BRIDGEWATER, N.J., Oct. 30 /PRNewswire-FirstCall/ --
2009 Q3 Change Change at 2009 Change Change at
on a constant 9 months on a constant
reported exchange reported exchange
basis rates basis rates
------- -------- -------- -------- -------- ---------
euro euro
Net sales 7,400m +8.0% +6.0% 21,945m +7.2% +4.1%
----------------- ------- -------- -------- -------- -------- ---------
Adjusted net
income excluding
selected
items(1) 2,229m +15.9% +7.7% 6,675m +20.1% +11.0%
----------------- ------- -------- -------- -------- -------- ---------
Adjusted EPS
excluding
selected
items(1) 1.71 +16.3% +8.2% 5.11 +20.5% +11.6%
----------------- ------- -------- -------- -------- -------- ---------
In order to facilitate an understanding of our operational performance, we comment on our adjusted income statement excluding selected items(1), a non-GAAP financial measure. The consolidated income statement for the first 9 months of 2009 is provided in Appendix 6, as are details of adjustments and selected items. Consolidated net income for the first 9 months of 2009 was euro 4,056 million, compared with euro 3,669 million for the first 9 months of 2008. Consolidated earnings per share for the first 9 months of 2009 was euro 3.11, versus euro 2.80 for the first 9 months of 2008.
Third-quarter performance(2) buoyed by key growth drivers
- Good performances from Lovenox® (+13.7%) and Lantus® (+21.7%) across all three geographic regions, continuation of strong uptrend in the presence of Plavix® in the United States (+11.3%) and Japan (+50.3%)
- Sales growth of 20.9% in emerging markets
- Strong growth for the Pentacel® and Menactra® vaccines; substantial proportion of seasonal and A/H1N1 vaccines sales anticipated in the fourth quarter
- OTC sales up 26.3%
- Launch of Multaq® in the United States on target; positive opinion from the CHMP in Europe, and approval in Canada and Switzerland
- Impact of competition from generics of Eloxatin® in the United States and Plavix® in some European countries more than offset by growth drivers
Solid quarterly results and 2009 full-year guidance updated
- 2009 third-quarter adjusted EPS excluding selected items(1) of euro 1.71, +8.2% at constant exchange rates and +16.3% on a reported basis
- Robust cash flow from operating activities to end September, of euro 6,834 million
- 2009 guidance, taking account of approximately $500 million sales of A/H1N1 vaccines expected in the fourth quarter: growth in adjusted EPS excluding selected items(1) of around 11% at constant exchange rates, barring major adverse events
Ongoing transformation of sanofi-aventis
- Business Development: euro 6.2 billion invested to end September 2009
- Reinforcement of the R&D portfolio: two projects (BSI-201 and otamixaban) moved into Phase III; two new alliances with Merrimack in oncology, and Wellstat in diabetes; agreement to acquire Fovea in ophthalmology
- Expansion of the OTC business: agreement to acquire Oenobiol in France
Commenting on the Group's 2009 third-quarter performance, sanofi-aventis Chief Executive Officer Christopher A. Viehbacher said:
"We pursued our transformation strategy in the third quarter, reinforcing our platforms for growth and forging ahead with our policy of R&D alliances and targeted acquisitions. As promised, we have mobilized substantial resources on the production of A/H1N1 vaccines."
(1) See Appendix 7 for definitions of financial indicators, and details of selected items;
(2) Growth in net sales is expressed at constant exchange rates unless otherwise indicated (see Appendix 7 for a definition)
2009 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 2009, sanofi-aventis (NYSE: SNY) generated net sales of euro 7,400 million, up 8.0% on a reported basis. Exchange rate movements had a favorable effect of 2.0 percentage points, with the appreciation of the U.S. dollar (and to a lesser extent the yen) against the euro more than offsetting the unfavorable effects of some other currencies. At constant exchange rates, and after taking account of changes in structure (in particular the consolidation of Zentiva and Medley), net sales rose by 6.0%. Excluding changes in structure and at constant exchange rates, third-quarter organic net sales growth was 3.2%.
Net sales for the first nine months of 2009 were 7.2% higher at euro 21,945 million. Exchange rate movements, primarily the appreciation of the U.S. dollar against the euro, had a favorable effect of 3.1 percentage points. At constant exchange rates, and after taking account of changes in structure (primarily the consolidation of Zentiva and Medley in the second quarter, and the end of commercialization of Copaxone® by sanofi-aventis in North America effective April 1, 2008), net sales rose by 4.1%. Excluding changes in structure and at constant exchange rates, organic net sales growth over the first 9 months of 2009 was 3.5%.
Pharmaceuticals
Third-quarter net sales for the Pharmaceuticals business were up 6.2% at euro 6,354 million. Over the nine months to end September, Pharmaceuticals net sales rose by 4.0% to euro 19,560 million.
