Sanofi India Q2 Diabetes Business Grows 14%

Total Income: Increased by 7% year-on-year (YoY).
Domestic Sales: Grew by 8% YoY.
Export Sales: Declined by 2% YoY.
Diabetes Business: Achieved 14% YoY growth, powered by the innovative portfolio (Toujeo and Soliqua).
Profit Before Tax (PBT) & Exceptional Items: Stood at ₹112 crores, a 19% YoY increase from ₹94 crores.
PBT Margin: Improved to 27% of net sales, up from 24% in the year-ago quarter.
Other Operating Income: Attributable to services provided to other group entities, including a private company in India and the consumer health division.
Other Income: Comprised interest on deposits and foreign exchange (FX) gains.

Total Sales (Domestic + Export): Declined by 2% YoY.
Diabetes Business: Grew by 17% YoY.
Profit Before Tax (PBT) & Exceptional Items: Declined by 4% YoY, primarily attributed to one-off impacts in Q1 from the partnership business transition.
Operating Expenses: Reduced by 15% YoY in H1, focusing on personnel costs and other opex without impacting projects with a return on investment.
Cash Position: Increased by 34% YoY, described as a "very healthy situation."

The company's diabetes business unit showed strong consecutive quarterly gains.
Market Leadership: Maintained a 47% value market share and 61% volume share in the basal analog segment.
Lantus: Volume acceleration of +6%, maintaining market leadership.
Toujeo: Grew by 11% in value market share as the second preferred second-generation basal insulin.
Soliqua: Grew by 16% quarter-on-quarter despite erosion in the GLP-1 market.
Public Sector: A key growth driver, contributing ~70% of the growth in the diabetes business through expansion into new accounts (CGHS, ESI, Railway, State, Army).
Real-World Evidence: Four publications for Toujeo and Soliqua between Q4 2025 and Q2 2026 to strengthen positioning in Indian guidelines.

The partnership segment grew by only 2% YoY in Q2.
Management attributed the anemic growth to one-off impacts from the transition period following the partnership agreements signed in March 2024.
These included the build-up of safety stock inventory by partners in Q1 2025, which impacted primary sales comparisons in Q1 2026, and agreed sales returns during the transition.
Management stated there is no risk of partners sidelining Sanofi products for their own, as dedicated teams are in place.
A recovery to industry-level growth is not expected in 2026 but is being evaluated for 2027.

Faced challenges, particularly in the Australian market due to heavy competition for mature products.
Strategy involves offsetting losses by specializing the Goa manufacturing site for certain products and supplying other markets like France, Italy, Turkey, and Russia.
The company is awaiting tender results from South Africa.

The company is ahead of its 2026 CSR commitments.
Programs include KiDS & Diabetes in Schools and Mobile Medical Units.
Over 600,000 direct beneficiaries are expected by year-end.
A new MoU was signed with the National Health Mission (NHM) in Madhya Pradesh to expand CSR projects, adding to existing operations in Uttar Pradesh, Maharashtra, and Goa.

Deepak Arora (MD): Emphasized execution of the business strategy, building AI-enabled capabilities, and being customer-centric. Described 2026 as a "year of acceleration" for the diabetes business.
Rachid Ayari (CFO): Highlighted financial discipline, operational excellence, and a strong cash position. Noted that excluding one-offs, the H1 top line would be positive and the bottom line would show high-digit growth.
The company is evaluating the introduction of innovative devices and AI platforms from the parent's portfolio to complement its diabetes business in India.

Management welcomed new innovation (once-weekly insulin) but believes it serves a different patient profile than once-daily insulins (Lantus, Toujeo).
No major shift is expected due to the large market size. The increased share of voice is seen as beneficial for expanding the overall insulin market.
The public sector expansion strategy is expected to continue driving growth for Sanofi's portfolio.
The insulin market is viewed as "sticky" for existing patients, with growth coming from new initiations and intensifications.

Management did not provide forward-looking guidance on dividends, stating it is a Board decision.
However, given the strong cash generation (+34%), they expect the payout "will not be lower than what we were doing in the past."
A proposal for an open market buyback is not part of the current strategy, though such matters are discussed at the Board level.

Management stated that GLP-1 drugs have been complementary to insulin therapy in some cases.
The growth of Soliqua (a GLP-1 + insulin combination) is partly attributed to the increased awareness from GLP-1s.
The analog insulin segment is sustaining double-digit growth irrespective of GLP-1 competition.

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