Sanofi India Ltd (BOM:500674) (Q2 2027) Earnings Call Highlights: Diabetes Portfolio Drives 14% ...

Negative Points

• Sanofi India Ltd ( BOM:500674 ) reported a 2% decline in total income for H1 2026, impacted by one-off transition costs and safety stock adjustments related to its partnership agreements.

• The partnership business for Cardiovascular and CNS products showed anemic growth of only 2% in Q2, below industry expectations, with management not expecting to reach industry growth until 2027.

• Export business faced challenges, particularly in the Australian market due to intense competition for mature products, leading to a 2% decline in export sales.

• The company's overall sales declined 2% in H1 2026, with the partnership segment still in a transition phase and not yet delivering expected growth.

• Sanofi India Ltd ( BOM:500674 ) faces potential competitive pressure from new once-weekly insulin entrants, which could impact the growth trajectory of its once-daily products like Toujeo and Lantus.

• The company's other operating income declined due to reduced services provided to consumer health entities, impacting overall revenue growth.

• Management acknowledged that the partnership business is not meeting expectations and requires significant reorganization and reinvestment from partners to improve performance.

• The company's growth is heavily reliant on the diabetes segment, with limited visibility on new product launches or diversification into other therapeutic areas in the near term.

• Sanofi India Ltd ( BOM:500674 ) is not expecting to reach industry-level growth in the partnership portfolio during 2026, indicating prolonged underperformance in this segment.

• The company's dividend payout ratio remains uncertain, with management unable to commit to maintaining historical payout levels, potentially disappointing income-focused investors.

Q & A Highlights

Q: Why is the partnership business (Cardiovascular and CNS) showing prolonged anemic growth, and when will it catch up with the industry? Is this a structural issue or a temporary headwind? A: Rachid Ayari (CFO) explained that the Q1 2026 performance was impacted by one-off items from 2025, including the building of safety inventory and agreed sales returns during the transition period with partners. For Q2, the 2% growth is below expectations, but the company is working with partners (Cipla and Emcure) on reorganization and reinvestment. He does not expect to reach industry growth in 2026, but this is being evaluated for 2027. Deepak Arora (MD) added that the OAD segment is already meeting market growth, indicating the strategy is on track, though other segments are taking more time.

Q: How sustainable is the 14% growth in the diabetes business, and are there initiatives to enter new segments beyond diabetes? A: Deepak Arora (MD) stated that the strong equity of Sanofi's insulin portfolio in the market will be leveraged continuously. While he couldn't commit to a specific percentage, he assured that the company will work to repeat the first-half performance in the second half, focusing on patient support, early diagnosis, and expanding into the public sector. Rachid Ayari (CFO) added that Cardiovascular and CNS remain important, and the under-diagnosed patient population in India (around 100 million) presents significant opportunities for the insulin portfolio.

Q: How will the entry of once-weekly insulin (by competitors like Novo) impact the growth of Toujeo and Soliqua? Is the existing patient base sticky? A: Deepak Arora (MD) welcomed the innovation, noting that it increases the share of voice for the insulin market. He clarified that once-weekly and once-daily insulins serve different patient profiles. The once-weekly format may help initiate therapy in patients who were previously reluctant due to daily injections, while the larger patient base will continue to benefit from once-daily basal analogs like Toujeo and Lantus. He emphasized that the public sector expansion will continue to drive growth and that it's too early to assess any major impact.

Q: What is the strategy for the export business, which is facing challenges, particularly in Australia? A: Rachid Ayari (CFO) explained that the company is offsetting losses in mature markets like Australia by focusing on other markets such as France, Italy, Turkey, and Russia. The Goa site is being specialized for manufacturing certain products worldwide. The company is also waiting on tenders from South Africa and is bringing back outsourced products to increase volume. The strategy is to offset losses in mature markets with opportunities in other regions.

Q: Can we expect the dividend payout ratio to remain healthy going forward? A: Rachid Ayari (CFO) stated that while he cannot communicate on forward-looking statements, the company's cash generation is strong (up 34%). He expects the payout to be at least at last year's level, but the final decision rests with the Board. He assured that it will not be lower than in the past.

Q: Are there any identified products from the parent company's basket that can be brought into India? A: Deepak Arora (MD) mentioned that the company is working on business cases for devices, Bluetooth-enabled devices, and AI platforms to simplify daily insulin use for patients. As the pipeline evolves, they will maintain close discussions with the parent company.

Q: How is the overall insulin market growing in the context of GLP-1s, and what is the impact on Sanofi's portfolio? A: Deepak Arora (MD) stated that GLP-1s have actually contributed to the growth of Toujeo and Lantus, as they are often used in combination. Soliqua's 16% growth is attributed to patients who cannot tolerate GLP-1s but need a progressive therapy. He believes insulin will remain the gold standard of care, with the analog segment sustaining double-digit growth regardless of GLP-1 competition.

Q: Are there any thoughts on using the company's cash for an open market buyback? A: Rachid Ayari (CFO) responded that while such proposals are discussed at the Board level, a buyback is not currently part of the company's strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .