Sanofi (France): 2011 Results Benefit from Genzyme Corporation Acquisition

PARIS, Feb. 8, 2012 /PRNewswire/ --

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Commenting on the Group’s performance in 2011, Sanofi Chief Executive Officer, Christopher A. Viehbacher said, “2011 was a key year in transforming Sanofi. We successfully acquired and integrated Genzyme, our growth platforms(3) recorded double-digit growth, we delivered cost savings as planned and submitted filings to regulatory authorities for five new products. Several product exclusivity losses were absorbed and we successfully limited the impact on business EPS. Beyond the remaining patent cliff in 2012, the robust performance of our diversified growth platforms, the reduced exposure to future patent expiries and progress on R&D, position Sanofi for a period of sustainable growth”.

2011 Performance

• Total sales(4) grew 5.3%(5) to euro 33,389 million. Excluding Genzyme and A/H1N1 sales, sales decreased by 1.2%. euro 2,206 million of sales were lost due to generic competition compared to 2010.
• Growth platforms sales increased 10.8% (excluding A/H1N1 sales). Sales of growth platfoms and Genzyme reached euro 21,703 million and accounted for 65% of total sales.
• Sales in Emerging Markets(6) grew 10.4% (excluding Genzyme and A/H1N1 sales) to euro 10,133 million.
• Diabetes delivered growth of 12.0%. In the fourth quarter, Lantus® sales exceeded euro 1 billion in quarterly sales for the first time.
• Vaccines sales were up 7.2% (excluding A/H1N1 sales) to euro 3,469 million.
• Genzyme sales (consolidated from April 1, 2011) increased 7.7%(7) to euro 2,395 million. The $700 million targeted cost synergies by 2013 are on track and $230 million were already achieved in 2011.
• CHC and Generics recorded another year of impressive growth, up 22.8% and 16.2%, respectively. The Allegra® OTC launch in the U.S. by Chattem was a success with sales of euro 211 million.
• Merial sales were up 4.3%, which included growth of 12.4% in Emerging Markets.
• Business EPS(1) of euro 6.65 was down 3.8% at CER.
• The proposed dividend of euro 2.65 per share corresponds to a payout ratio of 40%.

Outlook

• Production recovery is well underway at Genzyme. The Framingham plant recently received important regulatory approvals by both the FDA and EMA for the production of Fabrazyme®.
• Five new products were submitted to regulatory authorities since last July. In February, Aubagio in the EU and Zaltrap in the U.S. were submitted.
• As announced last September, the loss of Plavix® and Avapro® exclusivity in the U.S. is anticipated to impact the 2012 business net income by around euro 1.4 billion(2). Taking into account this impact, the performance of growth platforms, contribution from Genzyme and cost control as well as other generic competition should lead to a 2012 business EPS(1) 12% to 15% lower at CER than 2011(8), barring unforeseen adverse events. This objective is in-line with the mid-term plan presented last September for a return to growth over 2012-2015.

(1) See Appendix 10 for definitions of financial indicators; (2) At Constant Exchange Rates; (3) See Appendix 4; (4) Growth in net sales is expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 10 for a definition); (5) 2010 includes consolidated Merial sales (euro 1,983 million); (6) See definition in the section, “Net sales by geographic region"; (7) on a constant structure basis and at constant exchange rates; (8) euro 6.65

2011 fourth-quarter and full-year net sales

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

In the fourth quarter of 2011, Sanofi generated sales of euro 8,508 million, up 8.8% on a reported basis. Exchange rate movements had a negative effect of 0.4 percentage points. The positive effect from the Japanese yen, the U.S. dollar and the Chinese Yuan was offset by an unfavorable impact from various currencies (notably the Venezuelan Bolivar, Turkish Lira and the Brazilian Real). At constant exchange rates, and including changes in the scope of consolidation (primarily the consolidation of Genzyme), net sales increased by 9.2%.

Sales in 2011 grew 3.2% on a reported basis to euro 33,389 million. Exchange rate movements had an unfavorable effect of 2.1 percentage points. The impact of the depreciation of the U.S. dollar, Venezuelan Bolivar and Turkish Lira against the Euro was mitigated by the favorable effect of the Japanese Yen and Australian dollar. At constant exchange rates, and accounting for changes in the scope of consolidation (primarily the consolidation of Genzyme from April 1), net sales increased by 5.3%. Excluding Genzyme and A/H1N1 sales, 2011 sales decreased by 1.2%.

Growth Platforms (see Appendix 4)

Sales of the Group’s growth platforms grew by 7.7% in the fourth quarter. Emerging Markets, Diabetes, Consumer Health Care and Animal Health grew at a double-digit pace in the quarter. The Group’s growth platforms together with Genzyme accounted for 66.4% of total consolidated sales in Q4 2011, up from 58.4% in the fourth quarter of 2010. In 2011, the growth platforms and Genzyme comprised 65.0% of total consolidated sales compared with 56.9% in 2010. Full year 2011 sales of growth platforms grew 10.8% excluding A/H1N1 vaccines sales.

Pharmaceuticals

Fourth-quarter sales for the Pharmaceuticals business reached euro 7,220 million, an increase of 10.5%, which reflects the positive contribution (euro 831 million) from Genzyme (consolidated from April 1, 2011) as well as the negative effect of generic competition to Lovenox®, Ambien® CR and Taxotere® in the U.S., Plavix® and Taxotere® in the EU, and the impact of EU austerity measures. Full year 2011 pharmaceuticals sales were euro 27,890 million, an increase of 6.7%.