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Q3 2015 RESULTS by Sanofi
- 1. Q3 2015 RESULTS October29, 2015
- 2. 2 Forward Looking Statements Thispresentation 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 labeling and other matters that could affect the availability or commercial potential of such product candidates, the absence of guarantee that the product 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, trends in exchange rates and prevailing interest rates, the impact of cost containment policies and subsequent changes thereto, the average number of shares outstanding 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, 2014. 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 3 Olivier Brandicourt ChiefExecutive Officer
- 4. Sanofi Grew Salesand Business EPS in Q3 2015 while Accelerating Investments to Drive Future Growth 4 Delivering solid sales growth Posting steady financial results Bringing innovative medicines to market NDA: New Drug Application GBUs: Global Business Units (1) On a reported basis, Q3 2015 sales were up +9.2% (2) On a reported basis, Q3 2015 Business EPS was up +9.5% (3) In particular Aubagio®, NexGard®, Lemtrada® and Toujeo® (4) Scheduled to be effective January 1, 2016 Building a sustainable path forward 11 22 33 44 ● Higher OpEx, as expected, driven by investment in launches ● Business EPS up +6.1% at CER(2) ● Sales up +3.4% at CER(1) despite Diabetes sales erosion in the U.S. ● Growing contribution from new products(3) ● Praluent® launched in the U.S. and EMA approval granted ● NDA for lixisenatide accepted for review by FDA ● Plans for implementation of Global Business Unit structure and globalization of functions on track(4)
- 5. Q3 2015FX Impact +€0.05 Incremental EPSat CER +€0.09 Q3 2014 Net Sales Business EPS Solid Top and Bottom Lines Growth in Q3 2015 5 (1) On a reported basis, Q3 2015 sales were up +9.2% and Business EPS was up +9.5% +6.1% at CER(1) FX Impact Q3 2015 +€508m Incremental Sales at CER +€302m Q3 2014 +3.4% at CER(1) €8,781m €9,591m €1.47 €1.61
- 6. 6 Q3 2015 Salesby Business Areas (1) Q3 2015 sales were up +3.4% at CER and +9.2% on a reported basis (2) Q3 2015 sales excluding Diabetes were €7,739m, up +6.0% at CER; YTD Sep 2015 sales excluding Diabetes were €22,102m, up +5.8% at CER (3) Sales of Pharmaceuticals include €4m of Praluent® Growth at CER Genzyme Generics Consumer Healthcare Diabetes Oncology €923m €452m €814m €1,852m €376m +32.7% +6.7% +3.2% -6.6% +5.4% Broad-based Sales Growth Continues in Q3 2015(1,2) % of Sales 9.6% 8.5% 19.3% 4.7% 3.9% Animal Health Vaccines €607m €1,717m +9.3% +5.5%17.9% 6.3% Pharmaceuticals(3) €7,267m +2.6%75.8% Established Products €2,846m +0.1%29.8% Q3 2015 sales growth excluding Diabetes of +6.0% at CER
- 7. Diabetes Performance inQ3 2015 Reflects Lower U.S. Sales of Lantus® than Expected 7 (1) Diabetes sales in the U.S. declined by 12.0% at CER in Q1 2015 and by 14.0% at CER in Q2 2015 (2) U.S. Lantus® sales were €997m down -19.6% at CER in Q3 2015 (3) Diabetes sales in Western EU were €296m, down -0.3% at CER, in Q3 2015 (4) Diabetes sales in Emerging Markets were €373m, up +15.5% in Q3 2015 Global diabetes sales expected to be down between 6% and 7% at CER in 2015 ● U.S. Lantus® sales(2) impacted by: ● Higher discounts as compared to last year ● Slower than expected U.S. basal market ● Higher than expected proportion of sales to U.S. government channels (e.g. Medicaid) ● Successfully defending U.S. glargine TRx share post Toujeo® launch ● Stable diabetes sales in Western EU(3) given biosimilar glargine entry in some countries ● Sustained double-digit diabetes sales growth in Emerging Markets(4) Q3 2015 Diabetes Sales by Geography (€m) Global Diabetes Sales: €1,852m, -6.6% at CER Ex-U.S. €777m +8.1% at CER U.S. (1) €1,075m -16.4% at CER 42.0% 58.0%
