Q2 2011 RESULTS
July 28, 2011
2
Forward Looking Statements
This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts.
These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product
development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates”, “plans”
and similar expressions.
Although Sanofi’s
management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Sanofi, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include among other things, the uncertainties
inherent
in research
and development, future clinical
data and analysis, including
post marketing, decisions
by regulatory
authorities, such
as the FDA or the EMA, regarding
whether
and when
to approve
any
drug, device
or biological
application that
may
be
filed
for any
such
product
candidates as well
as their
decisions
regarding
labelling and other matters
that
could
affect the availability
or commercial potential
of such
products
candidates, the absence of guarantee
that
the products
candidates if approved
will
be
commercially
successful, the future approval
and commercial success
of therapeutic
alternatives, the Group’s ability to benefit from external growth opportunities as well
as those discussed or identified in the public filings with the SEC and the AMF made by Sanofi, including those listed under “Risk Factors”
and “Cautionary Statement Regarding Forward-Looking Statements”
in Sanofi’s
annual report on Form 20-F for the year ended December 31, 2010.
Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.
3
●
Key Highlights●
Christopher A. Viehbacher, Chief Executive Officer
●
Business Performance●
Hanspeter Spek, President, Global Operations
●
David Meeker,
Chief Operating Officer, Genzyme
●
Olivier Charmeil, Senior Vice President, Vaccines
●
R&D Update●
Dr. Elias Zerhouni, President, Global Research & Development
●
Financial Performance●
Jérôme
Contamine, Executive Vice President, Chief Financial Officer
●
Q&A Session
Agenda
KEY HIGHLIGHTS
Christopher A. Viehbacher
Chief Executive Officer
5
€4,561m
€3,341m
Q2 2009 Q2 2010 Q2 2011
Key Genericized Products(1)
Quarterly Sales (€m)
(1)
Key genericized
products include Lovenox®, Taxotere®, Ambien CR®, Eloxatin®, Allegra®, Xyzal®, Xatral®
and Nasacort®
in the U.S.
as well as Taxotere®, Plavix®
and Aprovel®
in Western Europe(2)
Growth platforms [Emerging Markets, Diabetes, Vaccines excluding
A/H1N1, CHC, New products (Multaq®
and Jevtana®) , Animal Health] and Genzyme(3)
In Q2 2009, Merial
Joint Venture sales of €490m were not consolidated by Sanofi. With a 50% share of Merial
Joint Venture sales, Sanofi pro forma
growth platforms sales would be €3,586m; Q2 2010 and Q2 2011 sales include 100% of Merial
sales.
Successfully Managing Top Line Transition despite Stronger Generic Pressure in Q2 2011
€1,611m
€2,106m
Q2 2009 Q2 2010 Q2 2011
€773m
Growth Platforms and Genzyme(2,3)
Quarterly Sales (€m)
€5,447m
65% of sales
including
6
As Anticipated, Business EPS(1)
Impacted
by Loss
of High Margin
Blockbusters
€8,307m
Q2 2010 Q2 2011
Total Sales (€m)
(1)
Growth is at CER (Constant Exchange Rates) vs. Q2 2010 ‐
See Business EPS definition on slide 52(2)
Q2 2010 and Q2 2011 sales include 100% of Merial
sales(3)
Q2 2011 includes Genzyme
sales of €796m(4)
Genzyme
net contribution after financing and transaction costs
€8,349m(3)(2)
€1.90
Q2 2010 Q2 2011
Business EPS (€)
€1.64
+6.9%
-4.0%
-7.4%
-12.1% (4)
7
Oncology DivisionKey Brands from
Genzyme
Genzyme
Integration
Leveraging the Best from Both Companies
Personalized Genetic Health Key Brands
Multiple SclerosisKey Brands(1)
PharmaceuticalsKey Brands from
Genzyme
(1)
Lemtrada™
and Aubagio™
are the registered names submitted to health authorities for investigational agents, respectively alemtuzumab
and teriflunomide. Aubagio™
(teriflunomide) is a product of Sanofi’s
R&D.
™ ™
8
21.120.9
24.7
H1 2010 H2 2010 H1 2011
Unlabeled Released Vials Output (in thousands 400U vial equivalents)
Update on Output for Cerezyme®
and Fabrazyme®
266.2
191.1
271.6
H1 2010 H2 2010 H1 2011
Unlabeled Released Vials Output (in thousands 35mg vial equivalents)
9
Multiple Milestones
Recently
Achieved
●
Dermik -
Divestiture
of dermatology
business unit
●
Jevtana® -
Start of EU roll out in 2nd
line prostate cancer
●
Certifect® -
New parasiticide for dogs
launched
in the U.S.
