PARIS, Feb. 13 /PRNewswire-FirstCall/ -- The consolidated income statement for 2006 is provided in the appendices. Consolidated net income after minority interests for the period was euro 4,006 million, compared with euro 2,258 million in 2005, after the impact of the accounting treatment of acquisitions (primarily the acquisition of Aventis) and restructuring costs for a total amount of euro 3,034 million after tax in 2006 and euro 4,077 million in 2005.
In order to give a better representation of its underlying economic performance, the group has decided to present and explain an adjusted consolidated income statement(1) for 2006 and the fourth quarter of 2006, and to compare them with an adjusted consolidated income statement for 2005 and the fourth quarter of 2005 respectively. Adjusted net income for 2006 was euro 7,040 million, compared with euro 6,335 million for 2005.
Unless otherwise indicated, all sales growth figures in this press release are stated on a comparable basis(1).
FOURTH QUARTER: Sustained sales growth -- 8.4% growth (5.0% on a reported basis) in net sales to euro 7,356 million, despite the ongoing impact of healthcare reforms in France and Germany. -- Fourth-quarter sales impacted by a generic of clopidogrel bisulfate in the United States. -- 12.5% growth in "Operating income - current" -- Adjusted EPS of euro 1.02, down 5.6%, or euro 1.01 excluding selected items(2), down 1.0%.
2006 FULL-YEAR: Demonstrated ability to deliver EPS growth in a year penalized by generics
-- Net sales: euro 28,373 million, up 4.0% (up 3.9% on a reported basis). Excluding the impact of generics of 4 products(3) in the United States, sales growth would have been 8.2%. -- Sustained effort in R&D: up 9.5% to euro 4,430 million. -- Adjusted EPS of euro 5.23, up 10.3%. -- 5.9% growth in adjusted EPS excluding selected items(2) (to euro 4.88, against euro 4.61 in 2005).
R&D: Significant progress in pipeline with 46 projects in phase IIb/III compared to 35 in February 2006
DIVIDEND: 15.1% increase in the dividend to euro 1.75 per share to be submitted for approval at the Annual General Meeting of May 31, 2007
2007 GUIDANCE
Barring major adverse events (including events on Lovenox(R) and Plavix(R) in the US), the Group expects a growth in 2007 adjusted EPS excluding selected items in the same order of magnitude as 2006 growth, despite the end of protection for Ambien(R) IR in the United States in April 2007 and generic competition for Eloxatin(R) in Europe.
2006 fourth-quarter and full-year net sales
In the fourth quarter of 2006, sanofi-aventis recorded net sales of euro 7,356 million, a rise of 8.4%. Exchange rate movements (two-thirds relating to the U.S. dollar) had an unfavorable effect of 3.2 points. Changes in Group structure had a negative effect of 0.2 of a point. On a reported basis, net sales increased by 5.0%. Full-year net sales rose by 4.0% to euro 28,373 million. Exchange rate movements had a favorable effect of 0.4 of a point. Changes in Group structure had a negative effect of 0.5 of a point. On a reported basis, net sales rose by 3.9%.
Net sales by business segment
Net sales reported by sanofi-aventis comprise net sales generated by the pharmaceuticals business and net sales generated by the human vaccines business.
Pharmaceuticals
Fourth-quarter net sales for the pharmaceuticals business reached euro 6,550 million, up 6.2%. Net sales of the top 15 products were 11.0% higher at euro 4,421 million, representing 67.5% of pharmaceuticals net sales, against 64.6% for the comparable period in 2005.