Flagship products(4)
2009 Q3 Change at 2009 Change at
net sales constant 9-month constant
exchange net sales exchange
rates rates
Millions of euros --------- --------- --------- ---------
Lantus® 778 +21.7% 2,317 +24.9%
----------------- ----- ----- ----- -----
Lovenox® 747 +13.7% 2,289 +9.1%
----------------- ----- ----- ----- -----
Plavix® 664 +4.1% 2,053 +4.1%
----------------- ----- ----- ----- -----
Taxotere® 526 +1.4% 1,644 +6.8%
----------------- ----- ----- ----- -----
Aprovel® 299 +1.7% 919 +3.9%
----------------- ----- ----- ----- -----
Eloxatin® 193 -44.3% 890 -18.4%
----------------- ----- ----- ----- -----
Apidra® 34 +32.0% 100 +42.6%
----------------- ----- ----- ----- -----
Multaq® 13 13
----------------- ----- ----- ----- -----
The strong pace of growth for Lantus®, the world's leading insulin brand, continued in the third quarter of 2009; net sales were up 21.7% at euro 778 million, boosted by the SoloSTAR® injection pen. The product reported strong growth across all three regions: 21.3% in the United States (to euro 478 million), 11.4% in Europe (to euro 189 million) and 48.6% in the Other Countries region (to euro 111 million). Taking into account the performance over the first 9 months of the year (net sales of euro 2,317 million, a rise of 24.9%), Lantus® has become the Group's best-selling product in terms of consolidated net sales.
ClikSTAR®, a new reusable pen for the administration of Lantus® and/or Apidra®, is now available in some European Union countries and in Canada. With the launch of ClikSTAR® to complement SoloSTAR®, sanofi-aventis now offers a full range of injection pens that make it easier for patients to use insulin. ClikSTAR® is currently being evaluated by the United States Food and Drug Administration (FDA).
(4) See Appendix 2 for a geographical split of consolidated net sales by product.
Various results from studies of Lantus® were presented at the annual meeting of the European Association for the Study of Diabetes (EASD) in September 2009, in particular results from a comparative study that once again demonstrated the efficacy of the 24-hour long-acting basal insulin Lantus® administered by daily injection, versus insulin detemir administered by twice-daily injection.
In October 2009, the FDA approved the inclusion in the Lantus® labeling of favorable results from a 5year study comparing the effect of Lantus® with that of NPH insulin on the progression of retinopathy in patients with type 2 diabetes.
The rapid-acting insulin analog Apidra® recorded a 32.0% rise in third-quarter net sales to euro 34 million. Net sales of the product for the nine months to end September were up 42.6% at euro 100 million.
Third-quarter net sales of Lovenox®, the leading low molecular weight heparin on the market, rose by 13.7% to euro 747 million, driven by strong growth in Europe (+23% at euro 220 million) and in the Other Countries region (+19.2% at euro 85 million). Over the nine months to end September, net sales of the product advanced by 9.1% to euro 2,289 million. No biosimilar of Lovenox® has been approved in the United States to date.
Taxotere® reported third-quarter net sales of euro 526 million, up 1.4%. Demand for the product remains strong, but sales growth was impacted by fluctuations in inventory levels between the third quarter of 2009 and the third quarter of 2008. In Europe, the Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion on a new single vial formulation of Taxotere®. Over the nine months to end September, the product posted a 6.8% rise in net sales, to euro 1,644 million. In October, sanofi-aventis submitted a request for marketing approval in Europe for Taxotere® as an adjuvant treatment for early stage breast cancer without lymph node Involvement.
Net sales of Eloxatin® in the third quarter were euro 193 million, down 44.3%, reflecting the entry of a number of generics into the U.S. market during August 2009, which negatively impacted the product's U.S. sales by 53.0% to euro 122 million. In Europe, competition from generics is ongoing, with net sales down 55.1% at euro 22 million. In the Other Countries region however, the product achieved growth of 16.7% (net sales: euro 49 million). On September 10, 2009, the U.S. Court of Appeals for the Federal Circuit reversed the summary judgment against sanofi-aventis delivered by the District Court for the District of New Jersey, and referred the case back to the District Court. In light of this judgment, sanofi-aventis has petitioned the District Court for a preliminary injunction to suspend the sale of generics in the United States pending settlement of the patent litigation.
Marketing of Multaq®, the first anti-arrhythmic with a clinical benefit in reducing cardiovascular hospitalization in patients with atrial fibrillation to be approved, began in the United States on July 28. The promotional material was approved by the FDA Division of Drug Marketing, Advertising and Communication (DDMAC) in September, and is now available for use by our sales forces. Initial indications are very encouraging, in terms both of the level of new prescriptions and the response of prescribers to the product. After eight weeks on the market, over 19,000 prescriptions have been written by around 4,500 physicians. Some regional insurance plans have already granted reimbursement, and Managed Care coverage is set to expand over the next three months thanks to the solid pharmaco-economic case for the product. Third-quarter net sales of Multaq® amounted to euro 13 million.