●
Zaltrap™ (aflibercept) -
Positive Phase III results
in 2nd
line colorectal cancer
●
Lyxumia® (lixisenatide) -
New supportive
Phase III data in Type 2 diabetes
●
Lemtrada™ (alemtuzumab) -
Positive Phase III headline data in treatment-naïve MS
●
semuloparin -
Positive Phase III in VTE prevention
for chemotherapy
treated
patients
●
Hexaxim® -
Licensure
process
started
for 6-in-1 vaccine for Emerging Markets
●
sarilumab -
Positive Phase IIb
results
in rheumatoid
arthritis
●
sarilumab -
Negative
Phase IIb
results
in ankylosing
spondylitis
●
Multaq® (dronedarone) -
PALLAS study
in permanent AF stopped
VTE: Venous Thromboembolism
10
Recent
Appointments
Strengthen
our
Management Team
Peter Guenter Senior Vice President, Global Operations, Europe
David-Alexandre GrosChief Strategy Officer
Anne Whitaker President, North America, Pharmaceuticals
Gregory Irace Senior Vice President, Global Services
11
Growth
Platforms
Delivered
Double-Digit Sales Increase in H1 2011
Emerging Markets +10.5% excluding A/H1N1 vaccines and Genzyme sales(2)
Consumer Healthcare +28.1%
Diabetes Solutions +11.5%
Animal Health +6.7%
Innovative Products +€227m
Vaccines +6.0% excluding A/H1N1 vaccines(3)
Growth Platforms in H1 2011: +12.3% excluding A/H1N1 vaccines and Genzyme sales (1)
Growth is at CER (Constant Exchange Rates)(1)
H1 2011 Growth
Platforms
sales increased
by +17.3% at
CER including
€419m of A/H1N1 vaccine sales in H1 2010 and €796m of Genzyme
sales in Q2 2011(2)
H1 2011 Emerging
Markets
sales increased
by +4.9% at
CER including
€361m of A/H1N1 vaccine sales in H1 2010 and €115m of Genzyme
sales in Q2 2011(3)
H1 2011 Vaccines sales decreased
by ‐20.3% at
CER when
including
€419m of A/H1N1 vaccine sales in H1 2010
12
Outlook for 2011 Updated
to Include
Genzyme
H1 2011 H2 2011
●
Lack of H1N1 vaccines sales in Q1 2011
●
Impact of multiple generic entries in H2 2010
●
Loss of exclusivity of Taxotere®
in the U.S. in late Q1 2011
●
Benefit of Genzyme
only in Q2 2011
●
Expected continuous strong sales from growth platforms
●
Sustained cost control
●
Lower relative generic impact compared to prior year
●
Contribution of two full quarters of Genzyme
2011 Business EPS to be 2 to 5% lower than 2010 Business EPS at CER(1,2,3)
barring major unforeseen adverse events
(1)
Growth is at CER (Constant Exchange Rates)(2)
FY 2010 Business EPS: €7.06(3)
This outlook does not assume a return of generics of Eloxatin®
in the U.S. in 2011. Generic makers (Teva, Fresenius Kabi
(formerly Dabur), Sandoz,
Mayne/Hospira, MN/Par, Actavis
and Sun) required to cease selling in the U.S. since June 30, 2010 but litigation continues.
BUSINESS PERFORMANCE
Hanspeter Spek,
President, Global Operations
David Meeker,
Chief
Operating Officer, Genzyme
Olivier Charmeil,
Senior Vice President, Vaccines
14
Q2 2011
Fx Impact
Others
GrowthPlatforms
Genzyme
Key GenericizedProducts
Q2 2010
Growth Platforms Delivered +9.5% Growth at CER in Q2 2011 before Adding Genzyme
(1)
Other key genericized
products include Aprovel®
in Western EU, Nasacort®
and Xatral®
in the U.S. (2)
Growth platforms: Emerging Markets, Diabetes, Vaccines excluding
A/H1N1, CHC, New products (Multaq®
and Jevtana®) , Animal Health
(2)
€8,307m
€8,349m
‐€528m
Q2 2011 Group Sales (€m)
‐€778m
+€1,339m
+€9m
Key Genericized Products:●
Taxotere® U.S. & Western EU: -€336m
●
Lovenox® U.S.: -€334m
●
Ambien CR® U.S.: -€103m
●
Allegra® U.S.: -€46m
●
Xyzal® U.S.: -€43m
●
Plavix® Western EU: -€41m
●
Others(1): -€53m
●
Eloxatin® U.S.: +€178m
15
Emerging
Markets
Western
Europe
(1)
World less North America (USA, Canada), Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg,
Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark), Japan, Australia and New Zealand(2)
Genzyme
sales in Emerging Markets were €115m in Q2 2011(3)
RoW: Japan, Australia, New Zealand, Canada
Emerging Markets -
Our Largest Geographical Area
12,2%
28,5%
28,9%
30.4%
●
Q2 2011 Emerging Markets(1)
sales of €2,533m, +12.3% at CER
●
+7.1% at CER excluding Genzyme
and A/H1N1(2)
Other Emerging Markets +3.7%
BRIC (Brazil, Russia, India, China)
+14.8%
Sales Split (%)
RoW(3)
U.S.
Q2 2011 Growth Rates at CER excluding Genzyme and A/H1N1
16
€925m
€894m€900m
Q3 2010 Q4 2010 Q1 2011 Q2 2011
Diabetes Sales Growth Accelerated in H1 2011
Sales (€m)
+14.5% at CER
+13.2% at CER+6.7%
at CER+8.8%
at CER
●
Q2 2011 Diabetes sales of €1,168m, +12.4% at CER
●
Strong performance of Lantus®
●
46.2% of U.S. sales from SoloStar®
vs. 32.3% in Q4 2009●
Strong performance in Emerging Markets with sales up +29.3%
●
Accelerating growth of Apidra®
supported by new U.S. commercial approach●
Sales of €53m, +29,5% at CER
●
Positive Phase III results with Lyxumia®
presented at ADA
€969m
17
●
Solid performance of CHC●
Sales of €644m, +17,6% at CER(1)
●
Successful launch of Allegra®
OTC
in the U.S. in March 2011●
Already €143m of sales in H1 2011
●
Outselling Zyrtec®
OTC(2)
●
Launch of Lactacyd®
in China following BMP Sunstone integration
●
New initiatives to build umbrella brands in Europe
€578m
€321m
Q2 2009 Q2 2010 Q2 2011
(1)
Growth at constant perimeter and exchange rate was +9.9% in Q2 2011(2)
Nielsen Food, Drug and Mass excluding Walmart
(represents 54% of All Outlets) through 11/06/2011
Consumer Health Care -
Boosted by Allegra®
OTC
+17.6% at CER
€644mSales (€m)
18
Q2 2009 Q2 2010 Q2 2011
U.S.
Emerging
Markets
Western
Europe
Others
●
Q2 sales of €434m, +17,6% at CER
●
64.2% of Generics sales in Emerging Markets: €279m, +13.8% at CER
●
Authorized generics of Ambien®
CR and Taxotere®
launched
in the U.S.