Over 2006 as a whole, pharmaceuticals net sales, despite being impacted by generics of 4 products(4) in the United States and the effect of healthcare reforms in France and Germany, reach euro 25,840 million up 2.5%. Net sales of the top 15 products were up 6.4% at euro 17,289 million, representing 66.9% of pharmaceuticals net sales, compared with 64.4% in 2005. Excluding the impact of generics of Allegra(R) and Amaryl(R) in the United States, growth in net sales of the top 15 products would have been 12.4%.
million euro Q4 2006 Change on a 2006 Change on a net comparable net sales comparable sales basis basis Lovenox(R) 614 +11.8 % 2,435 +12.9 % Plavix(R) 541 +5.0 % 2,229 +9.6 % Stilnox(R)/Ambien(R)/ Ambien CR(TM) 580 +42.5 % 2,026 +33.3 % Taxotere(R) 437 +6.6 % 1,752 +8.4 % Eloxatin(R) 402 -1.5 % 1,693 +7.8 % Lantus(R) 451 +35.8 % 1,666 +36.9 % Copaxone(R) 273 +11.0 % 1,069 +17.9 % Aprovel(R) 265 +15.7 % 1,015 +13.3 % Tritace(R) 271 -3.9 % 977 -4.8 % Allegra(R) 163 +7.9 % 688 -49.7 % Amaryl(R) 105 -19.8 % 451 -33.5 % Xatral(R) 84 -5.6 % 353 +7.3 % Actonel(R) 87 -1.1 % 351 +6.7 % Depakine(R) 74 -6.3 % 301 -5.3 % Nasacort(R) 74 +8.8 % 283 +0.7 % TOTAL TOP 15 4,421 +11.0 % 17,289 +6.4 % TOTAL TOP 15 excl. impact of Allegra(R) and Amaryl(R) in the USA* 4,325 +11.1 % 16,890 +12.4 % * Excluding net sales of Allegra(R) and Amaryl(R) in the United States
In the fourth quarter, net sales of other pharmaceutical products decreased by 2.5% to euro 2,129 million. This decrease reflects varied performances by geographical region. In Europe, net sales of other pharmaceutical products were adversely affected by healthcare reforms in France and Germany, down 4.1% to euro 1,278 million. In the rest of the world excluding the United States, net sales of these products rose by 4.4% to euro 671 million.
Over 2006 as a whole, net sales of other pharmaceutical products were down 4.6% at euro 8,551 million. This part of the portfolio showed a 4.1% increase in net sales to euro 2,614 million in the rest of the world excluding the United States, and a 5.3% decrease to euro 5,170 million in Europe.
Excluding the impact of generics of DDAVP(R) and Arava(R) in the United States(5), net sales of other pharmaceutical products would have been down 2.4% in 2006.
Human Vaccines
Fourth-quarter consolidated net sales for the human vaccines business increased by 30.0% to euro 806 million. As expected, sales were helped by the postponement of US influenza vaccine sales from the third to the fourth quarter. The Group exceeded its target of delivering 50 million doses of Fluzone(R) in this territory in 2006 (55 million doses delivered).
Menactra(R) recorded fourth-quarter net sales of euro 45 million, up 46.9%, and 2006 full-year net sales of euro 242 million, an increase of 36.3%.
Sales of Adacel(TM) (adult tetanus-diphtheria-pertussis booster), launched in the United States in July 2005, reached euro 30 million in the fourth quarter and euro 154 million over the full year. A new production facility was approved by the FDA in August 2006 and should enable sanofi pasteur to better respond to demand for certain pertussis vaccines from 2007 onwards.
2006 full-year consolidated net sales for the human vaccines business reached euro 2,533 million, a rise of 22.7%. Full-year sales of H5N1 vaccines totaled euro 151 million. Sanofi pasteur also signed a new contract with the U.S. government in November 2006 for a stockpile of a new type of H5N1 pre- pandemic vaccine. The value of this contract could reach $117.9 million, with the exact amount depending on the number of doses that can be produced. Shipment of the vaccine will take place in 2007.
million euro Q4 2006 Change on a 2006 Change on a net comparable net sales comparable sales basis basis Polio/Whooping Cough/ Hib Vaccines 141 +28.2 % 633 +18.5 % Adult Booster Vaccines 76 +33.3 % 337 +23.4 % Influenza Vaccines 439 +36.8 % 835 +27.5 % Travel Vaccines 48 +2.1 % 239 +34.3 % Meningitis/Pneumonia Vaccines 57 +26.7 % 310 +22.0 % Other vaccines 45 +12.5 % 179 +5.3 % TOTAL 806 +30.0 % 2,533 +22.7 %
Fourth-quarter sales of Sanofi Pasteur MSD, the joint venture with Merck & Co in Europe, rose by 59.8% on a reported basis to euro 257 million. Quarterly sales benefited from the postponement of Vaxigrip(R) influenza vaccine sales from the third quarter to the fourth quarter.
