Sanofi-Aventis (France): Resilient Sales and Business EPS(1) in Q3 2010

PARIS, Oct. 28 /PRNewswire-FirstCall/ --

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 the first 9 months of 2010 is provided in Appendix 8. A reconciliation of business net income to consolidated net income is provided in Appendix 7. Consolidated net income for the first 9 months of 2010 was euro 5,030 million, compared with euro 4,056 million for the first 9 months of 2009. Consolidated earnings per share for the first 9 months of 2010 was euro 3.85 versus euro 3.11 for the first 9 months of 2009.

Commenting on the Group’s performance in Q3 2010, sanofi-aventis Chief Executive Officer, Christopher A. Viehbacher said, “This third quarter was marked by the success of the Jevtana® launch in the U.S., by positive Phase III data for lixisenatide and teriflunomide but also by the entry of a generic of Lovenox® in the U.S. Our Q3 results were also enhanced by favourable currency tailwind. Tight cost control and good performance of growth platforms have allowed the Group to slightly raise its guidance for 2010. In addition, we recently commenced a tender offer to acquire Genzyme.”

Q3 2010 Performance

• Overall sales(2) were resilient notwithstanding the impact of generic competition to several products, including Lovenox® in the U.S. Favourable exchange rate effect on reported sales
• Emerging Markets(3) accounted for 29.6% of Group sales, up +13.0%, driven by Latin America (+24.5%) and Russia (+22.2%)
• Consumer Health Care (+45.8%; +9.5% organic growth) and Generics (+18.9%) demonstrated strong growth
• Vaccines sales increased by +8.9% (+14.7% excluding A/H1N1) due to strong seasonal flu vaccines sales; Fluzone HD® was also successfully launched in the U.S.
• Diabetes sales reached euro 1,097m, up +6.7%, and represented 14% of Group sales
• Successful launch of Jevtana® in the U.S. with sales of euro 41 million in under three months, exceeding the Group’s expectations; Multaq® is now available in 23 countries
• Further improvement of operating expenses to net sales ratio from 38.1% (in Q3 2009) to 37.5%
• Business EPS(1) was up 8.6% in Q3 2010 on a reported basis and down 2.3% at CER

Transformation Program

• The Group’s five growth platforms made up 58% of consolidated sales (up from 50% in Q3 2009)
• Cost savings on track to reach more than euro 1.2 bn by end of 2010 at CER compared with the 2008 cost base
• R&D delivery: Positive Phase III data announced for lixisenatide (diabetes) and teriflunomide (multiple sclerosis); Dengue disease vaccine and quadrivalent flu vaccine entered Phase III

Revised 2010 Guidance

• Sanofi-aventis now expects business EPS(1) growth for 2010 to be between 0% and 2% versus 2009(4) business EPS, at constant exchange rates and barring major unforeseen adverse events. This guidance takes into account generic competition for Ambien CR® in the U.S., possible entry of generics of Taxotere® in the U.S. and the E.U. and further erosion of Lovenox® sales in the U.S.

(1) See Appendix 9 for definitions of financial indicators; (2) Growth in net sales is expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 9 for a definition); (3) See chart entitled “Net sales by geographic region”; (4) 2009 business EPS of euro 6.61; see Appendix 9 for a definition.

2010 third-quarter and 9-month net sales

Unless otherwise indicated, all sales growth figures in this press release are stated at constant exchange rates(1).

In the third quarter of 2010, sanofi-aventis generated net sales of euro 7,821 million, up 5.7% on a reported basis. Exchange rate movements had a favorable effect of 7.4 percentage points, mainly due to the weaker Euro versus the U.S. dollar, Japanese Yen, Brazilian Real, and Australian dollar. At constant exchange rates, and including changes in structure (primarily the consolidation of Chattem), net sales decreased by 1.7%. Excluding changes in structure and at constant exchange rates, third-quarter net sales declined by 3.0%.

