Sanofi: Vaccine Research and Development Update Reinforces Steady Long-Term Growth Outlook

Sanofi’s SAN vaccine research and development update provided details on core franchises and new vaccines but didn’t impact our fair value estimate. The encouraging pipeline developments reaffirm our conviction in the firm’s wide moat. We believe Sanofi will likely meet its vaccine sales expectation of over EUR 10 billion by 2030, up from close to EUR 5 billion in 2018.

Key to Sanofi’s vaccine growth will be continued flu vaccine sales, which we believe is likely. While competition is mounting from mRNA developers, we believe the first-generation mRNA flu vaccines will not be very competitive due to side effect issues, storage complications, and efficacy concerns with the B strains of the flu. Longer term, we expect mRNA technology to improve, and Sanofi is working on an mRNA flu vaccine that should be competitive. However, one area of weakness for Sanofi is the lack of a COVID-19 mRNA vaccine. If competitors are successful in combining flu and COVID-19 into a single mRNA vaccine, we believe Sanofi could lose market share.

We expect RSV to provide Sanofi with a key growth driver, led by recently approved RSV immunization Beyfortus. With close to three times the ability to prevent hospitalizations and office and emergency room visits versus a maternal RSV vaccine, we believe Beyfortus’ potential is well over EUR 1 billion in peak annual sales. Also, Beyfortus holds the advantage of targeting a wider range of infant ages versus the competing product Synagis as well as only one injection versus up to five for Synagis. Longer term, a toddler RSV vaccine and an adult RSV vaccine also targeting hMPV and PIV could lead to significant launches in 2027 and beyond.

Additional vaccine developments in pneumococcal and meningitis look likely to reach the market by 2028, but we remain skeptical of the differentiation of these vaccines and only project minor sales potential. Also, early vaccine work in chlamydia and acne looks intriguing but needs further validation.