Followings its approval by the European Union, Gardasil(R) (Merck & co), the first vaccine designed to prevent genital warts caused by human papillomavirus (HPV) types 6, 11, 16 and 18, and in particular cervical dysplasia and carcinoma was launched by Sanofi Pasteur MSD. Gardasil is now available in 13 European countries, including France, Germany and the United Kingdom. Other countries, including Spain and Italy, will follow during 2007.
Rotateq(R) (Merck & Co) was approved by the European authorities in June 2006 for the prevention of rotavirus gastroenteritis in infants. It was launched by Sanofi Pasteur MSD in Austria, Portugal and Germany in October 2006 and in France in January 2007.
Sanofi Pasteur MSD posted 2006 full-year sales of euro 724 million, up 5.3% on a reported basis. Excluding Hexavac(R), which was suspended by the EMEA in September 2005, Sanofi Pasteur MSD would have recorded growth in sales of 12.3% on a reported basis.
Sanofi Pasteur MSD sales are not consolidated by sanofi-aventis. Net sales by geographical region million euro Q4 2006 Change on a 2006 Change on a net comparable net sales comparable sales basis basis Europe 3,062 +1.0 % 12,219 +1.1 % United States 2,661 +15.6 % 9,966 +3.9 % Other countries 1,633 +12.4 % 6,188 +10.5 % TOTAL 7,356 +8.4 % 28,373 +4.0 %
In Europe, fourth-quarter net sales were up slightly by 1.0%, in a context of ongoing healthcare reforms in France and Germany.
The German reforms, especially the pressure on doctors to curb prescriptions, led to a marked deceleration in the pharmaceutical market and in sanofi-aventis local sales during the third and fourth quarters. In addition, some of the Group products continued to be hit by parallel imports.
The reform of the healthcare system in France has involved higher taxes on reimbursed prescription drugs, reclassification of some products as non- reimbursable, and greater penetration of generics. The Group local sales, which are particularly vulnerable because of its position as market leader, were down significantly.
Over 2006 as a whole, net sales in Europe rose by 1.1%.
In the United States, fourth-quarter sales growth was driven notably by strong growth in sales of Ambien(R)/Ambien CR(TM), Lantus(R) and vaccines.
Over 2006 as a whole, sales grew by a modest 3.9%. Excluding the impact on sales of generic competition for 4 products(3) in 2005, sales would have risen by 17.2%.
In "Other Countries", sales growth accelerated in the fourth quarter to 12.4%. Over the full year, sales growth was 10.5%. Latin America and Asia continue to record strong growth.
Developed sales(1)
Developed sales give an indication of the overall presence of sanofi- aventis products in the market. Fourth-quarter developed sales were euro 7,937 million, a rise of 2.1%, reflecting the situation of Plavix(R) in the United States (see comments on developed sales of Plavix(R)). Over 2006 as a whole, developed sales grew by 2.6% to euro 31,575 million. From the first quarter of 2007, we will stop reporting developed sales. However, we will continue to comment on the worldwide presence of Plavix(R) and Aprovel(R).
Developed sales of Plavix(R) / Iscover(R): million euro Q4 2006 Change on a 2006 Change on a comparable comparable basis basis Europe 436 +4.1 % 1,715 +8.4 % United States 273 -61.5 % 2,167 -16.4 % Other countries 183 +18.1 % 702 +18.8 % TOTAL 892 -30.5 % 4,584 -3.8 %
On August 8, 2006, Apotex announced that it had launched a generic version of clopidogrel bisulfate 75 mg tablets in competition with Plavix(R) in the United States. On August 31, 2006, the U.S. District Court for the Southern District of New York granted the motion filed by sanofi-aventis and Bristol- Myers Squibb for a preliminary injunction and ordered Apotex to halt sales of its generic version of clopidogrel bisulfate. However, the Court did not order the recall of products already sold by Apotex.