On September 25, 2009, sanofi-aventis announced that the CHMP had issued a positive opinion recommending the granting of marketing authorization for Multaq® in the European Union. This positive opinion now needs to be ratified by the European Commission. In addition, Multaq® was authorized in Switzerland on September 25, and has been available in Canada since September 28.
Worldwide presence(1) of Plavix®/Iscover®
Third-quarter sales of Plavix® rose by 6.3%, driven by good performances in the United States (up 11.3%, net sales consolidated by Bristol Myers Squibb) and the Other Countries region (up 15.6%). In Europe, the product is facing competition from generics using clopidogrel with a different salt from that used by Plavix® (clopidogrel hydrogen sulphate), especially in the United Kingdom and Germany, and sales fell by 7.8%. In Germany, the market share of Plavix®/Iscover® by volume was around 55% (IMS Pharmatrend, week of September 21, 2009), with alternative salts of clopidogrel granted an extension to their indication during the quarter.
In Japan, Plavix® performed particularly well in the quarter, with net sales up 50.3% at euro 82 million.
Sales of Plavix® for the nine months to end September rose by 8.1% to euro 5,168 million, with Japanese sales up 64.2% at euro 237 million.
In Europe, various generics of Plavix® obtained marketing authorization during the third quarter, in particular alternative salts of clopidogrel such as besylate. In some countries, additional time is required for pricing and reimbursement procedures before these generics can be marketed. In France, sanofi-aventis responded to the marketing authorizations granted by the European and French healthcare authorities for alternative salts of clopidogrel by deciding in early October to make an identical copy of Plavix® available in France, the generic Clopidogrel Winthrop® (clopidogrel hydrogen sulphate).
Worldwide presence of Plavix®/Iscover®: geographic split
Millions of euros 2009 Change at 2009 Change at
Q3 constant 9 months constant
exchange exchange
rates rates
----------------- ------ --------- -------- ---------
Europe 404 -7.8% 1,293 -3.6%
----------------- ------ --------- -------- ---------
United States 997 +11.3% 3,034 +13.4%
----------------- ------ --------- -------- ---------
Other Countries 285 +15.6% 841 +13.3%
----------------- ------ --------- -------- ---------
TOTAL 1,686 +6.3% 5,168 +8.1%
----------------- ------ --------- -------- ---------
Worldwide presence(1) of Aprovel®/Avapro®/Karvea®
Net sales of Aprovel® held steady in the third quarter, in a competitive environment. In Europe, where the product is facing competition from generics in monotherapy in Spain and Portugal, sales rose by 0.4%. Over the nine months to end September, the product reported sales growth of 1.2%.
Worldwide presence of Aprovel®/Avapro®/Karvea®: geographic split
Millions of euros 2009 Change at 2009 Change at
Q3 constant 9 months constant
exchange exchange
rates rates
----------------- ------ --------- -------- ---------
Europe 239 0.4% 737 +1.3%
----------------- ------ --------- -------- ---------
United States 132 -1.6% 399 -1.4%
----------------- ------ --------- -------- ---------
Other Countries 123 +0.8% 373 +3.7%
----------------- ------ --------- -------- ---------
TOTAL 494 +0.0% 1,509 +1.2%
----------------- ------ --------- -------- ---------
(1) See Appendix 7 for definitions of financial indicators
Other Pharmaceutical Products
In the United States, net sales of the hypnotic Ambien® CR were flat in the third quarter (euro 124 million, down 0.6%), but grew by 0.5% over the first nine months of 2009 to euro 381 million. In Japan, third-quarter net sales of Myslee®, the leading hypnotic on the market, were up 12.6% at euro 46 million. Over the first nine months of 2009, net sales of the product were 17.6% higher at euro 139 million.
Net sales of Allegra® were up 5.3% in the third quarter at euro 153 million, driven by another good performance in Japan (+13.3%). Over the first nine months of 2009, net sales of the product increased by 2.2% at euro 591 million.
Copaxone® posted third-quarter net sales of euro 118 million, a rise of 20.0%. The end of commercialization of the product by sanofi-aventis in North America effective April 1, 2008 led to a 31.7% decline in consolidated net sales of Copaxone® over the first nine months of 2009.
OTC
Third-quarter net sales for the OTC business grew 26.3% at euro 356 million, reflecting healthy organic growth (7.4% on a constant structure basis and at constant exchange rates) plus the consolidation of Symbion and of Zentiva's OTC activities.
The 6 flagship brands (Doliprane®, Essentiale®, Maalox®, No-Spa®, Enterogermina®, Lactacyd®) achieved growth of 19.6%, driven by Doliprane® and Essentiale®. OTC net sales for the nine months 2009 were euro 996 million, a rise of 19.6% (or 4.5% on a constant structure basis and at constant exchange rates).