- 8. Global Roll-out Underwayand Showing Early Promise in Key Markets 8 0% 1% 2% 3% 4% 5% 6% 7% 8% 1 3 5 7 9 11 13 15 17 19 21 23 25 0% 10% 20% 30% 40% 50% 60% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 Weekly NBRx Share within Basal Market(1) Lantus® 49.8% Levemir® 26.8% NPH 9.4% Weekly Sell Out Share (in Units/Packs) within Basal Market(2) 6.8% (1) Basal market includes Toujeo®, Lantus®, Levemir® (a Novo Nordisk brand) and NPH - Source: IMS Weekly Data week of April 3 - week of Oct 9, 2015 (2) Insight Health Germany (Retail Apo-Weekly-Pharma) – All data including parallel trade; Toujeo® week of May 5 - Oct 20, 2015; Tresiba® week of April 29 - Oct 14, 2014 Weeks from Toujeo® Launch Weeks from Launch 3.6% Tresiba® Additional launches in Q3 in Japan, Canada, U.K. and other EU countries 14.0%
- 9. Genzyme Delivers StrongQ3 2015 with MS Franchise Continuing to More than Double vs. Q3 2014 ● Strong MS sales in Q3 2015 ● Aubagio® reaching €225m ● Lemtrada® at €68m, sequentially up +24.0% at CER from previous quarter ● ECTRIMS data presentations support value proposition of MS products: Aubagio® favorable impact on brain atrophy(1) Lemtrada® effect maintained over 5 years(2) ● Sustained Rare Diseases sales growth driven by continued new patient accrual ● Double digit growth of Gaucher franchise, Fabry and Pompe brands(3) 9 Genzyme Quarterly Sales Q3 2014 Q3 2015 €923m +32.7% at CER €293m +120.2% at CER €119m €649m MS: Multiple Sclerosis (1) Additional MRI data on brain atrophy from Phase III TEMSO study, Press release October 7th 2015 (2) CARE-MS I&II 5-year extension study, Press release October 8th 2015 (3) Gaucher franchise (Cerezyme®+Cerdelga®) sales were €207m, up +14.3% at CER, while Fabrazyme and Myozyme were €147m and €162m respectively, up +18.1% at CER and +10.9% at CER Rare Disease Multiple Sclerosis €630m +13.0% at CER€530m
- 10. Vaccines Showed GoodSales Growth in Q3 2015 10 Q3 2015 €1,717m +5.5% at CER Q3 2014 €1,451m Other Adult Boosters Travel/Endemic Polio/Pertussis/Hib Influenza Vaccines Meningitis/Pneumo (2) (1) U.S. flu vaccines sales were €576m in Q3 2015, up 8.3% at CER (2) Includes VaxServe, a U.S. healthcare supplier serving primary care physician offices, community immunization providers, immunizing pharmacies, travel clinics and corporations ● Stable flu vaccines sales of €736m (+0.3% at CER) in Q3 2015 ● Solid U.S. performance(1) , partially offset by delayed supply in Western EU and Mexico ● PPH sales up +17.8% at CER driven by strong delivery pattern in China ● Menactra® sales up +17.8% at CER as a result of U.S. public sector purchases ● Dengue vaccine launch preparation on track ● 1st license anticipated before year-end ● 1st wave of launches in endemic countries planned for 2016 Sanofi Pasteur Quarterly Sales On track to deliver >65m doses of Flu vaccine in the U.S. in 2015