As a result, sales of Plavix(R) in the United States have been hit hard since August 8, 2006. Fourth-quarter sales of Plavix(R) in the United States were euro 273 million. Growth in total prescriptions (TRx) of clopidogrel bisulfate remained strong, at 11.8%(6) in the fourth quarter and 13.0%(7) in 2006 as a whole. In the last week of December, the share of total clopidogrel bisulfate prescriptions taken by Plavix(R) was rising sharply, reaching 44.3%(8), compared with 21.3%(8) in the last week of September.
In August 2006, the Food and Drug Administration approved a new indication for Plavix(R) in patients suffering from acute ST-segment elevation myocardial infarction, to reduce the rate of death from any cause and the rate of a combined endpoint of re-infarction, stroke or death. The same indication was approved in the European Union in September 2006.
In Europe, fourth-quarter net sales of Plavix(R) rose by 4.1% to euro 436 million. This low rate of growth was largely due to a decline in sales in Germany, reflecting a marked slowdown in the local market as well as parallel imports, plus the effect of a 5% reduction in prices in France on September 1, 2006
In Japan, the launch of Plavix(R) as a treatment for the reduction of recurrence after ischemic cerebrovascular disorder continued. The 6-month Post-Marketing Vigilance Period ended during the fourth quarter, though the two-week limit on prescriptions also imposed by the Japanese authorities will remain in force until May 2007. Full-year net sales were euro 12 million. The application relating to Plavix(R) as a treatment for acute coronary syndrome was filed with the Japanese authorities at the end of 2006.
Developed sales of Aprovel(R)/ Avapro(R)/ Karvea(R): million euro Q4 2006 Change on a 2006 Change on a comparable comparable basis basis Europe 229 +13.4 % 878 +11.4 % United States 138 +5.3 % 516 +12.7 % Other countries 98 +16.7 % 370 +14.9 % TOTAL 465 +11.5 % 1,764 +12.5 %
Fourth-quarter developed sales of Aprovel(R)/Avapro(R)/Karvea(R) were up 11.5% at euro 465 million.
In the United States, the product posted net sales growth of 5.3% in the fourth quarter. Over the full year, total prescriptions were up 3.9%(7).
Comments by product Geographical split of consolidated net sales by product (Top 15) Q4 2006 net sales Change on a Change on a Change on a (million Europe comparable United comparable Other comparable euro) basis States basis countries basis Lovenox(R) 174 +7.4 % 379 +14.2 % 61 +10.9 % Plavix(R) 415 +7.5 % 5 -87.2 % 121 +34.4 % Stilnox(R)/ Ambien(R)/ Ambien CR(TM) 23 -14.8 % 532 +47.8 % 25 25.0 % Taxotere(R) 178 +9.9 % 174 +1.2 % 85 +11.8 % Eloxatin(R) 124 -11.4 % 235 1.7 % 43 +16.2 % Lantus(R) 134 +19.6 % 277 +42.8 % 40 +53.8 % Copaxone(R) 72 +18.0 % 186 +8.1 % 15 +15.4 % Aprovel(R) 213 +15.1 % - - 52 +18.2 % Tritace(R) 122 -17.6 % 3 0.0 % 146 +11.5 % Allegra(R) 8 -11.1 % 93 +12.0 % 62 +5.1 % Amaryl(R) 33 -44.1 % 3 -66.7 % 69 +9.5 % Xatral(R) 45 -26.2 % 25 +47.1 % 14 +27.3 % Actonel(R) 57 -9.5 % - - 30 +20.0 % Depakine(R) 52 -8.8 % - - 22 +0.0 % Nasacort(R) 9 0.0 % 58 +11.5 % 7 0.0 % 2006 net sales Change on a Change on a Change on a (million Europe comparable United comparable Other comparable euro) basis States basis countries basis Lovenox(R) 689 +6.5 % 1,502 +16.0 % 244 +13.5 % Plavix(R) 1,617 +9.5 % 156 -26.1 % 456 +32.2 % Stilnox(R)/ Ambien(R)/ Ambien CR(TM) 95 -12.0 % 1,838 +38.1 % 93 +14.8 % Taxotere(R) 714 +14.2 % 708 +1.0 % 330 +13.8 % Eloxatin(R) 564 +3.7 % 965 7.3 % 164 +29.1 % Lantus(R) 520 +26.5 % 1,006 +39.7 % 140 +62.8 % Copaxone(R) 279 +20.8 % 733 +17.5 % 57 +9.6 % Aprovel(R) 808 +11.4 % - - 207 +21.1 % Tritace(R) 509 -11.5 % 16 +100.0 % 452 +2.0 % Allegra(R) 51 -1.9 % 384 -62.7 % 253 -11.2 % Amaryl(R) 174 -31.5 % 15 -91.9 % 262 +10.1 % Xatral(R) 210 -10.3 % 92 +73.6 % 51 +21.4 % Actonel(R) 242 +3.4 % - - 109 +14.7 % Depakine(R) 210 -10.3 % - - 91 +8.3 % Nasacort(R) 41 +7.9 % 214 -0.5 % 28 0.0 %
