BRIDGEWATER, N.J., Feb. 10 /PRNewswire-FirstCall/ --
In order to facilitate an understanding of our operational performance, we comment on our adjusted income statement excluding selected items(2), a non-GAAP financial measure. 2009 consolidated income statement is provided in Appendix 6, as are details of adjustments and selected items.
Consolidated net income for 2009 was euro 5,265 million, compared with euro 3,851 million for 2008. Consolidated earnings per share for 2009 was euro 4,03 versus euro 2.94 for 2008.
Commenting on the Group's 2009 performance, sanofi-aventis Chief Executive Officer Christopher A. Viehbacher said, "2009 was the first year of implementation of our new strategy. Major steps have already been achieved in strengthening our growth platforms and reinforcing our R&D pipeline while delivering a double-digit EPS(1) growth".
Full-year 2009 performance(3) boosted by our growth platforms
Execution on our Transformation program
2010 guidance
(1) Adjusted EPS excluding selected items at constant exchange rates; (2) See Appendix 9 for definitions of financial indicators, and Appendix 6 for details of selected items; (3) Growth in net sales is expressed at constant exchange rates unless otherwise indicated (see Appendix 9 for a definition); (4) This growth estimate is based on 2009 Business EPS of euro 6.61; see Appendix 9 for definition
2009 fourth-quarter and full-year net sales
Unless otherwise indicated, all sales growth figures in this press release are stated at constant exchange rates(2).
In the fourth-quarter of 2009, sanofi-aventis generated net sales of euro 7,361 million, up 3.8% on a reported basis. Exchange rate movements had an unfavorable effect of 5.1 percentage points, of which approximately 60% was due to the weakening of the U.S. dollar versus the euro. At constant exchange rates, and adjusting for changes in structure (in particular the consolidation of Zentiva and Medley), net sales rose by 8.9%. Excluding changes in structure and at constant exchange rates, fourth-quarter organic net sales growth was 5.6%.
For full-year 2009, net sales rose by 6.3% to euro 29,306 million. Exchange rate movements had a favorable effect of 1.0 percentage point. The appreciation of the U.S. dollar (and to a lesser extent the yen) against the euro more than offset the unfavorable effect of various other currencies. At constant exchange rates, and after taking into account changes in structure (primarily the consolidation of Zentiva and Medley in the second quarter, and the end of commercialization of Copaxone(R) by sanofi-aventis in North America effective April 1, 2008), net sales rose by 5.3%. Excluding changes in structure and at constant exchange rates, organic net sales growth in 2009 was 4.0%.
Pharmaceuticals
Fourth-quarter net sales for the Pharmaceuticals business were euro 6,263 million, up 2.7%. For full-year 2009, Pharmaceuticals net sales rose by 3.7% to euro 25,823 million.
Flagship products(5)
Net sales of Lantus(R), the world's leading insulin brand, were euro 763 million in the fourth quarter of 2009, an increase of 16.7%. The product reported solid growth of 16.8% in the U.S., to euro 460 million, boosted by increased use of the SoloSTAR(R) injection pen. In the "Other Countries" region, Lantus(R) net sales were up 36.7% at euro 104 million. In Europe, sales rose by 8.4% (to euro 199 million), despite a weaker performance in Germany. For full-year 2009, with worldwide sales of euro 3,080 million (+22.5%) driven by SoloSTAR(R), Lantus(R) became the Group's best-selling product in terms of consolidated net sales. In the United States, the contribution of SoloSTAR(R) to new prescriptions of Lantus(R) family products reached 26.4% by end December (IMS NPA December 2009), an increase of 6.7 percentage points versus the comparable period of 2008. In 2009, ClikSTAR(R), a new reusable pen for the administration of Lantus(R) and/or Apidra(R), was launched in several European Union countries and Canada. With ClikSTAR(R) and SoloSTAR(R), sanofi-aventis now offers a full range of injection pens that make it easier for patients to use insulin. ClikSTAR(R) is currently being evaluated by the U.S. Food and Drug Administration (FDA).
(5) See Appendix 2 for a geographical split of consolidated net sales by product.
