Sanofi-Aventis (France) Earnings Drop 29 Percent in 1st Quarter on Loss of Swine Flu Vaccine Sales

In order to facilitate an understanding of our operational performance, we comment on our business net income statement. Business net income(1) is a non-GAAP financial measure. The consolidated income statement for Q1 2011 is provided in Appendix 8. A reconciliation of business net income to consolidated net income is provided in Appendix 7. Consolidated net income in Q1 2011 was euro 1,218 million (compared with euro 1,714 million in Q1 2010) and included a non-recurring charge of euro 325 million net of tax corresponding to the amortization of Merial assets that would have been recognized for the period from September 18, 2009 to December 31, 2010, had these assets not been classified as held for sale or exchange. Consolidated earnings per share in Q1 2011 was euro 0.93 versus euro 1.31 in Q1 2010.

(1) See Appendix 9 for definitions of financial indicators; (2) Constant Exchange Rates; (3) Growth in net sales is expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 9 for a definition); (4)Prior period Income Statement has been re-presented to include Merial results in income from continuing operations (cf Appendix 9; (5) See definition on page 6; (6) At CER before inflation and on a constant structure basis compared to 2008.

2011 first-quarter net sales

Net sales in the first quarter of 2011 were 1.5% lower on a reported basis at euro 7,779 million. Exchange rate movements had a favorable effect of 3.7 percentage points, largely reflecting the appreciation of the Japanese Yen, U.S. dollar, Brazilian Real, Australian dollar and Chinese Yuan against the Euro. At constant exchange rates, and after taking into account changes in structure (mainly Chattem, consolidated from February 2010), net sales decreased by 5.2% or increased by 0.1% excluding pandemic influenza vaccine sales (euro 413 million) booked in the first quarter of 2010.

Key Growth Platforms (see Appendix 5)

The Group's growth platforms recorded sales of euro 4,607 million in the first quarter, an increase of 4.3% or 15.5% excluding A/H1N1 sales. These growth platforms collectively accounted for 59.2% of total consolidated sales versus 54.0% in Q1 2010 or 51.4% excluding A/H1N1 sales.

Pharmaceuticals

First-quarter net sales for the Pharmaceuticals business were euro 6,583 million, down 1.6%, reflecting generic competition for Lovenox®, Taxotere® and Ambien®CR in the U.S., for Plavix® and Taxotere® in the EU and the impact of austerity measures in EU and health care reform in the U.S.

In the first quarter, net sales of the Diabetes division totaled euro 1,113 million, an increase of 10.5% led by the double digit growth of Lantus®, the world's leading diabetes brand. Lantus® reported net sales of euro 925 million, an increase of 13.2%, supported by its strong performance in the U.S. (+14.7%, euro 563 million), reflecting additional promotional effort put in place in mid-2010. The contribution from Lantus® SoloSTAR® in the U.S. represented 43.8% of total Lantus® sales, an increase of 9.6 percentage points versus Q1 2010. Over the period, sales of Lantus® grew by 34.8% in Japan, and by 19.1% (euro 136 million) in Emerging Markets(8) led by Latin America and China.

(7)See Appendix 2 for a geographical split of consolidated net sales by product.

(8) World excluding the U.S. and Canada, Western Europe, Japan, Australia and New Zealand

In Western Europe, sales of Lantus® were euro 174 million, an increase of 1.2%, reflecting good growth in volume partially offset by price pressure notably in Germany.

The first launches of BGStar® and iBGStar®, the first range of blood glucose monitoring systems (BGMs) co-developed by sanofi-aventis and its partner AgaMatrix, occurred in Germany in April and will take place in France in May, respectively.

Net sales of Apidra®, the rapid-acting insulin analog, grew 20.5%to euro 49 million in the first quarter driven by Western Europe, Japan and Emerging Markets. Net sales of Amaryl® reached euro 108 million, down 5.6%, reflecting robust performance in Emerging markets offset by performance in Western Europe and Japan due to generic competition.

First-quarter net sales of Lovenox® were euro 583 million, down 26.5%, reflecting a generic competitor in the U.S. (U.S. sales were euro 222 million down 51.0%). Outside the U.S., sales reached euro 361 million (representing 61.9% of Lovenox sales) and grew by 5.4% driven by the Emerging Markets (+16.7% to euro 132 million).

Taxotere® has been facing generic competition in the EU since the end of 2010 following the expiry of its composition of matter patent and in the U.S. since the end of the first quarter following the loss of its market exclusivity. First-quarter net sales of the product decreased by 31.6% to euro 382 million, reflecting decreases of 61.3% in Western Europe (euro 74 million) and 19.9% in the U.S. (euro 168 million). In Japan, Taxotere® continued to record good performance with sales up 13.2%.

First-quarter net sales of Eloxatin® were euro 188 million (up 172.7%), reflecting partial recovery of U.S. sales (euro 119 million, versus euro 8 million in Q1 2010) which continue to be impacted by the workdown of generic inventory at the wholesaler level.

Since June 30, 2010, following the settlement of the Eloxatin U.S. patent infringement suits, generic manufacturers remain enjoined by the U.S. District Court for the District of New Jersey from selling their Eloxatin® generic products in the U.S. until August 9, 2012 or the earlier entry of a competing generic product. One generic manufacturer, Sun Pharmaceuticals, sought appellate review of the court's injunction. Following this appeal, Sun's case was remanded to the District Court for further consideration. In the event Sun prevails before the District Court, the generic manufacturers could re-enter the market prior to August 9, 2012.

Sales from new products (Jevtana® and Multaq®) totaled euro 111 million versus euro 24 million in Q1 2010.

Net sales for Jevtana® (cabazitaxel) were euro 48 million in the first quarter of 2011 mostly generated in the U.S. This new anti-cancer agent was launched in the U.S. in July 2010 for patients with metastatic hormone-refractory prostate cancer previously treated with a docetaxel-based therapy. The patient share of Jevtana® in the U.S. in second line metastatic hormone-refractory prostate cancer reached 54% in February (IntrinsiQ February 2011). In March 2011, Jevtana® received marketing authorization from the European Commission. The first launch of Jevtana® in the EU occurred in Germany in April 2011.

First-quarter net sales of Multaq® were euro 63 million (versus euro 24 million in Q1 2010), of which euro 44 million was generated in the U.S. Sales in Western Europe reached euro 17 million in the period. In January 2011, sanofi-aventis issued a Dear Health Care Provider Letter worldwide. The FDA also issued a Drug Safety Communication on hepatic events reported in patients treated with Multaq®. The revised product information was updated accordingly. The benefit/risk assessment of Multaq® by the EMA is ongoing. In the U.S. Multaq® received new Tier 2 unrestricted status with two major Managed Care accounts (United Healthcare Medicare and Commercial).

Worldwide presence(1) of Plavix®/Iscover®

First-quarter worldwide presence of Plavix® was euro 1,734 million, up 0.4% impacted by generic competition in Europe. In the U.S., Plavix® sales were euro 1,200 million, up 7.2% (net sales consolidated by Bristol-Myers Squibb). The product continued its success in Japan and China with a sales increase of +28.8% (euro 139 million) and +31.1% (euro 65 million), respectively. In Europe, sales declined by 40.0% to euro 153 million due to generic competition.