- 11. Sixth Consecutive Quarterof Growth at Merial Driven by Strong Performance in Pets 11 ● Q3 2015 sales of €607m, up +9.3% at CER ● Companion Animals sales of €401m, up +13.6% at CER ● NexGard® U.S. advertising campaign leads to strong performance in Q3 2015 ● Production Animals segment sales of €206m, up +2.5% at CER Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 -6.3%-6.4% -1.6% +12.7% +6.2% +11.5% +13.5% +14.2% +9.3% Quarterly Sales Growth at CER
- 12. (1) World excludingU.S., Canada, Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg, Portugal, the Netherlands, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark), Japan, South Korea, Australia, and New Zealand (2) RoW: Japan, South Korea, Canada, Australia, and New Zealand (3) At constant exchange rate Double Digit Growth in Emerging Markets and Low Single Digit Growth in the U.S. in Q3 2015 29.9% 40.5% 20.7% 8.9% 12 (1) €964m €697m €587m €562m Asia Latin America Eastern Europe, Russia & Turkey Africa & Middle East +7.0% +6.0% +11.4%Growth at CER +17.8% Emerging Markets Sales by Region Emerging Markets €2,871m +11.4% at CER U.S. €3,888m +2.3% at CER Western EU €1,988m -1.8% at CER RoW €844m -4.5% at CER (2) Q3 2015 Sales by Geography (€m) (3)
- 13. Early Launch ProgressEncouraging with Gradual Uptake(1) Consistent with Expectations ● U.S. comprehensive support hub tracking in line with expectations ● Over 4,000 prescribers ● Preferred Tier 2 formulary position granted by ESI (parity for both PCSK9 brands) ● Formulary status at CVS and UHC pending ● Near-term expansion opportunities: Driving awareness and adoption Gaining greater U.S. market access 13 Launches in first EU countries underway UHC: United Healthcare (1) Initial U.S. sales were €4m in Q3 2015 75 mg/1 mL pen 150 mg/1 mL pen Both doses available in a single-dose, 1-mL, prefilled pen and prefilled syringe Dosage and Administration Options 150 mg Q2W Available in 2 Doses Increase if needed Recommended starting dose 75 mg Q2W
- 14. New Launches Morethan Offset Lantus® Sales Decline in YTD Sep 2015 14 YTD Sep 2015 FXOthers Q3 2015 at CER Lantus®LaunchesYTD Sep 2014 +€566m -€332m +€647m +€2,200m (1) (1) Includes Aubagio®, Lemtrada®, Cerdelga®, Toujeo®, Afrezza®, Praluent®, NexGard® +3.6% at CER €27,779m €24,698m YTD Sep 2015 Sales €25,579m +12.5% reported
- 15. 15 U.S. (Q4 2015) EU(Q3 2016) Regulatory Submissions for Two High Potential Products Expected by Year End 1 Key Regulatory Submissions Rheumatoid Arthritis U.S. (Q4 2015) EU (Q1 2016) 2 Diabetes sarilumab
- 16. FINANCIAL RESULTS Jérôme Contamine ExecutiveVice President, Chief Financial Officer 16
- 17. Net Sales(1,2) Business EPS(1,2) 17 FXTailwind Easing Due to Emerging Market Currencies in Q3 2015 (1) Main currency impact on sales in Q3 2015: U.S. Dollar (+€621m); Chinese Yuan (+€79m); Brazilian Real (-€82m); Venezuelan Bolivar Forte (-€81m); Russian Ruble (-€62m) (2) Q3 2015 Fx impact without Venezuela on Sales +€589m (+6.7ppt) and Business EPS +€0.15 (+10.3ppt) Quarterly Currency Impact -1.0% -€81m +9.9% +€782m Q2 2015 Q3 2014 Q4 2014 Q1 2015 +2.7% +€229m -€0.03 -2.2% +1.5% +€0.02 +10.2% +€0.12 Q3 2015 +11.2% +€910m +15.4% +€0.18 +5.8% +€508m +3.4% +€0.05 Q2 2015 Q3 2014 Q4 2014 Q1 2015 Q3 2015