On October 30, the Group announced that it has signed an agreement to acquire 100% of the shares of Oenobiol, the French leader in nutritional supplements for health and beauty. In 2008, Oenobiol had a turnover of 58 million euros, of which 85% generated in France.
Generics
The Generics business posted third-quarter net sales of euro 302 million, a rise of 273.3%. This rate reflects strong organic growth (16.3% on a constant structure basis and at constant exchange rates), plus the consolidation of Zentiva, Kendrick and Medley from the second quarter. Implementation of the new generics platform in Eastern Europe, combining the operations of Zentiva and sanofi-aventis, should be completed by the end of the year. Over the first nine months of 2009, net sales for the Generics business were euro 679 million, a rise of 177.5% (or 12.1% on a constant structure basis and at constant exchange rates).
Animal Health
The acquisition of Merial was completed on September 18. Given the option of a future combination between Merial and Intervet/Schering Plough (subject to completion of the merger between Merck and Schering-Plough), sanofi-aventis has decided in light of the relevant accounting standards (IFRS 5) to recognize the contribution from Merial on a separate line, "Net income from the Merial business".
Merial's third-quarter sales were flat, falling by 0.5% (or by 4% on a reported basis) to $626 million. Sales of Frontline® and other fipronil products held steady at $248 million, despite increased competition and the impact of a decline in household consumption on the companion animal healthcare market.
For the first nine months of 2009, Merial reported net sales of $1,961 million, down 0.5% (or down 7.4% on a reported basis). Net sales of Frontline® and other fipronil products were down 1.9% at $834 million. Net sales of vaccines rose by 4.5% to $552 million over the 9-month period, driven by robust growth of 9.1% in companion animal vaccines.
Human Vaccines business
Third-quarter consolidated net sales for the Human Vaccines business rose by 4.8% to euro 1,046 million (representing 14.1% of the Group's total net sales), driven by the strong performance of Pentacel®, Pentaxim® and Menactra®, as well as the first H1N1 shipments.
Net sales of Pentacel® (the first 5-in-1 pediatric combination vaccine licensed in the United States in June 2008 against diphtheria, tetanus, pertussis, polio and Haemophilus influenzae type b) reached euro 82 million in the third quarter, versus euro 25 million in the third quarter of 2008. Net Sales of Pentaxim® (another 5-in-1 pediatric combo vaccine, which protects against diphtheria, tetanus, pertussis, polio and haemophilus influenzae type b) increased 62.5% to euro 39 million.
Net sales of Menactra® (quadrivalent meningococcal meningitis vaccine) advanced by 19.7% to euro 184 million.
Net sales of influenza vaccines for the quarter were 3.2% lower than last year at euro 378 million. In 2009, the low-yielding B strain will result in greater seasonal influenza sales during the fourth quarter of the year versus fourth quarter 2008. In 2009 Sanofi Pasteur should supply over 180 million doses of trivalent seasonal influenza vaccines, representing an estimated 40% of the northern hemisphere and 75% of the southern hemisphere global demand.
In September, Sanofi Pasteur began H1N1 shipments in the United States, third-quarter H1N1 sales amounted to euro 78 million. The bulk of the H1N1 shipments should occur during the fourth quarter of 2009 and early 2010. Sales of H1N1 vaccines should be around $500 million in the fourth quarter of the year.
During the third quarter, Sanofi Pasteur completed the acquisition of ShanH, a subsidiary of Merieux Alliance that owns a majority stake in Shantha Biotechnics, an Indian vaccine manufacturer. Shantha was recently awarded 2010-2012 contracts from a United Nations agency worth a total of $340 million for the supply of SHAN5™ (a pediatric combination vaccine against diphtheria, pertussis, tetanus, Haemophilus influenzae type B infections and hepatitis B). These contracts demonstrate Shantha's ability to meet high-quality affordable vaccines needs in international markets.
Consolidated net sales for the Human Vaccines business for the first nine months of 2009 were up 4.2% at euro 2,385 million. Excluding pandemic influenza vaccine contracts (A/H1N1 and H5N1), sales growth was 6.0%. Over the first nine months of 2009, sanofi-aventis recognized net sales of pandemic influenza vaccines amounting to euro 104 million, compared with euro 126 million for the comparable period of 2008.
Millions of euros 2009 Q3 Change at 2009 Change at
net sales constant 9-month constant
exchange net sales exchange
rates rates
----------------- --------- --------- --------- ---------
Polio/Pertussis/Hib
Vaccines (incl.
Pentacel® and
Pentaxim® 229 +12.4% 724 +24.6%
----------------- --------- --------- --------- ---------
Influenza Vaccines*
(incl. Vaxigrip®
and Fluzone® 378 -3.2%* 498 -16.4%*
----------------- --------- --------- --------- ---------
Meningitis/Pneumonia
Vaccines (incl.
