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      TUESDAY, 18/09/2018 - Scope Ratings GmbH
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      Scope affirms AA Sanofi rating

      The rating reflects our view of Sanofi's credit metrics' recovery to levels commensurate with the ratings following their temporary deterioration following the acquisitions of Bioverativ and Ablynx in the first half of 2018.

      Rating Action

      • Sanofi
      • AA/stable - affirmation
      • S-1+ short-term rating – affirmation
      • Senior unsecured debt AA - affirmation

      Rating Rationale

      The affirmation mainly reflects our base case, including our expectation of a temporary deterioration in credit metrics in 2018 owing to two major acquisitions in H1 2018 (Ablynx and Bioverativ). It also mirrors our belief that credit metrics in H2 2018 will significantly outperform those in H1 2018, which were held back by lower cash generation by vaccines, the ongoing patent expiry pressure on key blockbuster anti-diabetic drug Lantus, and the effects of acquisition-related debt. We believe credit metrics are likely to regain levels commensurate with the ratings by 2019, thus only one year after the acquisitions.

      Rating Change Drivers

      • Upside: increasing operating margins and free cash flow generation
      • Downside: Inability to maintain at least 60% FFO/ SaD and FCF/ SaD of 40%

      For the rating report please click HERE.

      Stress testing & cash flow analysis
      No stress testing was performed. Scope performed its standard cash flow forecasting for the company.

      Methodology
      The methodology used for this rating(s) and/or rating outlook(s):
      Rating Methodologies: Corporate Ratings, 2018; European Pharmaceuticals Rating Methodology, 2018
      are available on www.scoperatings.com.
      Historical default rates of Scope Ratings can be viewed in the rating performance report on https://www.scoperatings.com/#governance-and-policies/regulatory-ESMA Please also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope’s definition of default as well as definitions of rating notations can be found in Scope’s public credit rating methodologies on www.scoperatings.com.
      The rating outlook indicates the most likely direction of the rating if the rating were to change within the next 12 to 18 months.

      Solicitation, key sources and quality of information
      The rating was requested by the rated entity. The rated entity did participate in the rating process.
      The following substantially material sources of information were used to prepare the credit rating: public domain, Sanofi internal sources, third parties and Scope internal sources.
      Scope considers the quality of information available to Scope on the rated entity or instrument to be satisfactory. The information and data supporting Scope’s ratings originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data.
      Prior to the issuance of the rating or outlook action, the rated entity was given the opportunity to review the rating and/or outlook and the principal grounds on which the credit rating and/or outlook is based. Following that review, the rating was not amended before being issued.

      Regulatory Disclosures
      This credit rating and/or rating outlook is issued by Scope Ratings GmbH.
      Lead analyst Olaf Tölke, Managing Director
      Person responsible for approval of the rating: Werner Stäblein, Executive Director
      The ratings/outlooks were first released by Scope on 07.09.2017.

      Potential conflicts
      Please see www.scoperatings.com for a list of potential conflicts of interest related to the issuance of credit ratings.

      Conditions of use / exclusion of liability
      © 2018 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Analysis GmbH, Scope Investor Services GmbH and Scope Risk Solutions GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstrasse 5 D-10785 Berlin.

      Scope Ratings GmbH, Lennéstrasse 5, 10785 Berlin, District Court for Berlin (Charlottenburg) HRB 192993 B, Managing Director: Torsten Hinrichs. 

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