●
Sales of losartan
generic
up +23.5% at CER
●
Start of Medley roll-out in Latin America
●
Ongoing
initiatives to leverage
Zentiva’s
manufacturing
facility
in Lüleburgaz, Turkey
Generics -
Strong Performance Again in Q2 2011
€434m
Sales (€m)
€381m
€284m
19
Animal Health
-
Growth
despite
Competitive
Challenges
●
Q2 2011 sales of €496m, +1.1% at CER following an early season for fleas and ticks
●
Record Frontline®
sales in H1 2011 of €459m (+4.7% at CER) despite branded generic competition ●
Positive U.S. court ruling barring sales of Cipla
and Velcera’s
generics
of
Frontline Plus®
stayed and decision appealed
●
Withdrawal by Sergeant’s of all their U.S. generic
versions of
Frontline Plus®
in July due to infringement
of Merial
patent
●
Recent launches of Certifect®
and Zactran®
in the U.S.
20
Genzyme
-
A Solid
Quarter
●
Solid Q2 2011 sales of €796m, +16.0% at constant rate and perimeter
●
Strong
performance of PGH up +36.3% at CER
driven by Cerezyme®
and Myozyme®
/ Lumizyme®
●
Solid growth of Synvisc®
boosted by recent launch in Japan and growing uptake of Synvisc-One®
in the U.S.
●
Fill & finish activities discontinued at Allston plant●
Supply constraints for Fabrazyme®
expected until approval of new plant in Framingham, MA
●
Positive top-line results
from
first Phase III study
of Lemtrada™
in MS
+58.3%
+42.0%
+14.6%
Others -3.7%
+3.5%
+17.2%
&
&
Sales Split by Products (Growth Rates at CER)
Lemtrada™
is the registered name submitted to health authorities for the investigational agent alemtuzumab.
21
H1 2010 H1 2011
Polio/Pertussis/Hib Seasonal InfluenzaMeningitis/Pneumonia BoostersTravel & Endemics OtherPandemic Influenza
Vaccines -
Strong
Seasonal
Flu
in H1 2011
€1,308m+6.0%
at
CER
●
Q2 2011 sales of €706m, +3.4% at CER excluding A/H1N1●
Record seasonal flu in H1 2011: €158m, +41.6% at CER
●
Resilience of Menactra®
in Q2 2011: €97m, -1.4% at CER
●
Strong Q2 2011 sales of Pentaxim®: €65m,+36.8% at CER
●
Fluzone
Intradermal®
granted FDA approval●
Early
shipments
of Fluzone®
in the U.S. as of July 18, 2011
●
Hexaxim®
licensure process started for Emerging Markets
Vaccines Consolidated Sales (€m)
A/H1N1 €419m
R&D UPDATE
Dr. Elias Zerhouni,
President, Global Research & Development
23
Six NME Filings
Expected
in the Next
9 Months
Kynamro™ (mipomersen)–
hoFH
and Severe heFH
in July 2011 in EU and hoFH
in Q4 2011 in the U.S. 1
Visamerin® / Mulsevo® (semuloparin)–
VTE prevention in chemo-treated patients in Q3 2011 in the U.S. and EU 2
Aubagio™ (teriflunomide)–
RMS in Q3 2011 in the U.S. and Q1 2012 in EU3
Zaltrap™ (aflibercept)–
2L-mCRC in Q3 2011 in the U.S. and Q4 2011 in EU4
Lyxumia® (lixisenatide)–
Type 2 diabetes in Q4 2011 in EU5
Lemtrada™ (alemtuzumab)–
RMS in Q1 2012 in the U.S. and EU6
hoFH: Homozygous Familial HypercholesterolemiaheFH: Heterozygous Familial HypercholesterolemiaVTE: Venous Thrombo
Embolism
RMS: Relapsing Forms of Multiple SclerosismCRC: Metastatic Colorectal CancerNME: New Molecular Entity
24
-
A Promising Investigational Agent for MS
CARE-MS I CARE-MS II
Patients 581 840
Study Duration 2 years 2 years
Patient Population
Treatment naïve
Treatment experienced
Treatment Arms
Alemtuzumab vs. IFNβ
1aAlemtuzumab
vs. IFNβ
1a
Co-primary Outcomes
Relapse RateDisability
Progression
Relapse RateDisability
Progression
Data Timing Jul 2011 Q4 2011
●
Positive CARE-MS I Phase III top-line results released●
55% reduction in relapse rate over 2 years compared to Rebif®
●
Non statistically significant result on time to 6-month SAD (HR=0.70, p=0.22)
●
Safety profile consistent with Phase II clinical trial experience
●
Planned U.S. and EU filings in early 2012
●
Fast track status granted by FDA in 2010
Lemtrada™
is the registered name submitted to health authorities for the investigational agent alemtuzumabSAD: Sustained Accumulation of Disability
FINANCIAL PERFORMANCE
Jérôme
Contamine
Executive Vice President, Chief Financial Officer
26
8,307 8,349
-6.4%
Q2 2010 Growth withoutGenzyme
Genzyme FX Impact Q2 2011
USD : -386VEF : -45CNY : -18TRY : -17
Genzyme
Sales Overcompensate
for Negative
Fx Impact and Sales Decline
in Q2 2011
+6.9%Q2 2011 sales (€m)
VEF: Venezuelan BolivarCNY: Chinese YuanTRY: Turkish Lira
‐4.0%
+10.9%
+0.5%
27
Q2 2011 P&L Reflects
Shift in Business Mix and Genzyme
Consolidation
€m Q2 2011 Q2 2010 % Change
(reported €)
% Change
(CER)
Net sales 8,349 8,307 +0.5% +6.9%
Other
revenues 422 412 +2.4% +14.1%
Cost of sales (2,588) (2,209) +17.2% +22.3%
Gross profit 6,183 6,510 -5.0% +1.8%
R&D (1,197) (1,119) +7.0% +12.6%
SG&A (2,268) (2,125) +6.7% +13.3%
Other current operating income & expenses 7 27 - -
Share of Profit/Loss of associates 278 248 - -
Minority interests (58) (70) - -
Business operating income 2,945 3,471 -15.2% -9.5%
Business operating margin 35.3% 41.8% - -
CER: constant exchange rates
28
As Expected, Further
Generic
Competition
Leads to Slight
Increase
in CoS
in Q2 2011 vs. Q1 2011
Cost of Sales (%)
31.0%30.4%
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
●
Higher Cost of Sales in Q2 2011 vs. Q2 2010 due to:
●
Loss of sales of €778m from key genericized