Menactra® 205 +22.4% 464 +10.8%
----------------- --------- --------- --------- ---------
Adult Booster
Vaccines (incl.
Adacel® 109 -6.4% 311 -7.8%
----------------- --------- --------- --------- ---------
Travel and Other
Endemics Vaccines 72 -11.4% 237 -2.1%
----------------- --------- --------- --------- ---------
Other Vaccines 53 +40.0% 151 +35.9%
----------------- --------- --------- --------- ---------
TOTAL 1,046 +4.8% 2,385 +4.2%
----------------- --------- --------- --------- ---------
* Seasonal and pandemic influenza vaccines
Third-quarter net sales at Sanofi Pasteur MSD (not consolidated by sanofi-aventis), the joint venture with Merck & Co in Europe, fell by 6.0% on a reported basis to euro 350 million. Sales of Gardasil®, a vaccine for the prevention of human papillomavirus infections (a major cause of cervical cancer) were down 47.1% on a reported basis at euro 76 million. This decrease was due to extensive catch-up campaigns in the prior year. Excluding Gardasil®, sales of the rest of the portfolio rose by 20.0% on a reported basis. Sales at Sanofi Pasteur MSD for the first nine months of 2009 were euro 837 million, down 9.4% on a reported basis.
Net sales by geographic region
Millions of euros 2009 Q3 Change at 2009 Change at
net sales constant 9-month constant
exchange net sales exchange
rates rates
----------------- --------- --------- --------- ---------
Europe 3,050 +6.8% 9,077 +3.4%
----------------- --------- --------- --------- ---------
of which Eastern
Europe and Turkey 606 +42.8% 1,655 +32.3%
----------------- --------- --------- --------- ---------
United States 2,441 +1.1% 7,174 +0.3%
----------------- --------- --------- --------- ---------
Other Countries 1,909 +11.1% 5,694 +10.0%
----------------- --------- --------- --------- ---------
of which Japan 400 +4.2% 1,352 +8.4%
----------------- --------- --------- --------- ---------
of which Asia
(excluding the
Pacific region) 418 +8.2% 1,231 +10.6%
----------------- --------- --------- --------- ---------
of which Latin
America 494 +17.9% 1,331 +10.0%
----------------- --------- --------- --------- ---------
of which Africa 187 +6.2% 565 +5.2%
----------------- --------- --------- --------- ---------
of which Middle
East 150 +14.6% 462 +12.1%
----------------- --------- --------- --------- ---------
TOTAL 7,400 +6.0% 21,945 +4.1%
----------------- --------- --------- --------- ---------
Third-quarter net sales in Europe rose by 6.8%, driven by Eastern Europe (+39.6%) which since the start of April has included Zentiva. Sales in Western Europe rose by 1.8% over the period, despite ongoing competition from generics of Eloxatin® and increased competition from generics of Plavix®. Over the first nine months of 2009, net sales in Europe were up 3.4%.
The United States reported quarterly growth of 1.1% despite competition from generics of Eloxatin® in August. The main growth drivers during the period were again Lantus® (+21.3%) and Lovenox® (+8%). Over the first nine months of 2009, U.S. net sales were virtually unchanged (+0.3%), reflecting the impact of the end of commercialization of Copaxone® by sanofi-aventis effective April 1, 2008.
In the Other Countries region, third-quarter net sales rose by 11.1%, with Latin America, the Middle East and Asia-Pacific all posting double-digit growth. Net sales in China advanced by 38.8% to euro 149 million. In Japan, net sales rose by 4.2% to euro 400 million, compared with a 2008 third-quarter figure that benefited from sales of active ingredients of Aprovel® to our local partners. Japanese sales are being boosted by the ongoing success of Plavix®, and by good growth for Myslee® and Allegra®. Sales in Latin America are being driven by Brazil, thanks to healthy organic growth and the acquisition of Medley. Over the first nine months of 2009, net sales growth in the Other Countries region was 10.0%. Over the same period, net sales grew by 8.4% in Japan (to euro 1,352 million) and by 36.5% in China (to euro 408 million).
Third-quarter net sales in emerging markets(5) were euro 1,888 million, an increase of 20.9% (or 6.7% on a constant structure basis and at constant exchange rates). Emerging markets net sales for the first nine months of the year rose by 16.4% (or 7.0% on a constant structure basis and at constant exchange rates) to euro 5,358 million, representing 24.4% of the Group's total net sales.
(5) World excluding North America, 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.
Solid results, built on sales growth and ongoing cost control
2009 third-quarter financial results
Adjusted income statement excluding selected items(1)
Sanofi-aventis generated third-quarter net sales of euro 7,400 million, an increase of 8.0% on a reported basis. "Other revenues" rose by 19.2% due to a good performance from Plavix® in the United States and a favorable dollar effect.