- 18. CER: Constant ExchangeRates (1) Includes a foreign exchange loss of €137m on Venezuela 18 Q3 2015 Business Operating Income Stable at CER Given Investments to Drive Future Growth €m Q3 2015 Q3 2014 % Change (reported €) % Change (CER) Net sales 9,591 8,781 +9.2% +3.4% Other revenues 89 87 +2.3% -8.0% Cost of sales (2,998) (2,864) +4.7% +2.0% Gross profit 6,682 6,004 +11.3% +4.0% R&D (1,355) (1,146) +18.2% +9.9% SG&A (2,461) (2,193) +12.2% +6.2% Other current operating income & expenses (136) 39 - - Share of Profit/Loss of associates 78 43 - - Minority interests (25) (31) - - Business operating income 2,783 2,716 +2.5% -0.4% Business operating margin 29.0% 30.9% - - (1)
- 19. 19 €m Q3 2015Q3 2014 % Change (reported €) % Change (CER) Business operating income 2,783 2,716 +2.5% -0.4% Net financial expenses (105) (139) - - Income tax expense (582) (642) - - Effective tax rate -22.2% -25.0% - - Business net income 2,096 1,935 +8.3% +5.0% Net margin 21.9% 22.0% - - Business EPS €1.61 €1.47 +9.5% +6.1% Average number of shares outstanding (m) 1,305.5 1,313.0 - - Mid-Single Digit Business Net Income Growth at CER in Q3 2015 Resulting from Lower Tax Rate 19 CER: Constant Exchange Rates
- 20. Gross Margin Consistentwith FY 2015 Expectations ● Cost of Sales (CoS) of €2,998m in Q3 2015, up +2.0% at CER ● Gross margin of 69.7% in Q3 2015 reflecting 1.3 pt increase over Q3 2014: ● Positive impact from MS franchise and Vaccines more than offsetting negative impact of Diabetes U.S. and Plavix® LoE in Japan ● Favorable FX impact (1.0 pt) 20 Gross Margin (%) Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 69.7% 68.4% Gross Margin expected to be around 69% in 2015
- 21. OpEx Up +5.0%at CER in YTD Sep 2015 as Expected 2121 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 €3,816m €3,339m Operating Expenses (€m) €1,355m €1,146m €2,461m €2,193m Targeting mid-single digit OpEx growth at CER in 2015 ● Q3 2015 OpEx of €3,816m, up +7.5% at CER ● R&D expenses of €1,355m (14.1% of sales), up +9.9% at CER, driven by dupilumab, ODYSSEY CVOT study and immuno-oncology ● SG&A expenses of €2,461m (25.7% of sales), up +6.2% at CER, mainly due to Toujeo® DTC, Praluent® launch, support to MS brands as well as Animal Health SG&A R&D
- 22. Over €5bn ofFree Cash Flow Generated in YTD Q3 2015 22 Net Debt (€m) Acquisitions, Licensing, Net of Disposals €3,694m €1,383m Share Repurchase Proceeds from Issuance of Shares €552m CapEx €1,009m Net Cash from Operating Activities Net Debt Dec 31, 2014 Other €1,182m Net Debt Sep 30, 2015 Dividend €1,481m (1) (2) €7,171m €9,354m€6,014m (4) (1) FCF €5,005m FCF: Free Cash Flow (1) Including derivatives related to the financial debt +€302m at December 31st 2014 and +€302m at September 30th 2015 (2) Excluding Restructuring costs (3) Including Regeneron immuno-oncology collaboration of €584m and Caprelsa® rights of €149m (4) Other including Restructuring costs and Fx impact (3)
- 23. Business EPS Growth Between+6% and +8%(3) Stable to slightly growing at CER(1,2) 23 (1) Barring major unforeseen adverse events (2) FY 2014 Business EPS of €5.20 (3) Difference between variation on a reported basis and variation at CER, when applying September 2015 average exchange rates to the remaining quarter of the year and including Venezuela impact Outlook for 2015 Reaffirmed FY 2015 FX impact on Business EPS