products with relatively low Cost of Sales
●
Cost of Sales ratio relatively stable vs. Q1 2011
●
Aligned with expected Cost of Sales level for FY 2011
●
Genzyme
CoS
ratio slightly better than Group ratio
29
14.3%14.1%
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Increase
in R&D Expenses
in Q2 2011 Driven
by the Addition of Genzyme
R&D Costs
R&D/Sales Ratio (%)●
Q2 2011 R&D expenses of €1,197m, up 12.6% at CER
driven by:
●
Addition of €135m of R&D expenses from Genzyme
●
Stable R&D expenses at CER excluding Genzyme
●
R&D/Sales ratio slightly up vs. Q1 2011 to 14.3% as a result
30
Increase
in SG&A Expenses
in Q2 2011 prior to Implementation of Cost Synergies from Genzyme
SG&A/Sales Ratio (%)
27.2%24.8%
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
●
Q2 2011 SG&A expenses of €2,268m, up +13.3% at CER
●
Higher G&A expenses due to Genzyme
●
SG&A expenses almost stable excluding Genzyme
●
SG&A/Sales ratio up in Q2 2011 vs. Q2 2010 (25.6%) reflecting:
●
Stable ratio of Selling Expenses to Sales ratio
●
Higher G&A to Sales ratio
●
Ramp up of Genzyme
synergies expected to lead to improvement in the coming year
31
€m Q2 2011 Q2 2010 % Change
(reported €)
% Change
(CER)
Business operating income 2,945 3,471 -15.2% -9.5%
Net financial
expenses (100) (95) - -
Income
tax
expense (695) (898) - -
Effective tax rate -26.5% -28.1% - -
Business net income 2,150 2,478 -13.2% -7.0%
Net margin 25.8% 29.8% - -
Business EPS € 1.64 € 1.90 -13.7% -7.4%
Business EPS Down -7.4%
at CER in Q2 2011
CER: constant exchange rates
32
Benefiting
from
Low
Cost
of Debt
for Genzyme
€9,3bn
Q2 2010 Q2 2011
Average Gross Debt (€m)
€20.5bn4,1%
Q2 2010 Q2 2011
Average Rate (%)
2.0%
A decrease
of 2.1%
33
Significant
Cost
Synergies Expected
from
the Acquisition of Genzyme
Synergies Split
0% 10% 20% 30% 40%
Others
Support Functions and IS
Industrial Affairs
R&D
Operations
●
Level of cost synergies expected to reach $700m by end of 2013
●
Around 30% of 2010 OpEx
baseline
●
Main drivers of cost
synergies:
●
Integration
of Oncology
in Sanofi
●
R&D sharing platform
and leveraging
Boston as a hub for Sanofi in the U.S.
●
Focus on purchasing
and CapEx
efficiency
in IA
●
Shared
organisation for support functions
per country/region
34
Net Debt
of €13.2bn at
the End of Q2 2011
Net Debt Mar 31, 2011
Net Cash fromOperatingActivities CapEx
Acquisitions &Licensing
Dividends &Share
RepurchaseRestructuring Costs & Others
Net Debt Jun 30, 2011
- €13,231m
- €428m+ €2,016m
- €13,617m
+ €265m
+€16m
- €1,483m
(1)
Excluding Restructuring Costs(2)
Including €1,372m for dividends and €111m for acquisition of treasury shares
(1) (2)
Illustrative
35
Continuing to Invest in Sustainable Growth in H1 2011
●
Double-digit sales increase of growth platforms in H1 2011 excluding Genzyme and A/H1N1(1)
●
Significant generic headwind of >€1.3bn in H1 2011
●
Limited erosion of Business EPS in H1 2011, down 6.7% excluding impact of A/H1N1
●
On-track to deliver the €2.0bn cost savings objective of by end of 2011(2)
●
Integration of Genzyme
progressing according to plan
(1)
Growth platforms [Emerging Markets, Diabetes, Vaccines excluding
A/H1N1, CHC, New products (Multaq®
and Jevtana®) , Animal Health] and Genzyme(2)
Before inflation and tax on a constant structure basis vs. 2008(3)
In Q2 2009, Merial
Joint Venture sales of €490m were not consolidated by Sanofi
With a 50% share of Merial
Joint Venture sales, sanofi‐aventis pro forma growth platforms sales would be €3,586m(4)
Q2 2010 and Q2 2011 sales include 100% of Merial
sales, respectively €524m and €496m(5)
Q2 2011 includes Genzyme
sales of €796m
Proportion of Sales from
Growth
Platforms
(1)
Q2 2009
44.9%
Q2 2010
54.9%
Q2 2011
65.2%
(3) (4) (4, 5)
APPENDICES
R&D
37
Late Stage Pipeline –
Pharma & Vaccines
N New Molecular Entity
G GenzymeCentral Nervous System
Genetic diseases
OncologyMetabolic Disorders
Vaccines
Internal Medecine
RegistrationPhase III
Biosurgery
* ORIGIN: Evaluation of Lantus®
in reducing cardiovascular morbidity & mortality
iniparib (BSI-201)
mTNBC; squamous
LC
otamixaban Direct Xa
inhibitor ACS
eliglustat tartrateGlucosylceramide
synthetase
inhibitorGaucher
disease
Hexaxim™ DTP-HepB-Polio-Hib
vaccine
Zaltrap™ (aflibercept)
VEGF-Trap 2nd
line mCRC; 1st line mHRPC
semuloparin (AVE5026)
Indirect Xa/IIa
inhibitor
VTE prevention in cancer patients
atalurenTranscription modulator
Cystic fibrosis
Plavix®
clopidogrel
bisulfate Pediatric, EU; Stent, Japan
ombrabulin (AVE8062)
Vascular disrupting agent
Sarcoma
Plavix®
clopidogrel
bisulfate PAD, Japan
MACI®Cell-based treatment
Articular
cartilage defects
mipomersenApolipoprotein
B-100 antisensehoFH
and severe heFH
(EU)
prochymalMesenchymal
stem cellGraft-versus-host disease
Lantus®
insulin glargine
ORIGIN*; Pediatric, EU
Quadracel®
Diphtheria, tetanus, pertussis
& polio vaccine; 4-6 y of age
Clolar® / Evoltra®
Purine
analogueAdult acute myeloid leukemia (AML)
lixisenatide (AVE0010)
GLP-1 agonist Type 2 diabetes
Fluzone® QIV IM Quadrivalent
inactivated influenza
vaccine
teriflunomide Multiple sclerosis
(monotherapy, adjunct therapy & CIS)
mipomersenApolipoprotein
B-100 antisensehoFH
(U.S.)
