The French-based pharmaceutical company Sanofi (SNY -0.94%) has been flying under the radar over the past few years as companies like AbbVie, Bristol Myers Squibb, and Merck have dominated the space through the tremendous success of their drugs. However, while it's still trading below its all-time highs, Sanofi is making moves to drive growth into the future -- so now might not be a bad time to look at adding the stock to your portfolio. 

Vaccine fill

Image source: Getty Images.

Turning around

Sanofi was actually a creation of several different companies, including Aventis, Synthélabo, Hoechst, Rhône-Poulenc Rorer, and several others. Through mergers and acquisitions (M&A) we got the Sanofi we know today. Sanofi has been best known for creating drugs like Menactra (meningitidis vaccine), Lantus (diabetes), Eloxatin (colorectal cancer), and Taxorete (prostate and breast cancer). But in the last few years, with drugs going off-patent and sales declining across its many products, Sanofi has been in a bit of a slump .

However, in its 2020 full-year investor presentation, the company showed that it is making a quick turn-around led by the drug Dupixient, which is used to treat eczema. During the COVID-19-induced recession, the company has been able to grow sales at remarkable rates on some of its core business lines, growing influenza vaccine sales by 38% to over 2 billion euros and growing sales in its specialty care franchises by 22%. 

The company continues to outperform in 2021. Again, the company's main driver has been the outperformance of its specialty care products and vaccines businesses. The company grew these businesses at rates of 15.3% and 5.3%, respectively, from 2020's Q1. The company noted that vaccine sales rose 5.3%, mainly due to increased sales from the polio vaccine and overall vaccine sales growth in emerging markets. The company managed to bring in a total of 8.6 billion euros, beating analysts' estimates of 8.5 billion euros for the first quarter. 

Sanofi also isn't shying away from lending a helping hand during the COVID-19 pandemic, reaching deals with both Pfizer and BioNTech to produce 125 million doses of the vaccine for European nations, as well as reaching a deal with Johnson & Johnson to help produce the latter's vaccine at a rate of 12 million doses per month. While payment details around this deal were not disclosed, we can assume it is somewhere around the $1 billion-to-$2 billion range based on the $2.1 billion deal confirmed by the U.S. government last July to pay both Sanofi and GlaxoSmithKline to help manufacture COVID-19 vaccines

Future pipeline

Sanofi is currently making huge strides to bolster its pipeline over the next few years. The company's blockbuster, Dupixent, is a fast grower and looks to be a leader for the company in fueling future growth while newer drugs come onto the market.

The company's current development pipeline includes a partnership with AstraZeneca (AZN 0.46%) for Nirsevimab. This is a passive immunization, designed to provide RSV protection to all infants. The company expects to file for regulatory submission by 2022, a year ahead of the initial timeline. The company is also expecting its oncology unit to be a good driver of growth through drugs Libtayo (lung cancer), which it produces in partnership with Regeneron Pharmaceuticals (REGN 0.45%), and Sarclisa (myeloma). The U.S. Food and Drug Administration (FDA) has recently approved these two drugs to treat additional indications, which will help drive sales. In 2020 Libtayo brought in $270 million for Regeneron and Sanofi, and Sarclisa brought in around $50 million in sales. Scarlisa in particular is a big win for Sanofi, as it was Sanofi's first in-house cancer drug to be approved and on the market since Jevtana, which came out in 2010.

In addition to research and development, the company is expanding its pipeline through M&A as well, making a few acquisitions over the last 12 months. Most recently the company acquired the company Kymab for a little over $1.4 billion in order to add one of its monoclonal antibody drugs, which Sanofi hopes to bring to market as a potential first-in-class treatment for a range of immune and inflammatory diseases.

The company also acquired pharmaceutical company Kiadis for 308 million euros. The acquisition was made mainly to acquire Kiadis' proprietary next-generation NK-cell technology, which will help bolster Sanofi's existing therapeutic technology. By combining Sanofi's infrastructure with Kiadis' tech, the company hopes to advance the development of both Sanofi's and Kiadis' pipelines. Growing revenue has been tough for Sanofi over the last few years, with revenue dropping by 3.39% in the last year. But with an exciting pipeline and a collection of drugs to bring to market over the next few years, Sanofi could see annual revenue rise well into the future. 

Value play

Compared to its peers, Sanofi is currently trading at a very attractive valuation. It currently trades at a 9.1 forward P/E ratio, and is down considerably from the past year, when it was trading at around an 11 forward P/E. Taking EPS estimates of $5.66 for the current fiscal year and applying the usual multiple this company trades at, the stock should be trading at around $62, or a 20% possible price appreciation. The company offers an attractive 3.6% dividend yield, a nice payout to keep investors patient while the stock returns to fair value. With the current undervaluation and a positive outlook on its pipeline, buying Sanofi right now could drive market-beating returns into the rest of 2021.