Sanchez was negotiating a high-speed corner with 7km to go of the 37km stage when he slipped and lost control and fell onto his right-hand side.
The veteran Spaniard remounted to finish in considerable pain and anguish. His BMC team said the fall left him with an acromioclavicular joint dislocation of the right shoulder.
"I was doing a good TT and I think I was able to finish it in the top five or six and gain some GC positions," Sanchez said.
"Right now the physical pain is nothing compared to my soul. I am only two days from the final and we did a big sacrifice to be here fighting with the best riders.
"I know this is sport and cycling but it's hard to accept it now. The important thing is I haven't broken anything even if my right shoulder is dislocated. I hope to recover fast and give my best in this final of season in the Italian races in October."
The team said Sanchez also underwent a head CT scan after experiencing dizziness but was cleared of any concussion.
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