Net sales of the rapid-acting insulin analog Apidra(R) increased by 30.0% in the fourth quarter to euro 37 million. Full-year sales were up 38.8% at euro 137 million, driven by the launch of SoloSTAR(R) Apidra(R) in the U.S. in 2009.
Lovenox(R), the leading low molecular weight heparin on the market, reported 8.1% fourth-quarter sales growth to euro 754 million, with an improved performance in the United States (up 9.2% at euro 443 million). For full-year 2009, net sales of the product were up 8.8% driven by the performance in Europe (up 13.7% at euro 890 million) and in the "Other Countries" region (up 14.8% at euro 331 million).
Taxotere(R) recorded fourth-quarter net sales of euro 533 million, up 4.1%. For full-year 2009, the product posted a 6.1% rise in net sales to euro 2,177 million. In October, sanofi-aventis submitted a request for marketing approval in Europe for Taxotere(R) as an adjuvant treatment for early stage breast cancer without lymph node involvement. In November, the EMA approved a new single vial formulation of Taxotere(R) in Europe. This new formulation was also filed for approval in the U.S. in December 2008. A pediatric data dossier on Taxotere(R) was submitted for regulatory approval in the U.S. in November 2009, in response to the FDA's prior written request.
Net sales of Eloxatin(R) in the fourth-quarter were down 80.5% at euro 67 million, and accounted for only 1.1% of total pharmaceuticals sales. This performance reflects the introduction of generics in the U.S. in August 2009. Fourth-quarter sales in the U.S. were down 97.4% at euro 7 million. For full-year 2009, net sales of the product declined by 34.7% to euro 957 million.
The launch of Multaq(R), the first anti-arrhythmic with a clinical benefit in reducing cardiovascular hospitalization in patients with atrial fibrillation to be approved, is on track with net sales of euro 12 million in the fourth quarter and euro 25 million for the full year of 2009. In the U.S., significant progress has been achieved with Managed Care reimbursement based on convincing pharmaco-economic data and clinical evidence. To date, nearly 60% of covered lives are reimbursable with favorable tier 2 formulary status. Prescription trends are in line with expectations, with more than 90,400 cumulative prescriptions in 2009 (IMS NPA). On November 30, 2009, the European Commission granted marketing authorization for Multaq(R). In January 2010, Germany was the first country to launch Multaq(R) in the European Union. Multaq(R) is also marketed in Canada and Switzerland and has been approved in Brazil and Mexico. In November 2009, sanofi-aventis initiated RealiseAF, a major new registry designed to improve the understanding of the cardiovascular risk profile of atrial fibrillation patients and characterize their cardiovascular outcomes. This registry is targeted to include over 10,000 patients worldwide with atrial fibrillation.
Worldwide presence(2) of Plavix(R)/Iscover(R)
The fourth-quarter worldwide presence of Plavix(R) reached euro 1,614 million (+1.0%). The performances in the United States (+11.3%, net sales consolidated by Bristol Myers Squibb) and in the "Other Countries" region (+17.3%) more than offset the sales decline in Europe (-30.8%). Sales in Europe were negatively impacted by the acceleration of generic competition, mainly based on a different salt of clopidogrel. Sales in France (including Clopidogrel Winthrop(R)) fell by 42.1%. In France, the Group launched an authorized generic of Plavix(R), Clopidogrel Winthrop(R) (clopidogrel hydrogen sulphate) in the fourth-quarter. As a result, sanofi-aventis retained 56% of total units of clopidogrel in France (last week of December, 2009). In Japan, Plavix(R) continued its success, with net sales up 49.7% at euro 102 million in the fourth quarter.
For full-year 2009, the worldwide presence of Plavix(R) increased by 6.2% to euro 6,782 million. Japanese sales (euro 339 million) showed robust growth of 58.9%, taking the product's presence in the "Other Countries" region over euro 1 billion for the first time (euro 1,152 million, up 14.4%).
(2) See Appendix 9 for definitions of financial indicators
Worldwide presence of Plavix(R)/Iscover(R): geographic split
Worldwide presence(2) of Aprovel(R)/Avapro(R)/Karvea(R)
The fourth quarter worldwide presence of Aprovel(R) was up 3.1%, at euro 503 million. Europe saw a decline of 0.8%, principally reflecting competition from generics in Spain and Portugal in the monotherapy indication. The full year 2009 worldwide presence of Aprovel increased slightly (by 1.7%) to euro 2,012 million.