Net sales of Lovenox(R), the leading low molecular weight heparin on the market, reached euro 614 million in the fourth quarter, a rise of 11.8%. Growth of the product continues to be driven by its increasing use in medical prophylaxis. Sales in Europe increased by 12.9%.
Filing for approval of Lovenox(R) as a treatment for patients suffering from acute ST-segment elevation myocardial infarction (ExTRACT study) took place in the fourth quarter in both Europe and the United States (priority review granted by the FDA). This new indication is expected to further enhance the superiority of Lovenox over non-fractioned heparins.
The results of the PREVAIL study were presented at the 48th annual congress of the American Society of Hematology (ASH) in Orlando in December 2006. The results demonstrated a significant 43% reduction in venous thromboembolism (VTE) events with enoxaparin versus unfractionated heparin (UFH) in medically- ill patients hospitalized for acute ischemic stroke.
Sales of Plavix(R) raw materials to the United States, which are consolidated by sanofi-aventis, fell by 87.2% to euro 5 million during the fourth quarter due to the launch of a generic version of clopidogrel bisulfate 75 mg tablets by Apotex. Excluding this effect, consolidated net sales of Plavix(R) would have risen by 12.6% in the quarter and by 13.3% over the full year.
Net sales of Ambien(R)/Ambien CR(TM) in the United States rose by 47.8% in the quarter to euro 532 million. The products had a market share of 46.2%9 in December, versus 45.2% in September (IMS NPA-3 channels - September 2006). At end December, prescriptions of Ambien CR(TM) represented 31.8% of prescriptions of Ambien(R) brand products (IMS NPA Retail and Mail order).
At end November 2006, the FDA granted pediatric exclusivity to Ambien(R) and AmbienCR(TM). One effect of this decision is to delay the introduction of generics of Ambien(R) IR until April 2007.
In Japan, sales of Myslee(R) (developed sales) reached euro 119 million in 2006, an increase of 15.7%.
Taxotere(R) recorded strong fourth-quarter growth of 11.8% in "Other Countries" and 9.9% in Europe. In the United States, the competitive environment remains difficult, and the product posted sales growth of 1.2% to euro 174 million.
On December 14, 2006, results from the second interim efficacy and safety analysis from the BCIRG 006 Phase III breast cancer study were presented at the 29th Annual San Antonio Breast Cancer Symposium. These results confirmed, at a 3-year median follow-up, that Herceptin(R) (trastuzumab) combined with Taxotere(R) (docetaxel) based regimens significantly improved disease-free survival for women with early HER2-positive breast cancer.
In 2006, Taxotere(R) was approved in the United States and Europe for two new indications:
-- advanced stage gastric cancer in combination with the standard treatment (cisplatin and 5-fluorouracil) -- as induction treatment for patients with head and neck cancer in combination with a classic regimen (cisplatin and 5-fluorouracil).
