French drugmaker Sanofi said on Wednesday that its earnings could drop by up to 15 percent this year as top-selling drugs previously protected by patents are hit by competition from cheap copies.

Sanofi expects to return to growth in subsequent years, driven by emerging markets, diabetes, vaccines, animal health, its takeover of biotechnology company Genzyme and new products.

The chapter on blockbusters closes, but we are in good shape coming out of the 'patent cliff' this year, chief executive Chris Viehbacher told reporters on Wednesday.

The Paris-based company reported a 13 percent increase in fourth-quarter profits and fine-tuned the expected earnings dip in 2012 as blood-thinner Plavix, the world's second-best selling medicine, and blood pressure drug Avapro shortly face competition from generic copies in the United States.

It said its business earnings per share, which exclude items like amortisation and legal costs, were expected to fall 12-15 percent at constant exchange rates this year, reflecting a 1.4 billion euro (1.16 billion pound) dent in business net income from the impact on the two products.

Beyond 2012, Sanofi expects sales to grow 5 percent annually and EPS to grow even faster to 2015.

Fourth-quarter business net income rose to 2.08 billion, in line with analysts' average forecast of 2.07 billion. Sales rose 8.8 percent to 8.51 billion euros, close to the forecast of 8.54 billion, lifted by emerging markets, diabetes therapy Lantus and the contribution of Genzyme.

Quarterly sales of Lantus topped 1 billion euros for the first time, driven by the U.S., Japanese and emerging markets.

The company raised its dividend on 2011 profit to 2.65 euros from 2.50 euros for the year earlier.

Overall, a solid, quiet quarter which will help build investor credibility in the name, said Bernstein analyst Tim Anderson in a research note.

But Natixis analyst said Sanofi's forecasts for 2012 would prompt a negative reaction among investors.

At 1150 GMT shares were trading 1.6 percent lower at 55.58 euros, underperforming the CAC40 index <.FCHI>, up 0.5 percent.

Unlike competitors such as AstraZeneca , which aims to buy back $4.5 billion in shares in 2012, Sanofi ruled out a large share repurchase this year.

At this stage I don't think a big buyback would enhance our share price, Viehbacher told Reuters.

Sanofi has pledged reward shareholders by increasing its dividend payout ratio to 50 percent of net profit in 2014 from 35 percent in 2010.

After receiving the green light from European and U.S. regulators to begin producing rare disease drug Fabrazyme at a new plant in Framingham, Massachusetts, Sanofi plans to return to normal supply levels in the second quarter.

The supply outlook for Cerezyme, another rare disease therapy, should improve from February, it said. Both drugs have had to be rationed because of production problems.

Turning to its drug pipeline, Sanofi said three experimental medicines had moved to late-stage development; an insulin therapy, a treatment for bone marrow disorder and an influenza vaccine.

The company plans to file multiple sclerosis treatment Lemtrada with regulators in the United States and Europe in the second quarter of 2012.

Also on Wednesday, Sanofi and its partner Bristol-Myers Squibb said they had collected $442 million damages from Canadian generic drugmaker Apotex in patent litigation relating to Plavix.

(Editing by Dan Lalor and Will Waterman)