Worldwide presence of Aprovel(R)/Avapro(R)/Karvea(R): geographic split
Other Pharmaceutical Products
In the United States, net sales of the hypnotic Ambien(R) CR(R) reached euro 117 million (+1.9%) in the fourth quarter and euro 497 million (+0.9%) for the full year. In Japan, Myslee, the leading hypnotic on the market, continued to deliver a good performance with fourth-quarter net sales growth of 10.6% (to euro 55 million) and full year growth of 15.2% (to euro 194 million).
Fourth-quarter net sales of Allegra(R) fell by 16.4%, with the introduction of Allegra(R) D-12 generics in the United State in November adversely affecting the product's U.S. sales (-41.9% to euro 46 million). In Japan, Allegra(R) continues to grow, with sales increasing by 12.8%. For the full year, Allegra(R) sales reached euro 731 million, down 2.6%.
Fourth-quarter net sales of Copaxone(R) were euro 118 million, an increase of 16.7%. The end of commercialization of the product by sanofi-aventis in North America effective April 1, 2008 led to a 23.8% decline in consolidated net sales of Copaxone(R) in 2009. The payments collected by sanofi-aventis on sales of Copaxone(R) in North America will stop at the end of the first quarter of 2010.
As of March 1, 2010, sanofi-aventis will take full commercial responsibility for Xyzal(R) in the United States.
(2) See Appendix 9 for definitions of financial indicators
Consumer Health Care
The Consumer Health Care business posted fourth-quarter net sales of euro 405 million, an increase of 36.1% (or +19.1% on a constant structure basis and at constant exchange rates), reflecting dynamic organic growth and the consolidation of Zentiva's consumer health activity. Worldwide sales of the Group's eight flagship brands (Doliprane(R), Essentiale(R), No-Spa(R), Maalox(R), Enterogermina(R), Magne B6(R), Dorflex(R), Lactacyd(R)) increased by 42.3% in the fourth quarter. For full-year 2009, Consumer Health Care net sales were euro 1,430 million, representing year-on-year growth of 26.8% (or +8.1% on a constant structure basis and at constant exchange rates). The eight flagship brands grew by 22.1% for the full year, largely driven by Doliprane(R) and Essentiale(R). Oenobiol, the French leader in nutritional supplements for health and beauty (sales of euro 58 million in 2008) was consolidated as of the beginning of December.
In January 2010, sanofi-aventis signed agreements to establish a new Consumer Health Care joint venture in China with Minsheng Pharmaceutical Group. The intended sanofi-aventis-Minsheng joint venture will primarily focus on Vitamins and Mineral Supplements, the largest consumer healthcare segment in China, where Minsheng has established a strong presence.
Following the successful conclusion on February 8 of the tender offer for Chattem, a leading U.S. consumer healthcare company, sanofi-aventis has become the fifth largest consumer healthcare player in the world measured by combined product revenues. Chattem provides a strong platform for the potential conversion of prescription medicines, such as Allegra(R), to over-the-counter status in the U.S.
Generics
Fourth-quarter net sales of the Generics business were euro 333 million, an increase of 253%. This rate primarily reflects the consolidation of Zentiva, Kendrick and Medley from the second quarter, coupled with low single digit organic growth (+2.1% on a constant structure basis and at constant exchange rates). For full-year 2009, net sales for the Generics business nearly tripled to euro 1,012 million (or +8.7% growth on a constant structure basis and at constant exchange rates). The new generics platform in Europe, combining the operations of Zentiva and sanofi-aventis, is now fully operational.
Animal Health
Merial, a leading animal health company and a wholly-owned subsidiary of sanofi-aventis since September 18, 2009, recorded fourth-quarter sales of $593 million, up 3.9% (or +12.9% on a reported basis). This performance was driven by the ruminants market in Brazil, and sustained growth of the pets vaccines and the avian franchise. Sales of Frontline(R) and other fipronil based products increased by 1.1% to $162 million.
