How long can "laying to win" rely on Dupixent? Sanofi (SNY.US) performance reports joy but can't hide research and development anxiety. Stock prices under pressure await new leader to break the deadlock.

French pharmaceutical giant Sanofi (SNY.US) announced its first-quarter financial report for 2026 on Thursday. Thanks to the continuous strong demand for its core product Dupixent, the company's revenue and profits exceeded market expectations, giving a "welcome gift" to the new CEO Beln Garijo, who will officially take office at the end of the month. However, the market focus has quickly shifted to how Garijo will deal with the strategic challenges of the pipeline and the future patent expiration of Dupixent. Performance exceeds expectations, blockbuster drug leads the way The financial report shows that for the first quarter ending on March 31, Sanofi achieved total sales of 10.51 billion euros (approximately 12.29 billion U.S. dollars), higher than the analysts' average expectation of 10.22 billion euros. Operating income was 2.97 billion euros (approximately 3.47 billion U.S. dollars), also exceeding the market expectation of 2.85 billion euros. Excluding certain items, earnings per share were 1.88 euros (approximately 2.20 U.S. dollars), better than the analysts' expectation of 1.78 euros. The main engine driving the better-than-expected performance is still its blockbuster product Dupixent. Sales of this drug for the treatment of asthma and atopic dermatitis in the quarter increased by 30.8% to 4.17 billion euros when calculated at fixed exchange rates, far exceeding the analysts' expectation of 3.89 billion euros. The vaccine division's sales were 1.3 billion euros, slightly higher than the expected 1.29 billion euros, with strong demand for the polio and whooping cough combination vaccine partially offsetting weak sales of the flu vaccine and RSV antibody Beyfortus. New leadership at a critical juncture, research and development efficiency as a core challenge This impressive report card was released at a crucial period of high-level power transition at Sanofi. Former CEO Paul Hudson was removed by the board in February this year for failing to timely launch promising new drug pipelines, which led to pressure on the stock price. Beln Garijo, who has 15 years of experience at Sanofi and previously led Merck KGaA in Germany, will officially take office on April 29. Investors have high hopes for Garijo, but also clearly point out the biggest challenge she faces: improving research and development productivity and reducing dependence on Dupixent. The patent for Dupixent will expire in the early next decade, and Sanofi has not yet come up with a clear alternative to fill the revenue gap left by this drug. Over the past 12 months, Sanofi's stock price has fallen by about 13% due to a mix of positive and negative clinical trial results. In response to this, Sanofi's CFO Franois Roger frankly admitted during a conference call that the company did face setbacks in research and development last year, but stressed the need for a long-term focus on research and development. He disclosed that Garijo's arrival will be an opportunity to re-examine the strategy, including whether the company wishes to expand into other potential therapeutic areas. He also added that the company has a diversified portfolio of assets and does not rely on a single drug. Outlook and concerns: exchange rate headwinds and vaccine policy disruptions Sanofi reiterated its full-year performance guidance, expecting sales growth in the high single digits percentage when calculated at fixed exchange rates and that operating income growth will be slightly faster than sales growth. Senior analyst John Murphy pointed out that Sanofi is expected to exceed this guidance, but the market's focus is now on the potential strategic changes that may come with the new CEO taking office. Sanofi also mentioned the headwinds the company may face in the short term. The company stated that exchange rate fluctuations negatively affected sales growth by 7.4 percentage points. In addition, there is uncertainty in the outlook for the vaccine business. Sanofi expects that, due to factors such as changes in vaccine policies implemented by U.S. Health Secretary Robert F. Kennedy, vaccine sales this year will slightly decrease. Regarding the industry's widespread concern about whether pricing pressure on drugs in the United States will lead to delays in European listings, Roger stated that Sanofi plans to launch any products in the United States simultaneously in Europe, but he admitted that drug prices may change, and pricing in some countries "may likely see an increase."