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- 25. 25 Late Stage Pipeline– Pharma & Vaccines LixiLan lixisenatide + insulin glargine Fixed-Ratio / Type 2 diabetes patisiran (ALN-TTR02) siRNA inhibitor targeting TTR Familial amyloidotic polyneuropathy Clostridium difficile Toxoid vaccine lixisenatide GLP-1 agonist Type 2 diabetes, U.S. SAR342434 insulin lispro Type 1+2 diabetes revusiran (ALN-TTRsc) siRNA inhibitor targeting TTR Familial amyloidotic cardiomyopathy Rotavirus Live attenuated tetravalent Rotavirus oral vaccine Dengue Mild-to-severe dengue fever vaccine sarilumab (Anti-IL6R mAb) Rheumatoid arthritis Jevtana® cabazitaxel Metastatic prostate cancer (1L) VaxiGrip® QIV IM Quadrivalent inactivated influenza vaccine (3-36 months) PR5i DTP-HepB-Polio-Hib Pediatric hexavalent vaccine, U.S., EU dupilumab Anti-IL4Rα mAb Atopic dermatitis, Asthma VaxiGrip® QIV IM Quadrivalent inactivated influenza vaccine (3 years+) 25 N N N New Molecular Entity Immunology Rare Diseases OncologyDiabetes Vaccines Infectious DiseasesCardiovascular Diseases Neuro-degenerative Diseases Ophthalmology Phase III Registration N N NN N Multiple Sclerosis
- 26. Early Stage Pipeline– Pharma & Vaccines dupilumab Anti-IL4Rα mAb Nasal polyposis; Eosinophilic oesophagitis isatuximab Anti-CD38 naked mAb Multiple myeloma Rabies VRVg Purified vero rabies vaccine SAR156597 IL4/IL13 Bi-specific mAb Idiopathic pulmonary fibrosis GZ402671 Oral GCS Inhibitor Fabry Disease Meningitis ACYW conj. 2nd generation meningococcal conjugate infant vaccine sarilumab Anti-IL6R mAb Uveitis olipudase alfa rhASM Niemann-Pick type B Tuberculosis Recombinant subunit vaccine Combination ferroquine / OZ439 Antimalarial Fluzone® QIV HD Quadrivalent inactivated influenza vaccine - High dose Phase II N N 2626 N N N N New Molecular Entity Immunology Rare Diseases OncologyDiabetes Vaccines Infectious DiseasesCardiovascular Diseases Neuro-degenerative Diseases Ophthalmology Multiple Sclerosis
- 27. Early Stage Pipeline– Pharma & Vaccines GZ402668 GLD52 (anti-CD52 mAb) Relapsing multiple sclerosis SAR566658 Maytansin-loaded anti-CA6 mAb Solid tumors GZ402666 neo GAA Pompe Disease SAR422459 ABCA4 gene therapy Stargardt disease SAR113244 Anti-CXCR5 mAb Systemic lupus erythematosus SAR408701 Anti-CEACAM5 ADC Solid tumors GZ389988 TRKA antagonist Osteoarthritis UshStat® Myosin 7A gene therapy Usher syndrome 1B SAR228810 Anti-protofibrillar AB mAb Alzheimer’s disease SAR439684 PD-1 inhibitor Cancer SAR339375 Anti-miR21 RNA Alport syndrome SAR366234 EP2 receptor agonist Elevated intraocular pressure SAR425899 GLP-1R/GCGR dual agonist Diabetes SAR428926 LAMP-1 inhibitor Cancer SAR439774 ALN-AT3 Haemophilia Streptococcus pneumonia Meningitis & pneumonia vaccine SAR438335 GLP-1R/GIPR dual agonist Diabetes SAR439152 Myosin inhibitor Hypertrophic cardiomyopathy Herpes Simplex Virus Type 2 HSV-2 vaccine Phase I N N N NN NN N 27 N N N N N N N N N N New Molecular Entity Immunology Rare Diseases OncologyDiabetes Vaccines Infectious DiseasesCardiovascular Diseases Neuro-degenerative Diseases Ophthalmology Multiple Sclerosis
- 28. 28 Phase I PhaseII Phase III Registration TOTAL Oncology 4 1 0 0 5 Diabetes Solutions 2 0 2 1 5 Cardiovascular / Renal Diseases 1 0 0 0 1 Immune Mediated Diseases 2 1 2 0 5 Infectious Diseases 0 1 0 0 1 Ophthalmology 3 0 0 0 3 Rare Diseases 4 2 2 0 8 Age Related Degenerative Diseases 1 0 0 0 1 Vaccines 2 4 3 3 12 TOTAL 19 9 9 4 R&D Pipeline Summary Table(1) 28 13 NMEs & Vaccines 41 28 29 (1) Excluding life cycle management programs