The FDA has granted a pediatric extension for Eloxatin(R) in the United States, extending the data protection period by six months until February 2007, as well as the other regulatory exclusivity periods.
Fourth-quarter net sales of Eloxatin(R) in Europe were down 11.4% at euro 124 million due to the introduction of generics in Germany and the United Kingdom.
Lantus(R), the world's leading insulin brand, continues to record excellent performances, with net sales up 35.8% in the fourth quarter to euro 451 million. Net sales of the product in 2006 reached euro 1,666 million, up 36.9%. The new disposable pen, Solostar(R), was approved in Europe in September 2006, and the application is currently under review in the United States. The first launch of Solostar(R) took place in the final quarter of 2006.
Acomplia(R) has been launched in the United Kingdom (end June 2006), Denmark (August), Germany, Ireland, Norway, Finland (all in September), Austria and Argentina (both in October), Sweden (November) and Greece (December). Fourth-quarter net sales were euro 20 million, and full-year net sales euro 31 million. The product was launched in Chile and Mexico in January 2007.
Acomplia(R) has been very favorably received by specialists and general practitioners for obese patients presenting cardiometabolic risk factors.
On January 12, 2007, the German Ministry of Health published its decision to ratify the recommendation of the Federal Joint Committee ("G-BA") to classify Acomplia(R) as a "comfort" or "lifestyle" drug, not available for reimbursement under the German compulsory health insurance scheme. Sanofi- aventis believes that this classification is unjustified given the profile of the drug, and is challenging it in court.
The results of the SERENADE study were presented on December 5, 2006 at the World Diabetes Congress of the International Diabetes Federation held in Cape Town, South Africa. The SERENADE results showed that patients receiving rimonabant showed significant improvements in blood sugar control and weight, as well as in other risk factors such as HDL-cholesterol (good cholesterol) and triglycerides, when compared to placebo in type 2 diabetes patients not currently treated with anti-diabetic medications. SERENADE is the second study, following RIO-DIABETES, to demonstrate that rimonabant significantly improves blood sugar control in type 2 diabetes patients.
The SERENADE dossier was filed with the European healthcare authorities in December 2006.
Regarding the ongoing review of rimonabant in the United States, a complete response to the approvable letter received from the FDA on February 17, 2006 was submitted by sanofi-aventis on October 26, 2006. The FDA has accepted this as a complete class 2 response, and set a user fee goal date of April 26, 2007.
An application for Sculptra(R) for volume restoration and/or correction of facial wrinkles and folds was filed with the FDA in the second half of 2006.
(1) Refer to the Appendices for definitions of financial indicators (2) Refer to Appendix 6 (3) Excluding net sales in the United States of Allegra(R), Amaryl(R), Arava(R) and DDAVP(R) (generics introduced in the second half of 2005) (4) Allegra(R), Amaryl(R), Arava(R), DDAVP(R) (5) Excluding net sales of Arava(R) and DDAVP(R) in the United States (6) IMS NPA 3 channels-Q4 2006 (7) IMS NPA 3 channels- YTD 2006 (8) IMS NPA 2 channels (9) IMS NPA 3 channels-December 2006 Adjusted consolidated income statement The adjusted consolidated income statement is presented in Appendix 3.
Refer to Appendix 1 for a definition of "adjusted net income", and to Appendix 4 for a reconciliation of the consolidated income statement to the adjusted consolidated income statement.
Fourth quarter of 2006
Net sales generated by sanofi-aventis in the fourth quarter of 2006 rose by 5.0% on a reported basis to euro 7,356 million.
Gross profit was euro 5,627 million. The gross margin ratio was 76.5%, against 77.7% in the comparable period of 2005. This reduction was mainly due to two factors:
-- A fall in other revenues (royalties) from euro 336 million to euro 228 million due to the marked drop in sales of Plavix(R) in the United States because of competition from a generic version. -- A 0.5 point improvement (to 26.6%) in the ratio of cost of sales to net sales. In the fourth quarter, the ratio of cost of sales to net sales was in line with the ratio for the first 9 months of 2006. Research and development expenses were 5.3% higher at euro 1,211 million.
