...The Negative Outlook attached to the `AA-' rating in March 2018 reflects the group's elevated financial leverage following Sanofi's announced specialty pharma acquisitions (totalling EUR13 billion). These acquisitions come at a time when the group's sales growth and profitability are undergoing a structural evolution, characterised by a decline in profitable established drugs and their gradual replacement by newly introduced treatments. In our view, this combination of events exhausts financial rating headroom in the near term, highlighting the risk of negative rating pressure over the next 12 months. Sanofi's rating remains underpinned by its scale, diversification and leading positions in global pharmaceutical markets. We believe that near-term management attitudes towards further capital allocation, including M&A and shareholder returns, will determine the trajectory of the rating as we see significant flexibility for Sanofi in terms of its strategy (such as the anticipated disposal...