Net sales for the first 9 months of 2010 were 4.8% higher on a reported basis at euro 22,989 million. Exchange rate movements had a favorable effect of 3.9 percentage points, largely reflecting the appreciation of the U.S. dollar, Brazilian Real, Japanese Yen, Australian dollar and Canadian dollar against the Euro. At constant exchange rates, and after taking into account changes in structure (in particular the consolidation of Chattem, Zentiva, Oenobiol and Shantha), net sales rose by 0.9%. Excluding changes in structure and at constant exchange rates, net sales for the first nine months decreased by 1.2%.

Key Growth Platforms (see Appendix 5)

The Group’s growth platforms accounted for 58% of total consolidated sales in the third quarter of 2010 which is up from 50% in the third quarter of 2009. Over the first nine months, the growth platforms represented 53% of total consolidated sales compared with 46% for the same period of 2009. Animal Health, which constitutes our sixth growth platform, achieved sales (not consolidated) of $667 million in the third quarter of 2010 (up 8.8%) and $2,058 million in the first 9 months of the year (up 3.8%).

Pharmaceuticals

Third-quarter net sales for the Pharmaceuticals business declined by 3.5% to euro 6,595 million reflecting the entry of generic Lovenox® in the U.S., the workdown of generics inventory for Eloxatin® in the U.S., and generics competition for Plavix® in Europe. Year-to-date net sales were euro 20,071 million, down 1.2%.

Third-quarter net sales of the Diabetes division were euro 1,097 million (+6.7%). Lantus®, the world’s leading diabetes brand, reported net sales of euro 900 million, an increase of 6.7%. Sales in the U.S. were euro 553 million (+5.9%); these figures include an accrual related to U.S. Healthcare Reform and reflect a reduction in inventory. In Emerging Markets(6) and in Western Europe, sales grew by 7.3% (euro 128 million) and 5.0% (euro 170 million), respectively. In the U.S., the contribution of SoloSTAR® to new prescriptions of Lantus® family products continued to improve, reaching 32.4% by end September (IMS NPA September 2010), an increase of 7.5 points versus the comparable period of 2009.

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

(6) World excluding North America, Western Europe, Japan, Australia and New Zealand

BGStar® and iBGStar are the first range of blood glucose monitoring systems (BGMs) co-developed by sanofi-aventis and its partner AgaMatrix. BGStar® and iBGStar integrate convenient, accurate and easy-to-use blood glucose management with decision making support into the everyday lives of people with diabetes, enabling them to make more informed diabetes-related decisions and take charge of their lives. CE mark and 510K approvals have been obtained for BGStar®, and submission of iBGStar in the U.S. is planned for Q4 2010. The Group expects BGStar® and iBGStar to be available in the U.S. (iBGStar), Germany and France in Q1 2011. Additional launches are planned across Europe in 2011 and in Asia and Latin America in 2012.

Net sales of Apidra®, the rapid-acting insulin analog, grew by 23.5% to euro 45 million in the third quarter sustained by good performance in the Emerging Markets.

Third-quarter net sales of Lovenox® were euro 589 million, down 26.1%. Sales declined 47.3% (euro 255 million) in the U.S. due to the entry of a generic competitor at the end of July. Outside the U.S., Lovenox® sales reached euro 334 million (representing 56.7% of Lovenox sales in the third quarter), an increase of 4.6%, supported by the Emerging Markets (up 8.3% to euro 129 million) where Latin America and Eastern Europe demonstrated double digit growth. Year-to-date Lovenox® sales reached euro 2,224 million (-5.1%), 45.8% of which was generated outside the U.S. (euro 1,018 million, up 7.6%).

Net sales of Taxotere® were euro 537 million (-4.9%) in the third quarter. In the U.S., sales of the product decreased 13.8% (euro 191 million). In Western Europe, Taxotere® sales declined 5.2% to euro 185 million reflecting the entry of generics in countries with no compound patent protection (e.g. Spain, Portugal, Denmark). Emerging countries delivered double digit growth (+13.9% to euro 98 million) due to strong performance in the Middle-East region. Over the first 9 months of 2010, sales of Taxotere® were euro 1,666 million (-1.9%).

On September 27, 2010, the U.S. District Court for the District of Delaware ruled against sanofi-aventis on the patent dispute over Taxotere®. The compound patent for Taxotere® in the U.S. was not challenged in these lawsuits (expired in May 2010). Taxotere® is protected through November 14, 2010 by paediatric exclus