Dengue Mild-to-severe
dengue fever vaccine
LemtradaTM (alemtuzumab) Anti-CD52 mAb
Multiple sclerosis
Recombinant human TSH Modified (rhTSH-M)
Goiter
DTP-HepB-Polio-Hib Pediatric hexavalent
vaccine
Allegra®
fexofenadine
Dry syrup, Japan
N
G
G
G
N
N
N
N
N
N
N
NG
G
N
N
G
G
Thrombosis
NG
38
Early Stage Pipeline –
Pharma & Vaccines
N New Molecular Entity
G GenzymeCentral Nervous SystemCardiovascularGenetic diseases
OncologyMetabolic Disorders
Vaccines
Internal Medecine
Phase II
Ophthalmology
iniparib (BSI-201)
Ovarian cancer, non-squamous
NSCLC, neoadjuvant
breast cancer
FOV1101 FDC prednisolone/ cyclosporine
Allergic conjunctivitis
SAR231893 Anti-IL4 mAb
Asthma; Atopic dermatitis
Zaltrap™ (aflibercept)
VEGF-Trap 1st line colorectal cancer
FOV2302 Plasma kallikrein
inhibitor
Retinal vein occlusion induced macular edema
ferroquine Antimalarial
Malaria
SAR256212 (MM-121)
anti-ErbB3 mAb
Breast cancer
FOV2304 Bradykinin
B1 antagonist
Diabetic macular edema
SAR153191 Anti-IL-6R mAb
RA; Ankylosing
spondylitis
SAR245408 (XL147)
Oral PI3K inhibitor
Endometrial cancer
SAR164877 Anti-NGF mAb
Pain
(on clinical hold)
fresolimumab (GC1008)TGFβ
antagonistFibrosis
SAR245409 (XL765)
Oral dual inhibitor of PI3K & mTOR
Cancer
SAR110894 H3 antagonist
Alzheimer's disease
ACAM-Cdiff Clostridium difficile
Toxoid
vaccine
Ombrabulin (AVE8062)
Vascular disrupting agent
Ovarian 2nd
line, NSCLC 1st
line
Multaq®
Antiarrhythmic
agent
Atrial
fibrillation, Japan
Rabies mAb
post exposure prophylaxis
SAR236553 (REGN727)
Anti-PCSK-9 mAb
Hypercholesterolemia
Acid sphingomyelinaseNiemann-Pick type B
Rabies VRVg Purified vero
rabies vaccine
Gene therapy (AAV-AADC)Parkinson's disease
Meninge ACYW conj. 2nd
generation meningococcal
conjugate Infant vaccine
N
N
N
N
N
N
N
N
N
G
G
N
N
G
N
N
N
N
39
Early Stage Pipeline –
Pharma & Vaccines
Phase ISAR153192
Anti-DLL4 mAb
Cancer
Genz644282 Topoisomerase-1 inhibitor
Solid tumors
SAR339658 VLA 2 antagonist
Inflammatory Bowel disease
SAR114137 Cathepsin
S/K inhibitor
OA pain & Peripheral neuropathic pain
SAR3419 Maytansin-loaded anti-CD19 mAb
non-Hodgkin’s lymphoma
Mozobil® (plerixafor)
CXCR4 Antagonist
Tumor Sensitization
SAR113945 IKK-β
inhibitor
Osteoarthritis
SAR152954 H3 antagonist
Sleep disorders
SAR256212 (MM-121) anti-ErbB3 mAb
Solid tumors, ovarian cancer
tasidotin GC1008 topoisomerase
inhibitor tubulin
binding agent
Melanoma
SAR292833 (GRC15300)
TRPV3 antagonist
Neuropathic pain, osteoarthritic
pain
SAR411298 FAAH inhibitor
Cancer pain
SAR103168 Multikinase
inhibitor
AML
Oral clofaribinePurine
analogueMyelodysplastic
syndromes
SAR100842 LPA-1/LPA-3
Internal medicine
Rotavirus Live Attenuated Tetravalent
Rotavirus oral vaccine
SAR650984 Anti-CD38 naked mAb
Hematological malignancies
SAR104772/SAR126119 TAFIa
inhibitor
Acute ischemic stroke
SAR279356 (F598)
Anti-PNAG mAb
Serious infections
Streptococcus pneumonia Meningitis & pneumonia vaccine
SAR302503 (TG101348)
JAK-2 inhibitor
Myelofibrosis, refractory polycythemia
SAR407899 Rho kinase
inhibitor
Diabetic nephropathy
SAR97276 Antimalarial
Malaria
Pseudomonas aeruginosa Antibody fragment product
Prevention of
ventilator-associated pneumonia
SAR566658 Maytansin-loaded anti-DS6
Solid tumors
lixisenatide + Lantus®
GLP-1 agonist + insulin glargine
Type 2 diabetes
SAR156597 IL4/IL13 Bi-specific
mAb
Idiopathic
Pulmonary
Fibrosis
Tuberculosis Recombinant subunit vaccine
SAR307746 (REGN910)
Anti-Ang2 mAb
Cancer
SAR101099 Urotensin
II receptor antagonist
Diabetic nephropathy
Gene therapy (sFLT-01)Age related Macular Degeneration
(AMD)
RetinoStat®
Gene therapy
Wet
age-related
macular
degeneration
(AMD)
SAR125844 Met kinase
inhibitor
Solid tumors
N
N
N
N
N
N
N
N
N
G
G
N
N
G
G
N New Molecular Entity
G GenzymeCentral Nervous System
Genetic diseasesOncologyMetabolic Disorders
VaccinesInternal Medecine
Thrombosis
Ophthalmology
N
N
N N
N
N
N
N
N
N
N
N
NG
N
40
Phase I Phase II Phase III Registration TOTAL
Oncology 10 3 3 0 16
Metabolic Disorders 2 1 1 1 5
Thrombosis 1 0 2 0 3
Central Nervous System 3 2 2 0 7
Internal Medicine 7 4 0 0 11
Ophthalmology 1 3 0 0 4
Genetic Diseases 1 2 2 0 5
Vaccines 4 4 5 1 14
TOTAL 29 19 15 2