- 29. 29 Expected R&D Milestones 29 ProductEvent Timing Dengue vaccine Expected regulatory decision in endemic countries Q4 2015 sarilumab Expected U.S. regulatory submission in Rheumatoid Arthritis Q4 2015 LixiLan Expected U.S. regulatory submission in Diabetes Q4 2015 PR5i vaccine (DTP-HepB-Polio-Hib) Expected CBER decision on the extended review timeline Q4 2015 LixiLan Expected EU regulatory submission in Diabetes Q1 2016 dupilumab Expected Phase III top line results in Atopic Dermatitis Q1 2016 PR5i vaccine (DTP-HepB-Polio-Hib) Expected EU regulatory decision Q2 2016 Meningitis ACYW conj. vaccine Expected start of Phase III trial Q2 2016 Rotavirus vaccine Expected regulatory submission in India Q2 2016 Insulin lispro Expected Phase III top line results in Diabetes Q2 2016 lixisenatide Expected U.S. regulatory decision Q3 2016 dupilumab Expected U.S. regulatory submission in Atopic Dermatitis Q3 2016 sarilumab Expected MONARCH Phase III results in Rheumatoid Arthritis Q3 2016
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- 31. Business EPS CurrencySensitivity Currency Exposure on Q3 2015 Sales Currency Average Rates 2015 Currency Sensitivity 31 Q3 2014 Q3 2015 % change EUR/USD 1.33 1.11 -16.5% EUR/JPY 137.74 135.89 -1.3% EUR/CNY 8.17 7.01 -14.2% EUR/RUB 48,08 70,46 +46.6% Currency Variation Business EPS Sensitivity U.S. Dollar -0.05 USD/EUR +EUR 0.10 Japanese Yen +5 JPY/EUR -EUR 0.03 Russian Ruble +10 RUB/EUR -EUR 0.06 € 21.4% US $ 41.5% Japanese Yen 4.5% Bristish £ 2.1% Australian $ 1.4% Canadian $ 1.5% Brazilian Real 2.7% Chinese Yuan 5.9% Russian Ruble 1.4% Others 16.2% Mexican Peso 1.4%
- 32. 32 Business Net IncomeStatement Third quarter 2015 Net sales 9,591 8,781 9.2% 7,267 6,815 6.6% 1,717 1,451 18.3% 607 515 17.9% - - Other revenues 89 87 2.3% 68 69 (1.4%) 9 9 - 12 9 33.3% - - Cost of sales (2,998) (2,864) 4.7% (2,151) (2,036) 5.6% (635) (629) 1.0% (212) (199) 6.5% - - As % of net sales (31.3%) (32.6%) (29.6%) (29.9%) (37.0%) (43.3%) (34.9%) (38.6%) Gross profit 6,682 6,004 11.3% 5,184 4,848 6.9% 1,091 831 31.3% 407 325 25.2% - - As % of net sales 69.7% 68.4% 71.3% 71.1% 63.5% 57.3% 67.1% 63.1% Research and development expenses (1,355) (1,146) 18.2% (1,173) (987) 18.8% (140) (121) 15.7% (42) (38) 10.5% - - As % of net sales (14.1%) (13.1%) (16.1%) (14.5%) (8.2%) (8.3%) (6.9%) (7.4%) Selling and general expenses (2,461) (2,193) 12.2% (2,070) (1,859) 11.4% (176) (170) 3.5% (215) (164) 31.1% - - As % of net sales (25.7%) (25.0%) (28.5%) (27.3%) (10.3%) (11.7%) (35.4%) (31.8%) Other current operating income/expenses (136) 39 (128) 57 - 2 4 1 (12) (21) Share of profit/loss of associates* 78 43 57 22 20 21 1 - - - Net income attributable to non-controlling interests (25) (31) (24) (31) (1) - - - - - Business operating income 2,783 2,716 2.5% 1,846 2,050 (10.0%) 794 563 41.0% 155 124 25.0% (12) (21) As % of net sales 29.0% 30.9% 25.4% 30.1% 46.2% 38.8% 25.5% 24.1% Financial income and expenses (105) (139) Income tax expense (582) (642) Tax rate** 22.2% 25.0% Business net income 2,096 1,935 8.3% As % of net sales 21.9% 22.0% Business earnings per share*** (in euros) 1.61 1.47 9.5% Q3 2014€ million Q3 2015 Q3 2014 change Q3 2015 change Q3 2015 Q3 2014change Q3 2015 Q3 2014 change Q3 2015 Q3 2014 OtherGroup Total Pharmaceuticals Vaccines Animal health (1) Net of tax (2) Determined on the basis of Business income before tax, associates and non-controlling interests (3) Based on an average number of shares outstanding of 1,305.5 million in the third quarter of 2015 and 1,313.0 million in the third quarter of 2014
