Castlefield Stock Story - Sanofi
Sanofi is a global pharmaceuticals company with a strong environmental and social agenda. The Access to Medicine Foundation rates Sanofi as one of the best drug companies in the world. Investment Analyst David Gorman introduces Sanofi in this latest featured stock piece.
Castlefield is a member of the Access to Medicine Foundation, set up in 2003 with the aim of making global healthcare inequality a thing of the past.[1] The Foundation publishes an influential Index which assesses how effectively twenty of the world’s leading pharmaceutical companies ensure that people living in low- and middle-income countries (LMICs) can access the medicines, vaccines and diagnostics they need.
In the 2024 Access to Medicine Index, the French pharmaceutical company Sanofi ranks an impressive third, jumping up from eighth place in 2022. It performs strongly in R&D and product delivery and it is best in class for its inclusive business model, designed to improve access to pharmaceuticals.[2] Reaching patients in underserved regions is vital to advancing overall healthcare equity. As demand for these essential medicines increases in LMICs, there is now a pressing need for pharmaceutical companies to expand access to their products.
Reaching patients in underserved regions is vital to advancing overall healthcare equity
In 2021, Sanofi opened its Global Health Unit or GHU. This not-for-profit unit aims to improve access to essential medicines in countries with the highest unmet needs.[3] Sanofi has specific programmes offering affordable treatments for preventable diseases such as polio, malaria and tuberculosis.
We own shares in Sanofi in our CFP Castlefield Thoughtful European Fund. Established in France in 1973, it is a diversified global healthcare company whose products target a wide variety of diseases. It operates four business units: Speciality Care, Vaccines, General Medicines and Consumer Healthcare. Sanofi’s therapy areas are cardiovascular disease, diabetes, immunology & inflammation, infectious diseases, oncology, neurology, rare blood disorders, rare diseases and vaccines.
Sanofi vaccines defend patients against illnesses like influenza, meningitis and conditions such as hepatitis A, typhoid, cholera, yellow fever and rabies. The company also provides over-the-counter cough, cold and flu remedies as well as allergy and pain care products. It also offers products for skin conditions like eczema.
Sanofi is a global leader in generic drugs thanks to its strength in the production of active pharmaceutical ingredients or APIs, which are essential to the production of pharmaceuticals. Many of Sanofi’s competitors must obtain their APIs from third party manufacturers, whereas Sanofi can produce its own. In patented drugs, Sanofi’s blockbuster product is Dupixent,[4] which treats skin conditions such as dermatitis, as well as asthma and lung disease.
In addition to Sanofi’s social agenda, it is also trying to reduce the environmental impact of its products and central to this is packaging. The company joined the fantastically named Blister Pack Collective, set up to develop recyclable, fibre-based blister packs,[5] rather than the plastic and foil products we see today. However, operating in a highly regulated sector can limit efforts to reduce packaging.
In addition to Sanofi’s social agenda, it is also trying to reduce the environmental impact of its products
Whenever we look at pharmaceutical companies, we think about animal welfare. The use of animals in R&D remains necessary for new and commercialised medicines and vaccines. Sanofi is committed to the principles of the 3Rs (Replace, Reduce, and Refine). It uses animals only when a non-animal method is unsuitable or not accepted by the competent authorities (Replacement), with the smallest number necessary for quality science (Reduction) and it implements state-of-the-art practices to promote animal welfare and prevent animal pain and distress in housing and procedure conditions (Refinement). Where possible, Sanofi uses other methods to ensure the quality, efficacy and safety of its products, including assays in cells and tissues, computer modelling and clinical trials with actual patients.[6]
From an investment perspective, Sanofi is a cash-generative, defensive, high quality company, with a diversified franchise in the global healthcare industry. Its drug development pipeline was seen by the market as less promising than that of some peers, but it has some interesting products moving through trial stage and, in Dupixent, it has a blockbuster.
Like most pharmaceutical companies, Sanofi operates in a highly competitive environment, but we think it can succeed through a combination of its market leadership in active ingredients, its pipeline of drugs in development and increasing demand for its therapies. Sanofi shares trade on an undemanding valuation and offer an attractive dividend yield.
Written by David Gorman
Information is accurate as at 20.03.2025. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.