Despite a challenging economic environment, Merial's 2009 full-year performance was resilient, with net sales of $2,554 million, up 0.4% (or down 3.4% on a reported basis), impacted by a decrease in sales of BTV (Blue Tongue virus) vaccines following a high level of BTV vaccines sales in 2008. Net sales of Frontline(R) and other fipronil based products were down 1.5% at $996 million as a result of a decline in household consumption in the companion animal healthcare market and an increasingly competitive environment in the United States. Net sales of vaccines rose by 4.4% to $794 million, driven by growth of 8.4% in pets vaccines and recently launched vaccines in the avian and swine segments.
Exercise of the option to combine Merial and Intervet/Schering Plough, being highly probable, sanofi-aventis recognized the contribution from Merial on a separate line, "Net income from the Merial business" (Merial sales are not consolidated) in accordance with IFRS 5.
Human Vaccines business
The Human Vaccines business delivered strong fourth-quarter growth of 64.6% in consolidated net sales to euro 1,098 million driven by the performance of its influenza franchise. Sanofi Pasteur posted a record year in influenza vaccines with sales of euro 1,062 million. Full-year 2009 net sales grew by 19.2% to euro 3,483 million driven by the strong performance of Pentacel(R), as well as the A/H1N1 vaccine shipments. The Human Vaccines business represented 11.9% of the Group's total net sales in 2009 versus 10.4% in 2008.
Pentacel(R) (which in June 2008 was the first 5-in-1 pediatric combination vaccine to be licensed in the United States against diphtheria, tetanus, pertussis, polio and Haemophilus influenzae type b) continued its success with net sales of euro 104 million in the fourth quarter (versus euro 57 million in the fourth quarter of 2008) and euro 343 million in 2009 (versus euro 84 million in 2008).
Net sales of influenza vaccines for the fourth quarter reached euro 564 million, against euro 162 million in the fourth quarter of 2008. Pandemic sales represented euro 362 million for the fourth quarter, in line with the guidance given when the third quarter results were announced, and euro 465 million for the full year (including euro 25 million in sales of H5N1 vaccine). Seasonal influenza sales amounted to euro 202 million, up 32.2%, reflecting a shift in sales from the third quarter to the fourth due the low-yielding B strain and A/H1N1 influenza pandemic. Overall, Sanofi Pasteur supplied over 280 million doses of influenza vaccines in 2009, including over 100 million doses of monovalent pandemic vaccines and 180 million of trivalent seasonal influenza vaccines, representing an estimated 40% of global demand in the northern hemisphere and 75% in the southern hemisphere.
Net sales of Menactra(R) (a quadrivalent meningococcal meningitis vaccine) in 2009 were euro 445 million (+1.1%). The submission of Menactra Infant/Toddler in the United States is scheduled for the second quarter of 2010. In 2009, Sanofi Pasteur reinforced its leadership in emerging markets with net sales of euro 932 million, an increase of 16.0% versus 2008. Shantha, the Indian vaccine manufacturer controlled via Sanofi Pasteur's third quarter acquisition of ShanH (a French holding company set up by Merieux Alliance), has recorded net sales of euro 17 million since the acquisition. Shantha provides access to a promising R&D pipeline, a solid vaccine portfolio and additional manufacturing capacities to address the needs of the emerging markets. In December, Shantha launched ShanChol(TM), India's first oral cholera vaccine. In 2009, Shantha was also awarded a 3-year contract from a United Nations agency worth a total of $340 million for the supply of SHAN5(TM) (a pediatric combination vaccine against diphtheria, pertussis, tetanus, Haemophilus influenzae type B infections and hepatitis B) during the 2010-2012 period.
Fourth-quarter net sales at Sanofi Pasteur MSD (not consolidated by sanofi-aventis), the joint venture with Merck & Co in Europe, fell by 15.1% on a reported basis to euro 295 million mainly due to lower Gardasil(R) sales. Sales of this vaccine (for the prevention of human papillomavirus infections, a major cause of cervical cancer) were down 30.3% on a reported basis at euro 89 million. This decrease was due to extensive catch-up campaigns in the prior year. In 2009, sales at Sanofi Pasteur MSD were euro 1,132 million, down 11.0% on a reported basis, mainly due to the drop in sales of Gardasil(R) (euro 395 million, down 32.4%). Excluding Gardasil(R), Sanofi Pasteur MSD achieved growth of 7.2% in 2009.