Gross profit came to euro 5,744 million, a rise of 6.9%, or of 3.7% at constant exchange rates. The ratio of cost of sales to net sales increased by 1.2 percentage points to 27.4% due to a slightly less favorable product mix, a rise in the cost of heparin raw materials, and the impact of generics during the period (arrival of Eloxatin® generics in the United States, and increased generic competition for Plavix® in Europe).
Research and development expenses were up 1.8% at euro 1,109 million, but down 0.6% at constant exchange rates, reflecting a selective approach to R&D projects and the impact of cost savings in pharmaceuticals R&D, increased R&D spend in vaccines, and the development costs of acquired companies. Overall, the ratio of R&D expenses to net sales was 15.0%, 0.9 percentage point lower than in the comparable period of 2008.
Selling and general expenses increased by 3.4% (or 1.2% at constant exchange rates) to euro 1,707 million, and include the launch costs for Multaq® in the United States. The ratio of selling and general expenses to net sales fell by 1 percentage point to 23.1%, reflecting the ongoing adaptation program.
Other current operating income, net of expenses totaled euro 86 million, versus euro 49 million in the third quarter of 2008. The year-on-year change mainly reflects an increase in the royalty collected by sanofi-aventis on sales of Copaxone® in North America.
Operating income - current(1) advanced by 11.9% to euro 2,955 million. At constant exchange rates, growth was 4.5%. The ratio of operating income - current(1) to net sales improved by 1.4 points to 39.9%.
Net financial expenses were euro 69 million, against euro 60 million in the comparable period of 2008. The acquisition of 100% of Merial for euro 2.8 billion was completed on September 18, 2009.
The effective tax rate was 0.6 of a point lower at 29%, in line with the 2008 full-year effective tax rate.
The share of profits from associates (excluding Merial) was 24.3% higher at euro 235 million, with the share of after-tax profits from the territories managed by BMS under the Plavix® and Avapro® alliance up 31.6% at euro 204 million thanks to the performance of Plavix® in the United States and a favorable dollar effect. The contribution from Sanofi Pasteur MSD was flat year on year.
Net income from the Merial business was euro 59 million; this figure consists of 100% of the net income of Merial from September 18, 2009 (when sanofi-aventis acquired a 100% interest) and 50% prior to that date.
Minority interests were 2.7% higher at euro 114 million. The share of pre-tax profits paid to BMS from territories managed by sanofi-aventis was euro 110 million (versus euro 104 million in the third quarter of 2008).
Adjusted net income excluding selected items(1) was euro 2,229 million, up 15.9% (7.7% at constant exchange rates). The ratio of adjusted net income excluding selected items(1) to net sales improved by 2 points to 30.1%.
Adjusted earnings per share (EPS) excluding selected items(1) was euro 1.71, an increase of 16.3% (8.2% at constant exchange rates) on the 2008 third-quarter figure of euro 1.47.
(1) See Appendix 7 for definitions of financial indicators, and page 10 for details of selected items
2009 9-month financial results
Adjusted income statement excluding selected items(1)
In the first nine months of 2009, sanofi-aventis generated net sales of euro 21,945 million, up 7.2% on a reported basis. "Other revenues" rose by 21.9% thanks to a good performance from Plavix® in the United States and a favorable dollar effect.
Gross profit was euro 17,392 million, a rise of 9.0% (4.3% at constant exchange rates). The ratio of cost of sales to net sales improved by 0.8 of a point to 25.6% due to positive currency effects, the end of commercialization of Copaxone® by sanofi-aventis in North America, and a favorable product mix.
Research and development expenses rose by 3.1% to euro 3,369 million, but fell by 0.1% at constant exchange rates. These figures include euro 54 million of provisions relating to the discontinuation of various projects following the portfolio review completed at the end of the first quarter.
Selling and general expenses were 2.1% higher at euro 5,334 million, but 1.0% lower at constant exchange rates. The ratio of selling and general expenses to net sales fell by 1.2 percentage points to 24.3%, reflecting the cost-measures implemented by the Group.
Other current operating income, net of expenses totaled euro 366 million, compared with euro 227 million for the first nine months of 2008; these figures reflect the payment by Teva of a royalty equal to 25% of North American sales of Copaxone® from the second quarter of 2008.
Operating income - current(1)was 17.6% higher at euro 8,899 million. At constant exchange rates, the growth rate was 9.5%. The ratio of operating income - current(1) to net sales improved by 3.7 points to 40.6%.
The effective tax rate was 29%, in line with the 2009 full-year effective tax rate.
The share of profits from associates (excluding Merial) was 22.2% higher at euro 644 million, with the share of after-tax profits from the territories managed by BMS under the Plavix® and Avapro® alliance up 34.1% at euro 598 million thanks to the performance of Plavix® in the United States and a favorable dollar effect. The contribution from Sanofi Pasteur increased year on year.
