2,500 patients treated.

So, all the indicators are really very positive for the coming two years, certainly, and as you know, there is also one characteristic of Elcotate, which we think is rather unique, the joint knee protection. So, altogether, we've continued to be very optimistic about the future trajectory of Eloctate, considering, again, the very big reservoir of patients who are not under prophylaxis yet. So, do you want to add anything, Bill?

Bill Sibold -- Executive Vice President and Head of Sanofi Genzyme

I think that's right. Ultimately, it's the profile of Eloctate. We think it is the best factor. We don't think factor replacement is going away. It's the fundamental approach to treating the disease. Regarding asthma, look, where we have our differences, we have the indication for the OCS-dependent asthma, which I think is something that allows us to immediately be in that population.

We've only been out there for a week or so at this point, but there's a lot of enthusiasm by physicians. Look at it just as for a patient that meets the criteria that has asthma. It's not to say niche anywhere, it's saying they believe that with the broad label and what we believe the best efficacy, that this is a good product to go to.

The other comment I would just make is that you look at the two physician audiences, pulmonologists and allergists -- certainly, with the allergists, they've had experience the last 18 months with atopic dermatitis. So, this is moving to the new indication for the product they know. For the pulmonologists, pulmonologists have not been so able to infuse product in practice. They're not set up that way.

So, we see it going to the pulmonologists with the subcu possibility with Dupixent that we would expect to see better uptick in that group for use of a biologic now because there's one they can use easily. We think it's going to be broadly used. We have areas of differentiation and we're very enthusiastic. We're a week into it. We're just at the beginning. We'll report back next quarter with how things are going.

Olivier Brandicourt -- Chief Executive Officer

Thank you very much, Bill. Thank you, David. Thank you, everyone. Have a very good day. Bye,bye now.

Operator

Ladies and gentlemen, the conference is now over. Thanks for choosing Chorus Call and thanks for participating in the conference. You may now disconnect your lines. Goodbye.

Duration: 70 minutes

Call participants:

George Grofik -- Vice President of Investor Relations 

Olivier Brandicourt -- Chief Executive Officer

Jean-Baptiste de Chatillon -- Executive Vice President and Chief Financial Officer

John Reed -- Executive Vice President, Global Head of R&D

Bill Sibold -- Executive Vice President and Head of Sanofi Genzyme

David Loew -- Executive Vice President, Sanofi Pasteur

Olivier Charmeil -- Executive Vice President, General Medicines & Emerging Markets

Alan Main -- Executive Vice President, Consumer Healthcare

Peter Verdult -- Citigroup -- Analyst

Florent Cespedes -- Société Générale -- Analyst

Luisa Hector -- Exane BNP Paribas -- Analyst

Graham Parry -- Bank of America Merrill Lynch -- Analyst

Jo Walton -- Credit Suisse -- Analyst

Seamus Fernandez -- Guggenheim Securities -- Managing Director

Richard Vosser -- J.P. Morgan -- Analyst

Emmanuel Papadakis -- Barclays -- Analyst

David Evans -- Kepler Cheuvreux -- Analyst

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