Net sales by geographic region
Fourth-quarter growth in Europe was 2.6%, driven by Eastern Europe, mainly on the consolidation of Zentiva and strong growth in Russia. Sales in Western Europe declined by 5.1%, as a result of increased competition from clopidogrel generics.
The United States recorded sales growth of 9.8% in the fourth quarter, the impact of competition from Eloxatin(R) generics being more than offset by A/H1N1 vaccine sales.
Emerging markets(6) posted fourth-quarter net sales of euro 1,997 million (+26.2%, or +8.9% on a constant structure basis and at constant exchange rates), with strong growth registered in Latin America, Africa and the Middle East.
In 2009, net sales in Europe grew by 3.2%.
The United States recorded sales growth of 2.8% in 2009, helped by strong growth for Lantus (+23.6%) and vaccines (+19.1%), despite competition from generics of Eloxatin(R) since August and the impact of the end of commercialization of Copaxone by sanofi-aventis effective April 1, 2008.
In Japan, net sales rose by 10.7% to euro 1,844 million in 2009, boosted by a strong Plavix(R) performance.
In 2009, emerging markets net sales rose by 19.0% (or +7.5% on a constant structure basis and at constant exchange rates) to euro 7,356 million. Emerging markets accounted for 25.1% of consolidated net sales in 2009, 1.4 percentage points higher than in 2008. Net sales in China grew by 28.8% to euro 512 million. Russia recorded net sales of euro 508 million, a rise of 59.8%. Brazil continued to drive sales in Latin America thanks to healthy organic growth and the acquisition of Medley.
(6) World excluding the U.S., Canada, Western Europe (France, Germany, United Kingdom, Italy, Spain, Greece, Cyprus, Malta, Belgium, Portugal, Netherlands, Austria, Switzerland, Ireland, Finland, Norway, Iceland, Denmark), Japan, Australia and New Zealand.
Double-digit growth in 2009 full-year adjusted EPS excluding selected items(2) at constant exchange rates
2009 fourth-quarter financial results
Adjusted income statement excluding selected items(2)
Sanofi-aventis generated fourth-quarter net sales of euro 7,361 million, an increase of 3.8% on a reported basis. "Other revenues" were stable (+0.3%). A good performance from Plavix(R) in the United States was penalized by an unfavorable dollar effect. At constant exchange rates, "Other revenues" were up 8.7%.
Gross profit was down slightly (by 0.5%) at euro 5,504 million, but increased by 5.4% at constant exchange rates. The ratio of cost of sales to net sales was 30.2%. This increase of 3 percentage points mainly reflects the product mix, the cost of the donation of influenza vaccines to the WHO, and unfavorable currency effects.
Research and development expenses fell by 7.0% to euro 1,214 million, reflecting a decrease in pharmaceuticals R&D spend, and despite continuing spend in vaccines and the development costs of acquired companies. At constant exchange rates, the decline was 4.6%. Overall, the ratio of R&D expenses to net sales was down 1.9 percentage points at 16.5%.
Selling and general expenses were euro 1,991 million, an increase of 2.4% (or 7.0% at constant exchange rates). This increase notably reflects the selling and general expenses of acquired companies, and additional marketing costs in emerging markets. The ongoing adaptation program helped reduce the ratio of selling and general expenses to net sales by 0.4 of a percentage point to 27.0%.
Other current operating income net of expenses showed net income of euro 19 million, versus a net expense of euro 24 million in the fourth quarter of 2008. The year-on-year change mainly reflects an increase in payments received by sanofi-aventis on sales of Copaxone(R) in North America (euro 88 million) and less unfavorable foreign results.
Operating income - current(2) increased by 2.5% to euro 2,254 million and was impacted by an unfavorable dollar effect. At constant exchange rates, growth was 10.5%.
Net financial expenses were euro 117 million, against euro 122 million in the comparable period of 2008. Net interest expense on debt totaled euro 84 million compared with euro 41 million in the fourth quarter of 2008, reflecting the acquisitions made in 2009 (in particular Merial, for euro 2.8 billion, completed September 18, 2009).