Selling and general expenses were 5.7% lower than in the fourth quarter of 2005 at euro 2,153 million, equivalent to 29.3% of net sales. There was a continuation in the quarter of the slowdown in selling expenses in the United States, Germany and France as sanofi-aventis adapted to the changing market environment. In the "Other Countries" zone, the group strengthened its marketing efforts. There was again a reduction in general expenses relative to the fourth quarter of 2005.
Operating income - current was up 12.5% at euro 2,272 million, and represented 30.9% of net sales as opposed to 28.8% in the fourth quarter of 2005.
The charge relating to sanofi-aventis' efforts to adapt to the changing market environment was euro 176 million.
The euro 214 million charge for asset impairment relates notably to the impairment of industrial assets associated with Ketek(R), for which potential sales (euro 155 million in 2006) are affected by the restriction on indications in June 2006 and the recommendation of the FDA Joint Advisory Committee in December 2006.
Operating income was down 7.7% at euro 1,898 million.
Net financial income was euro 66 million, against net expense of euro 21 million for the comparable period of 2005. In 2006, the figure includes the euro 101 million capital gain arising on the divestment of the holding in Rhodia.
The interest charge on debt reached euro 36 million, against euro 79 million in the fourth quarter of 2005. In the fourth quarter, this figure included the full-year positive impact (euro 34 million) of the hedging of US commercial paper drawdowns using euro swaps. This amount was previously recorded in exchange gains and losses, a different component of financial income and expense.
Income tax expense was euro 534 million, against euro 643 million in the fourth quarter of 2005. The tax rate was 27.2%, against 31.6% for the comparable period of 2005. The fourth quarter of 2006 benefited from a net reduction in provisions for tax exposures.
The share of profits from associates was euro 50 million, compared with euro 140 million in the fourth quarter of 2005. This item was hit by the situation affecting Plavix(R) in the United States, and reflects the decline in the share of after-tax profits from territories managed by BMS (primarily the United States) under the Plavix(R) and Avapro(R) alliance (euro 12 million, against euro 109 million in the fourth quarter of 2005).
Minority interests totaled euro 103 million, against euro 88 million in the fourth quarter of 2005. This line includes the share of pre-tax profits paid over to BMS from territories managed by sanofi-aventis (euro 98 million, versus euro 80 million in the fourth quarter of 2005).
Adjusted net income was down 4.6% at euro 1,377 million.
Adjusted earnings per share (EPS) was euro 1.02, 5.6% lower than the 2005 fourth-quarter figure of euro 1.08, based on an average number of shares outstanding of 1,348.8 million in the fourth quarter of 2006 and 1,338.5 million in the fourth quarter of 2005.
After excluding selected items, adjusted net income was euro 1,368 million, up 0.6% on the 2005 fourth-quarter figure of euro 1,360 million (see Appendix 6).
After excluding selected items, adjusted EPS was euro 1.01, 1.0% lower than the 2005 fourth-quarter figure of euro 1.02 (see Appendix 6).
2006 full-year
Net sales generated by sanofi-aventis in 2006 were euro 28,373 million, an increase of 3.9% on a reported basis.
Gross profit was euro 21,934 million. The gross margin ratio was 77.3%, versus 78.1% in 2005. Other revenues were down 7.2% at euro 1,116 million, against euro 1,202 million in 2005, due to the drop in royalties generated by Plavix(R) in the United States since the third quarter. The ratio of cost of sales to net sales deteriorated by 0.3 of a point to 26.6%, with the impact of generics of Allegra(R), Amaryl(R), Arava(R) and DDAVP(R) in the United States over the first 9 months of 2006 not totally offset by the improvement in product mix.
Research and development expenses were 9.5% higher than in 2005 at euro 4,430 million, representing 15.6% of net sales (versus 14.8% in 2005). The increase reflects the stepping up of phase III clinical trials during the ye