The contribution of Merial to net income was euro 189 million; this figure consists of 100% of the net income of Merial from September 18, 2009 (when sanofi-aventis acquired a 100% interest) and 50% prior to that date. Merial generated an operating margin of 32.1% in the first nine months of 2009, slightly lower than the level recorded in the comparable period of 2008.
Minority interests increased by 4.5% to euro 346 million. The share of pre-tax profits paid to BMS from territories managed by sanofi-aventis was euro 329 million (versus euro 316 million for the first nine months of 2008).
Adjusted net income excluding selected items(1)was euro 6,675 million, up 20.1% (11.0% at constant exchange rates). The ratio of adjusted net income excluding selected items(1) to net sales improved by 3.3 points to 30.4%.
Adjusted earnings per share (EPS) excluding selected items(1) was euro 5.11, an increase of 20.5% (11.6% at constant exchange rates) relative to the first nine months of 2008 (euro 4.24).
(1) See Appendix 7 for definitions of financial indicators and page 10 for details of selected items.
Selected items (see Appendix 6)
In the third quarter of 2009, selected items comprised euro 28 million of restructuring provisions (net of tax) associated with the Group's adaptation program. Selected items in the third quarter of 2008 represented a net after-tax expense of euro 35 million.
Selected items for the first nine months of 2009 represented a net after-tax expense of euro 636 million (compared with a net after-tax expense of euro 203 million for the comparable period of 2008), and comprised:
- euro 949 million of restructuring costs associated with the Group's adaptation program;
- euro 20 million of impairment losses arising from the decision to discontinue development of TroVax®;
- the euro 333 million tax effect arising on the selected items described above.
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:
- A charge of euro 19 million in the second quarter arising from the workdown of inventories of Zentiva and other companies acquired during the period remeasured at fair value.
- An amortization charge of euro 2,522 million against intangible assets, of which euro 814 million was booked in the third quarter.
- Impairment losses of euro 352 million, of which euro 344 million was booked in the third quarter, mainly in respect of Benzaclin®, Nasacort® and Actonel® in light of changes in the competitive environment and the dates of approval for generics. In the second quarter, an impairment loss of euro 8 million was taken against the Di-Antalvic asset.
- Deferred taxes of euro 968 million, of which euro 391 million was booked in the third quarter. These deferred taxes were generated by the amortization charged against intangible assets, the workdown of inventories of acquired companies, and the impairment losses.
- In "Share of profits/losses from associates", a reversal of euro 58 million, of which euro 15 million was booked in the third quarter, mainly relating to the amortization of intangible assets (net of tax); of these figures, the amounts relating to Merial were euro 37 million for the first nine months of 2009 and euro 9 million for the third quarter.
These adjustments have no cash impact on the Group.
Net debt
Over the first nine months of 2009, sanofi-aventis generated substantial cash flow of euro 6,834 million, which provided finance for capital expenditure of euro 1,038 million and the dividend payout of euro 2,872 million, plus partial funding for the acquisitions and alliances carried out during the period. Spending on acquisitions totaled euro 5,963 million, and related primarily to Merial, Zentiva, Medley, Shantha and BiPar Sciences, while spending on alliances was euro 223 million. Net debt at end September was euro 5,042 million (debt of euro 7,363 million, net of cash of euro 2,321 million), compared with euro 1,780 million as of December 31, 2008.
Research and Development
The third quarter was a particularly active one for the Group's policy of targeted alliances and acquisitions. In parallel, initiatives designed to transform the Group's Research and Development operations continued to make progress.
The R&D portfolio was boosted by an exclusive worldwide license and collaboration agreement with the U.S. biotechnology company Merrimack relating to MM-121, currently in Phase I for solid malignancies. MM-121 is a first-in-class fully human monoclonal antibody targeting cancer cells that over-express or amplify the ErbB3 receptor. A similar type of agreement was signed with Wellstat Therapeutics for PN2034, a novel oral first-in-class insulin sensitizer for the treatment of type 2 diabetes. As a sensitizer, PN2034 is expected to normalize and therefore enhance insulin action in the liver of diabetic patients. The compound is currently in Phase II clinical testing.
An agreement was also signed with a view to the acquisition of Fovea, a French biopharmaceutical company specializing in ophthalmology. Fovea has an innovative technological platform, a number of ongoing research programs in the treatment of retinal disorders, and a portfolio of three products in clinical development:
- FOV 1101, a fixed dose combination of prednisolone and cyclosporine in eye-drop form, currently in Phase II for the treatment of persistent allergic conjunctivitis;
- FOV 2302, a recombinant peptide plasma kallikrein inhibitor, in Phase I for the treatment by intravitreal injection of Retinal Vein Occlusion induced macular oedema;
- FOV 2304, a potent antagonist of bradykinin B1 receptors in eye-drop form, scheduled to enter Phase I by end 2009 for the treatment of diabetic macular oedema.