R&D Pipeline Summary Table New Molecular Entities (NMEs) and Vaccines
48 17NMEs
& Vaccines
51
65
41
Anticipated
R&D Newsflow
Q3 2011
Q3 2011
Q3 2011
Q4 2011
Q3 2011
Q4 2011
Q3 2011
Q4 2011
Q4 2011
Q4 2011
Q1 2012
Key Milestones
-
Pharmaceuticals Timing
Expected regulatory submission of Zaltrap® in 2nd line mCRC in EU
Phase II results of Zaltrap® in 1st line mCRC (AFFIRM)
Expected regulatory submission of lixisenatide in EU
Phase III top-line results of LemtradaTM in multiple sclerosis (CARE-MS 2)
Lixisenatide in Type 2 diabetes - Further Phase III data presentation
Expected regulatory submission of Zaltrap® in 2nd line mCRC in U.S.
Expected regulatory submission of semuloparin in U.S. and EU
Expected regulatory submission of teriflunomide in U.S.
Phase III top-line results of teriflunomide in multiple sclerosis (TENERE)
Expected regulatory submission of mipomersen in U.S. for hoFH
Expected regulatory submission of teriflunomide in EU
41
Q1 2012Expected regulatory submission of LemtradaTM in MS in U.S. and EU
42
Anticipated R&D Newsflow
Q1 2012
Q4 2011
Q2 2012
Key Milestones
-
Vaccines Timing
Scientific opinion for HexaximTM issued by EMA
Start of Phase III for Fluzone® QIV ID
Start of Phase III for Vaxigrip® QIV IM
42
APPENDICES
FINANCE
44
Business Net Income Statement
*
Net of tax**
Determined on the basis of Business income before tax, associates, and non‐controlling interests***
Based on an average number of shares outstanding of 1,311.6 million in the second quarter of 2011 and 1,304.3 million in the second quarter of 2010(1)
In 2010, the results of operations of the Merial
business previously presented as "held‐for‐exchange" were reclassified and included in income from
continuing operations in accordance with IFRS5 § 36, following the announcement to maintain Merial
and Intervet/Schering‐Plough as two separate
organizations.
Second-quarter 2011 Pharmaceuticals Vaccines Animal health(1) Other Group Total
Millions of euros Q2 2011 Q2 2010 % change Q2 2011 Q2 2010 % change Q2 2011 Q2 2010 % change Q2 2011 Q2 2010 Q2 2011 Q2 2010 % change
Net sales 7,147 7,035 +1.6% 706 748 (5.6%) 496 524 (5.3%) 8,349 8,307 +0.5%
Other revenues 412 401 +2.7% 5 7 (28.6%) 5 4 +25.0% 422 412 +2.4%
Cost of sales (2,146) (1,806) +18.8% (282) (252) +11.9% (160) (151) +6.0% (2,588) (2,209) +17.2%
As % of net sales (30.0%) (25.7%) (39.9%) (33.7%) (32.3%) (28.8%) (31.0%) (26.6%)
Gross profit 5,413 5,630 (3.9%) 429 503 (14.7%) 341 377 (9.5%) 6,183 6,510 (5.0%)
As % of net sales 75.7% 80.0% 60.8% 67.2% 68.8% 71.9% 74.1% 78.4% Research and development expenses (1,023) (950) +7.7% (139) (130) +6.9% (35) (39) (10.3%) (1,197) (1,119) +7.0%
As % of net sales (14.3%) (13.5%) (19.7%) (17.4%) (7.1%) (7.4%) (14.3%) (13.5%)
Selling and general expenses (1,969) (1,808) +8.9% (137) (148) (7.4%) (161) (167) (3.6%) (1) (2) (2,268) (2,125) +6.7%
As % of net sales (27.6%) (25.7%) (19.4%) (19.8%) (32.5%) (31.9%) (27.2%) (25.6%)
Other current operating income/expenses (20) 67 (2) 10 1 19 (41) 7 27
Share of profit/loss of associates* 276 255 2 (7) 278 248
Net income attributable to non-controlling interests (58) (72) 1 1 (58) (70)
Business operating income 2,619 3,122 (16.1%) 153 219 (30.1%) 155 173 (10.4%) 18 (43) 2,945 3,471 (15.2%)
As % of net sales 36.6% 44.4% 21.7% 29.3% 31.3% 33.0% 35.3% 41.8% Financial income and expenses (100) (95)
Income tax expense (695) (898)
Tax rate** 26.5% 28.1%
Business net income 2,150 2,478 (13.2%)
As % of net sales 25.8% 29.8%
Business earnings per share*** (in euros) 1.64 1.90 (13,7%)
45
Business Net Income Statement
*
Net of tax**
Determined on the basis of Business income before tax, associates, and non‐controlling interests***
Based on an average number of shares outstanding of 1,308.6 million in the first semester of 2011 and 1,305.8 million in the first semester of 2010(1)
In 2010, the results of operations of the Merial
business previously presented as "held‐for‐exchange" were reclassified and included in income from
continuing operations in accordance with IFRS5 § 36, following the announcement to maintain Merial
and Intervet/Schering‐Plough as two separate
organizations.