- 33. 33 Business Net IncomeStatement Nine months 2015 Net sales 27,779 24,698 12.5% 22,522 20,332 10.8% 3,301 2,797 18.0% 1,956 1,569 24.7% - - Other revenues 252 241 4.6% 197 195 1.0% 23 23 - 32 23 39.1% - - Cost of sales (8,722) (7,988) 9.2% (6,593) (6,082) 8.4% (1,461) (1,329) 9.9% (668) (577) 15.8% - - As % of net sales (31.4%) (32.4%) (29.3%) (29.9%) (44.3%) (47.5%) (34.2%) (36.8%) Gross profit 19,309 16,951 13.9% 16,126 14,445 11.6% 1,863 1,491 24.9% 1,320 1,015 30.0% - - As % of net sales 69.5% 68.6% 71.6% 71.0% 56.4% 53.3% 67.5% 64.7% Research and development expenses (3,844) (3,473) 10.7% (3,316) (3,012) 10.1% (402) (351) 14.5% (126) (110) 14.5% - - As % of net sales (13.8%) (14.1%) (14.7%) (14.8%) (12.2%) (12.5%) (6.4%) (7.0%) Selling and general expenses (7,547) (6,526) 15.6% (6,380) (5,580) 14.3% (520) (441) 17.9% (647) (505) 28.1% - - As % of net sales (27.2%) (26.4%) (28.3%) (27.4%) (15.8%) (15.8%) (33.1%) (32.2%) Other current operating income/expenses (223) 68 (167) 76 2 3 9 18 (67) (29) Share of profit/loss of associates* 139 82 118 55 20 27 1 - - - Net income attributable to non-controlling interests (87) (96) (86) (96) (1) - - - - - Business operating income 7,747 7,006 10.6% 6,295 5,888 6.9% 962 729 32.0% 557 418 33.3% (67) (29) As % of net sales 27.9% 28.4% 28.0% 29.0% 29.1% 26.1% 28.5% 26.6% Financial income and expenses (314) (309) Income tax expense (1,771) (1,678) Tax rate** 24.0%) 25.0% Business net income 5,662 5,019 12.8% As % of net sales 20.4% 20.3% Business earnings per share*** (in euros) 4.33 3.81 13.6% 9M 2014 9M 2015 9M 2014 Other 9M 2014 change 9M 2015 9M 20149M 2015change change Group Total Pharmaceuticals Vaccines Animal health € million 9M 2015 9M 2014 change 9M 2015 (1) Net of tax (2) Determined on the basis of Business income before tax, associates and non-controlling interests (3) Based on an average number of shares outstanding of 1,306.6 million in the first nine months of 2015 and 1,315.8 million in the first nine months of 2014
- 34. 34 Reconciliation of BusinessNet Income to Consolidated Net Income Attributable to Equity Holders of Sanofi € million Q3 2015 Q3 2014 Change Business net income 2,096 1,935 8.3% Amortization of intangible assets(1) (598) (561) Impairment of intangible assets (209) (35) Fair value remeasurement of contingent consideration liabilities 90 (45) Restructuring costs (58) (163) Other gains and losses, and litigation - - Additional yearly expense related to US Branded Prescription Drug Fee (2) - (116) Tax effect of: 310 261 amortization of intangible assets 210 188 impairment of intangible assets 77 13 fair value remeasurement of contingent consideration liabilities 8 5 other gains and losses, and litigation - - restructuring costs 15 55 Other tax items - - Share of items listed above attributable to non-controlling interests 2 - Restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures (5) (86) IFRS net income reported (3) 1,628 1,190 36.8% Consolidated earnings per share(4) (in euros) 1.25 0.91 (1) Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations: €560 million in the third quarter of 2015 and €540 million in the third quarter of 2014 (2) Annual fee related to 2013 sales following the final IRS regulation issued in July 2014 that has changed the timing of liability recognition and leads to a one-time “double” expense in the year of 2014 (3) Net income attributable to equity holders of Sanofi (4) Based on an average number of shares outstanding of 1,305.5 million in the third quarter of 2015 and 1,313.0 million in the third quarter of 2014