The effective tax rate fell 3.1 percentage points to 23.8%, reflecting the adjustment of the effective tax rate of the first 9 months of the year (29%) to align on the full-year effective tax rate (28%) due to a new protocol to the 1994 U.S.-France income tax treaty that took effect on December 23, 2009 and applies retroactively from January 1, 2009. This new protocol eliminates source-country taxation of certain direct dividends payments.
The share of profits from associates (excluding Merial) was euro 197 million, an increase of 1.5%, with the share of after-tax profits from the territories managed by BMS under the Plavix(R) and Avapro(R) alliance up 5.1% at euro 187 million, impacted by an unfavorable dollar effect. The contribution from Sanofi Pasteur MSD increased. Adjusted net income from the Merial business (100% of the net income) was euro 52 million.
Minority interests declined by 26.4% to euro 81 million, reflecting a fall in the pre-tax profits paid to BMS from territories managed by sanofi-aventis (euro 76 million versus euro 106 million in the fourth quarter of 2008) as result of increased competition from clopidogrel generics in Europe.
Adjusted net income excluding selected items(2) was euro 1,796 million, up 10.4% (19.1% at constant exchange rates). The ratio of adjusted net income excluding selected items(2) to net sales improved by 1.4 points to 24.4%.
Adjusted earnings per share (EPS) excluding selected items(2) was euro 1.37, an increase of 9.6% (18.4% at constant exchange rates) on the 2008 fourth-quarter figure of euro 1.25. Excluding the positive tax impact, adjusted EPS excluding selected items(2) would have risen by 15.2% at constant exchange rates.
(2) See Appendix 9 for definitions of financial indicators, and Appendix 6 for details of selected items
Full-year 2009 financial results
Adjusted income statement excluding selected items(2)
Sanofi-aventis generated 2009 net sales of euro 29,306 million, an increase of 6.3% on a reported basis. "Other revenues" rose by 15.5% due to a strong performance from Plavix(R) in the United States and a favorable dollar effect.
Gross profit was euro 22,896 million, an increase of 6.6% (or 4.6% at constant exchange rates). The ratio of cost of sales to net sales increased by 0.2 of a percentage point to 26.8%.
Research and Development expenses were virtually stable (up 0.2%) at euro 4,583 million, but fell by 1.4% at constant exchange rates. Cost savings in pharmaceuticals R&D coupled with the impact of previously announced project terminations offset a 14.5% increase in R&D spend in vaccines. The ratio of R&D expenses to net sales fell by 1 percentage point from 16.6% to 15.6%.
Selling and general expenses were 2.2% higher at euro 7,325 million (or up 1.1% at constant exchange rates). The ratio of selling and general expenses to net sales fell by 1 percentage point from 26% to 25%, reflecting the cost-control measures implemented by the Group.
Other current operating income, net of expenses was euro 385 million, compared with euro 203 million in 2008. These figures reflect a payment by Teva equal to 25% of North American sales of Copaxone(R); the payment was euro 346 million for 2009 and euro 181 million for the last three quarters of 2008. These payments will cease at the end of the first quarter of 2010. In 2009, this line included a gain on foreign exchange versus a loss in 2008.
Operating income - current(2) reached euro 11,153 million, a rise of 14.2%. At constant exchange rates, the growth rate was 9.7%. The ratio of operating income - current(2) to net sales improved by 2.7 points to 38.1%.
Net financial expenses were euro 300 million, versus euro 270 million in 2008. Net interest expense on debt totaled euro 231 million compared with euro 191 million in 2008, reflecting the acquisitions made in 2009 and lower interest income on surplus cash.
The effective tax rate for 2009 was 28%, 1 percentage point lower than for 2008, due to a new protocol to the 1994 U.S.-France income tax treaty.
The share of profits from associates (excluding Merial) was euro 841 million, up 16.8%, with the share of after-tax profits from the territories managed by BMS under the Plavix(R) and Avapro(R) alliance up 25.8% at euro 785 million due to the performance of Plavix(R) in the United States coupled with a favorable dollar effect over the year. The contribution from Sanofi Pasteur MSD increased year on year.