First-half 2011 Pharmaceuticals Vaccines Animal health(1) Other Group Total
Millions of euros H1 2011 H1 2010 % change H1 2011 H1 2010 % change H1 2011 H1 2010 % change H1 2011 H1 2010 H1 2011 H1 2010 % change
Net sales 13,730 13,476 +1.9% 1,308 1,692 (22.7%) 1,090 1,037 +5.1% 16,128 16,205 (0.5%)
Other revenues 816 786 +3.8% 10 12 (16.7%) 9 9 835 807 +3.5%
Cost of sales (4,073) (3,531) +15.3% (550) (552) (0.4%) (327) (303) +7.9% (4,950) (4,386) +12.9%
As % of net sales (29.7%) (26.2%) (42.1%) (32.6%) (30.0%) (29.2%) (30.7%) (27.1%)
Gross profit 10,473 10,731 (2.4%) 768 1,152 (33.3%) 772 743 +3.9% 12,013 12,626 (4.9%)
As % of net sales 76.3% 79.6% 58.7% 68.1% 70.8% 71.6% 74.5% 77.9% Research and development expenses (1,963) (1,943) +1.0% (264) (247) +6.9% (70) (75) (6.7%) (2,297) (2,265) +1.4%
As % of net sales (14.3%) (14.4%) (20.2%) (14.6%) (6.4%) (7.2%) (14.2%) (14.0%)
Selling and general expenses (3,614) (3,373) +7.1% (264) (284) (7.0%) (322) (306) +5.2% (1) (2) (4,201) (3,965) +6.0%
As % of net sales (26.3%) (25.0%) (20.2%) (16.8%) (29.6%) (29.5%) (26.0%) (24.5%)
Other current operating income/expenses 42 168 (1) (2) (7) 6 (11) (70) 23 102
Share of profit/loss of associates* 559 491 (2) (8) 13 8 570 491
Net income attributable to non-controlling interests (136) (150) 1 1 (136) (148)
Business operating income 5,361 5,924 (9.5%) 237 612 (61.3%) 373 369 +1.1% 1 (64) 5,972 6,841 (12.7%)
As % of net sales 39.0% 44.0% 18.1% 36.2% 34.2% 35.6% 37.0% 42.2% Financial income and expenses
(178) (140)
Income tax expense (1,474) (1,796)
Tax rate** 27.5% 28.2%
Business net income 4,320 4,905 (11.9%)
As % of net sales 26.8% 30.3%
Business earnings per share*** (in euros) 3.30 3.76 (12,2%)
46
Reconciliation of Business Net Income to Consolidated Net Income Attributable to Equity Holders of Sanofi
(1)
The results of operations of the Merial
business previously presented as “held‐for‐exchange”
were reclassified and included in income from continuing operations
in accordance with IFRS5 §36, following the announcement to maintain Merial
and Intervet/Schering Plough as two separate organizations. (2)
Of which amortization expense generated by the remeasurement of intangible assets as part of business combinations: €
921 million in the second quarter of 2011
(including Aventis: €523 million, Genzyme
€242 million and Merial
€84 million) and € 900 million in the second quarter of 2010. (3)
In 2011: “Catch up”
in respect of 2009 and 2010 depreciation and amortization expense on PP&E* and intangible assets of Merial, previously classified as “Assets
held for sale or exchange”
(IFRS5 § 27).(4)
Based on an average number of shares outstanding of 1,311.6 million in the second quarter of 2011 and 1,304.3 in the second quarter of 2010.* Property, Plant and Equipment.
Millions of euros Q2 2011 Q2 2010(1) % change
Business net income 2,150 2,478 (13.2%)
Amortization of intangible assets(2) (965) (954)
Impairment of intangible assets (37) (108)
Fair value remeasurement of contingent consideration liabilities (20)
Expenses arising from the impact of acquisitions on inventories (262) (72)
Restructuring costs (345) (23)
Other gains and losses, and litigation(3)
Discontinuation of depreciation of PP&E* (IFRS5) 21
Tax effect of : 492 377 Amortization of intangible assets 296 318
Expenses arising on the workdown of acquired inventories 78 26
Restructuring costs 108 7 Other items 10 26
Other tax items (5)
Share of items listed above attributable to non-controlling interests 1
Restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures
(7) (8)
Net income attributable to equity holders of sanofi 1,006 1,707 (41.1%)
Consolidated earnings per share(4) (in euros) 0.77 1.31 (41,2%)
47
Reconciliation of Business Net Income to Consolidated Net Income Attributable to Equity Holders of Sanofi
(1)
The results of operations of the Merial
business previously presented as “held‐for‐exchange”
were reclassified and included in income from continuing operations in
accordance with IFRS5 §36, following the announcement to maintain Merial
and Intervet/Schering Plough as two separate organizations. (2)
Of which amortization expense generated by the remeasurement of intangible assets as part of business combinations: €
1,607 million in the first semester of 2011
(including Aventis: € 1,059 million, Genzyme: € 242 million and Merial
€
165 million) and €
1,701 million in the first semester of 2010.(3)
In 2011: “Catch up”
in respect of 2009 and 2010 depreciation and amortization expense on PP&E* and intangible assets of Merial, previously classified as “Assets held
for sale or exchange”
(IFRS5 § 27).(4)
Based on an average number of shares outstanding of 1,308.6 million in the first semester of 2011 and 1,305.8 in the first semester of 2010.* Property, Plant and Equipment.