- 35. 3535 Reconciliation of BusinessNet Income to Consolidated Net Income Attributable to Equity Holders of Sanofi € million 9M 2015 9M 2014 Change Business net income 5,662 5,019 12.8% Amortization of intangible assets(1) (1,827) (1,862) Impairment of intangible assets (237) (109) Fair value remeasurement of contingent consideration liabilities 161 (177) Restructuring costs (439) (298) Other gains and losses, and litigation (2) - 35 Additional expense related to US Branded Prescription Drug Fee (3) - (116) Tax effect of: 871 783 amortization of intangible assets 641 639 impairment of intangible assets 87 39 fair value remeasurement of contingent consideration liabilities (7) 19 other gains and losses, and litigation - (13) restructuring 150 99 Other tax items(4) (111) (110) Share of items listed above attributable to non-controlling interests 5 4 Restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures (132) (118) IFRS net income reported (5) 3,953 3,051 29.6% Consolidated earnings per share(6) (in euros) 3.03 2.32 (1) Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations: €1,732 million in the first nine months of 2015 and €1,798 million in the first nine months of 2014 (2) Day one profit on Alnylam shares presented in financial result (3) Annual fee related to 2013 sales following the final IRS regulation issued in July 2014 that has changed the timing of liability recognition and leads to a one-time “double” expense in the year of 2014 (4) Tax on dividends paid to shareholders of Sanofi (5) Net income attributable to equity holders of Sanofi (6) Based on an average number of shares outstanding of 1,306.6 million in the first nine months of 2015 and 1,315.8 million in the first nine months of 2014
- 36. 3636 Consolidated Income Statements €million Net sales 9,591 8,781 27,779 24,698 Other revenues 89 87 252 241 Cost of sales (2,998) (2,864) (8,722) (7,988) Gross profit 6,682 6,004 19,309 16,951 Research and development expenses (1,355) (1,146) (3,844) (3,473) Selling and general expenses (2,461) (2,309) (7,547) (6,642) Other operating income (108) 47 (25) 163 Other operating expenses (28) (8) (198) (95) Amortization of intangible assets (598) (561) (1,827) (1,862) Impairment of intangible assets (209) (35) (237) (109) Fair value remeasurement of contingent consideration liabilities 90 (45) 161 (177) Restructuring costs (58) (163) (439) (298) Operating income 1,955 1,784 5,353 4,458 Financial expenses (127) (154) (394) (446) Financial income 22 15 80 172 Income before tax and associates and joint ventures 1,850 1,645 5,039 4,184 Income tax expense(1) (272) (381) (1,011) (1,005) Share of profit / loss of associates and joint ventures 73 (43) 7 (36) Net income 1,651 1,221 4,035 3,143 Net income attributable to non-controlling interests 23 31 82 92 Net income attributable to equity holders of Sanofi 1,628 1,190 3,953 3,051 Average number of shares outstanding (million) 1,305.5 1,313.0 1,306.6 1,315.8 Consolidated earnings per share (in euros) 1.25 0.91 3.03 2.32 Q3 2014Q3 2015 9M 2015 9M 2014 (1) In 2015, including a tax on dividends paid to shareholders of Sanofi: (111) M€ compared to (110) M€ in 2014