The contribution of Merial to adjusted net income was euro 241 million; this figure consists of 100% of the adjusted net income of Merial from September 18, 2009 (when sanofi-aventis acquired a 100% interest) and 50% prior to that date.
Minority interests were euro 427 million, a decrease of 3.2%. The share of pre-tax profits paid to BMS from territories managed by sanofi-aventis was euro 405 million, down 4.1% due to competition from clopidogrel generics in Europe.
Adjusted net income excluding selected items(2) was euro 8,471 million, up 17.9% (12.8% at constant exchange rates). The ratio of adjusted net income excluding selected items(2) to net sales improved by 2.8 points to 28.9%.
Adjusted earnings per share (EPS) excluding selected items(2) was euro 6.49, an increase of 18.2% (13.1% at constant exchange rates) relative to 2008 (euro 5.49). Excluding the positive tax impact, adjusted EPS excluding selected items(2) would have grown by 11.7% at constant exchange rates, slightly ahead of our 2009 guidance.
(2) See Appendix 9 for definitions of financial indicators and Appendix 6 for details of selected items.
Selected items (see Appendix 6)
In the fourth quarter of 2009, selected items were euro 9 million (net of tax) and comprised euro 97 million of restructuring provisions (net of tax) associated with the Group's adaptation program (reflecting adaptation of the Group's sales force and industrial facilities in Europe) and a euro 106 million reversal of the deferred tax liability on tax costs of distributions subsequent to the new protocol to the 1994 U.S.-France income tax treaty that took effect on December 23, 2009. Selected items in the fourth quarter of 2008 represented a net after-tax gain of euro 85 million.
Selected items in 2009 represented a net after-tax expense of euro 627 million (compared with a net after-tax expense of euro 118 million in 2008), and comprised:
Adjustments to the consolidated financial statements to reflect the application of purchase accounting to acquisitions, primarily that of Aventis (see Appendix 6)
The material effects of the application of purchase accounting to acquisitions, primarily that of Aventis, on the consolidated income statement were as follows:
In "Share of profits/losses from associates" (excluding Merial), a reversal of euro 27 million, of which euro 6 million was booked in the fourth quarter, mainly relating to the amortization of intangible assets (net of tax) and for Merial a reversal of euro 66 million (including euro 46 million on the workdown of inventories) of which euro 29 million was booked in the fourth quarter.
These adjustments have no cash impact on the Group.
Strong cash flow from operating activities in 2009 (See Appendices 7 and 8)
In 2009, operating cash flow before changes in working capital totaled euro 9,362 million, compared with euro 8,524 million in 2008.
Working capital needs increased by euro 847 million in 2009, after having remained stable in 2008, reflecting the growth in net sales and the impact of acquisitions.
Net cash generated by operating activities was euro 8,515 million which provided finance for capital expenditures of euro 1,460 million, and the dividend payout of euro 2,872 million and also partially funded the acquisitions made in 2009. These acquisitions comprised the purchases of equity interests (euro 6,334 million, including assumed debt), primarily in Merial, Zentiva, Shantha, Medley, Kendrick, BiPar, Fovea and Oenobiol while spending on alliances was euro 325 million. Consequently, net debt stood at euro 4,135 million at December 31, 2009, (debt of euro 8,827 million, net of euro 4,692 million cash and cash equivalents) compared with euro 1,780 million at December 31, 2008, an increase of euro 2,355 million. The ratio of net debt to EBITDA remains low at 34%.
The sanofi-aventis Transformation program
Since the start of the year, we have been engaged in a wide-ranging Transformation program designed to meet the challenges facing the pharmaceutical industry to make us a global, diversified healthcare leader, and deliver sustainable growth. This Transformation program is expected to generate cost savings of euro 2 billion in 2013.
In 2009, the initial benefits of our cost management program were reflected in a 1 percentage point reduction in both the R&D/Sales and SG&A/Sales ratios. We delivered euro 480 million of cost savings in 2009.
For 2010, we expect that our Transformation program will generate more cost savings than initially planned.
Research and Development
2009 was a year of transformation within the Group's Research and