Millions of euros H1 2011 H1 2010(1) % change
Business net income 4,320 4,905 (11.9%)
Amortization of intangible assets(2) (1,701) (1,802)
Impairment of intangible assets (69) (108)
Fair value remeasurement of contingent consideration liabilities (66)
Expenses arising from the impact of acquisitions on inventories (264) (134)
Restructuring costs (467) (190)
Other gains and losses, and litigation(3) (517)
Discontinuation of depreciation of PP&E* (IFRS5) 39
Tax effect of : 1,002 726
Amortization of intangible assets 559 600 Expenses arising on the workdown of acquired inventories 78 43
Restructuring costs 150 63
Other items 215 20 Other tax items (1)
Share of items listed above attributable to non-controlling interests 1
Restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures
(14) (15)
Net income attributable to equity holders of sanofi 2,224 3,421 (35.0%)
Consolidated earnings per share(4) (in euros) 1.70 2.62 (35.1%)
48
Consolidated Income Statement
(1)
The results of operations of the Merial
business previously presented as “held‐for‐exchange”
were reclassified and included in income
from continuing operations in accordance with IFRS5 §36, following the announcement to maintain Merial
and Intervet‐Schering Plough
as two separate organizations.
Millions of euros Q2 2011 Q2 2010(1) H1 2011 H1 2010(1)
Net sales 8,349 8,307 16,128 16,205
Other revenues 422 412 835 807
Cost of sales (2,850) (2,269) (5,214) (4,496)
Gross profit 5,921 6,450 11,749 12,516
Research and development expenses (1,197) (1,117) (2,297) (2,260)
Selling and general expenses (2,268) (2,118) (4,201) (3,955)
Other operating income 73 91 191 243
Other operating expenses (66) (64) (168) (141)
Amortization of intangible assets (965) (954) (1,701) (1,802)
Impairment of intangible assets (37) (108) (69) (108)
Fair value remeasurement of contingent consideration liabilities (20) (66)
Restructuring costs (345) (23) (467) (190)
Other gains and losses, and litigation (517)
Operating income 1,096 2,157 2,454 4,303
49
Consolidated Income Statement
(1)
The results of operations of the Merial
business previously presented as “held‐for‐exchange”
were reclassified and included in income
from continuing operations in accordance with IFRS5 §36, following the announcement to maintain Merial
and Intervet‐Schering Plough
as two separate organizations.
Millions of euros Q2 2011 Q2 2010(1) H1 2011 H1 2010(1)
Operating income 1,096 2,157 2,454 4,303
Financial expenses (133) (111) (234) (214)
Financial income 33 16 56 74
Income before tax and associates and joint ventures 996 2,062 2,276 4,163
Income tax expenses (203) (526) (472) (1,071)
Share of profit/loss of associates and joint ventures 271 240 556 476
Net income 1,064 1,776 2,360 3,568
Net income attributable to non-controlling interests 58 69 136 147
Net income attributable to equity holders of sanofi 1,006 1,707 2,224 3,421
Average number of shares outstanding (million) 1,311.6 1,304.3 1,308.6 1,305.8
Earnings per share (in euros) 0.77 1.31 1.70 2.62
50
Change in Net Debt
(1)
Excluding restructuring costs.(2)
In 2011: (13,528)M€
related to Genzyme
acquisition(3)
In 2011: foreign exchange effect on net debt +384 M€
Millions of euros H1 2011 H1 2010
Business net income 4,320 4,905
Depreciation, amortization and impairment of property, plant and equipment and intangible assets 555 527
Net gains and losses on disposals of non-current assets, net of tax (35) (81) Other non cash items 276 436
Operating cash flow before changes in working capital (1) 5,116 5,787
Changes in working capital (1) (754) (844)
Acquisitions of property, plant and equipment and software (768) (629)
Free cash flow (1) 3,594 4,314
Acquisitions of intangibles, excluding software (64) (157)
Acquisitions of investments, including assumed debt(2) (13,935) (1,789)
Restructuring costs paid (353) (571)
Proceeds from disposals of property, plant and equipment, intangibles, and other non-current assets, net of tax 71 75
Issuance of sanofi shares 28 11
Dividends paid to sanofi shareholders (1,372) (3,131)
Acquisition of treasury shares (113) (321)
Disposals of treasury shares, net of tax 1 57
Other items(3) 489 (213)
Change in net debt (11,654) (1,725)
51
Simplified Consolidated Balance Sheet
ASSETS € million
06/30/11 12/31/10 LIABILITIES & EQUITY € million
06/30/11 12/31/10
Property, plant and equipment 10,669 8,155Equity attributable to equity‐holders of sanofi
52,456 53,097
Intangible assets (including goodwill)
60,077 44,411Equity attributable to non‐controlling interests
143 191
Non‐current financial assets, investments in associates, and deferred tax assets
6,212 5,619 Total equity 52,599 53,288
Long‐term debt 13,289 6,695
Non‐current liabilities related to business combinations and to non‐controlling interests
1,390 388
Non‐current assets 76,958 58,185Provisions and other non‐current liabilities
9,704 9,326
Deferred tax liabilities 6,560 3,808
Inventories, accounts receivable and other current assets
16,054 13,578 Non‐current liabilities 30,943 20,217
Cash and cash equivalents 6,538 6,465Accounts payable and other current liabilities
9,078 8,424
Current liabilities related to business combinations and to non‐controlling interests
207 98
Short‐term debt and current portion of long‐term debt
6,753 1,565
Current assets 22,592 20,043 Current liabilities 16,038 10,087
Assets held for sale or exchange
44 7,036Liabilities related to assets held for sale or exchange
14 1,672
Total ASSETS 99,594 85,264 Total LIABILITIES & EQUITY 99,594 85,264
52
Business EPS
●
Sanofi publishes a key non-GAAP indicator in response to the application of IFRS 8. This indicator “Business EPS”, replaced “adjusted EPS excluding selected items”.
●
Business EPS is defined as earnings per share attributable to equity holders of Sanofi excluding:●
amortization of intangible assets,●
impairment of intangible assets, ●
fair value remeasurement
of contingent consideration liabilities related to business combinations,
●
other impacts associated with acquisitions (including impacts of
acquisitions on associates),●
restructuring costs *,●
other gains and losses (including gains and losses on disposals of non-current assets *),●
costs or provisions associated with litigation *,●
tax effects related to the items listed above as well as effects
of major tax disputes.
*Reported in the line items Restructuring costs and Gains and losses on disposals, and litigation, which are defined in Note B.20
to our consolidated financial statements.
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