In October 2009, sanofi-aventis and Micromet announced a collaboration and worldwide license agreement for the development of a BiTE® antibody, directed against an antigen present on the surface of tumor cells. BiTE® antibodies are novel therapeutic antibodies that activate T-cells so that they will identify and destroy tumor cells.
(Clearance for the agreements described above is currently being sought from the anti-trust authorities)
Apart from these external additions to the portfolio, the principal
developments in the R&D portfolio since the last update on
July 29, 2009 are described below:
-- Two new Phase III programs have been launched:
-- BSI-201, a PARP inhibitor developed by Bi-Par Sciences (a
company recently acquired by sanofi-aventis) entered Phase
III in July. This pivotal study, set to include 420 patients at
100 sites, will evaluate the product in association with
chemotherapy in women with metastatic triple negative breast
cancer, i.e. with a tumor that expresses neither the estrogen
receptor nor the progesterone receptor and does not over-express
the HER2 receptor.
-- After good Phase II results, otamixaban (injectable, selective
direct inhibitor of coagulation factor Xa) is due to enter Phase
III in the first quarter of 2010. Results from the SEPIA-
ACS1/TIMI-42 Phase II study, presented to the European Society of
Cardiology (ESC) on August 30, showed a clinically significant
reduction in complications in the invasive management of acute
coronary syndromes, with a similar safety profile to that of
existing treatments.
-- Two projects entered Phase II:
-- the purified vero rabies vaccine, an improved version of the
Verorab® vaccine, which entered Phase II;
-- SAR 164877, an anti-NGF monoclonal antibody, developed for pain
relief in collaboration with Regeneron.
-- Two new candidates entered Phase I:
-- AVE 0010/Lantus® combination in the treatment of type 2 diabetes;
-- SAR 103168 (multikinase inhibitor), developed in acute myeloid
leukemia.
In addition to the Phase II results for otamixaban, results from two other
studies have recently been presented to the scientific community:
-- Results from the CURRENT-OASIS 7 study were presented to the ESC on
August 30. This large-scale trial (25,000 patients) was designed to
evaluate the efficacy and safety of a high dose Plavix® regimen versus
the approved dosage for patients requiring angioplasty. This major
study provided new information about the benefits of a higher loading
dose for this type of patient.
-- Positive Phase II results for teriflunomide, a novel orally available
immunomodulatory therapy used jointly with interferon in the treatment
of multiple sclerosis, were presented at the Congress of the European
Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS)
on September 11. Teriflunomide is currently in Phase III as a
monotherapy in the treatment of recurring multiple sclerosis.
A number of opinions on filings for approval were received from healthcare
authorities during the period:
-- Sculptra® was approved by the FDA at end July 2009 in a new
indication: aesthetic dermatology.
-- In September 2009, sanofi-aventis announced that it had received a
Complete Response Letter from the FDA regarding eplivanserin
(Ciltyri®). Eplivanserin was being reviewed as a potential treatment
for patients with chronic insomnia characterized by difficulties with
sleep maintenance. In the letter, the FDA requested additional
information regarding benefit-risk. Sanofi-aventis requested a
meeting, scheduled for the fourth quarter, to discuss what additional
steps and data would be necessary for FDA approval.
-- In September 2009, the CHMP issued a positive opinion recommending the
granting of marketing authorization for Multaq® in the European
Union for clinically stable adult patients with a history and/or a
current episode of non-permanent atrial fibrillation (AF), to prevent
recurrence of AF or to lower ventricular rate. In the Summary of
Positive Opinion, the CHMP noted that Multaq® had been shown, in
addition to its rhythm and rate controlling properties, to decrease
the risk of atrial fibrillation-related hospitalizations. Multaq®
has also been approved in Canada and Switzerland.
-- ClikSTAR®, a new rechargeable insulin pen designed to administer
Lantus® and/or Apidra®, was approved in Europe and Canada, and is
already available in some countries.
-- The monovalent A/H1N1 pandemic influenza vaccine was licensed in the
United States in September 2009.
-- In October 2009, the FDA approved the inclusion in the Lantus®
labeling of favorable results from a 5year study comparing the
effect of Lantus® with that of NPH insulin on the progression of
retinopathy in patients with type 2 diabetes.
-- Also in October 2009, the FDA approved Elitek® for the management
of hyperuricemia in adults suffering from leukemia, lymphoma or
solid malignancies who are receiving anti-cancer treatments that
carry a risk of inducing tumor lysis syndrome and hence hyperuricemia.
In October, this product was approved in Japan under the name
Rasuritek®.
-- A submission for approval of Plavix® in the prevention of major
vascular events in patients with atrial fibrillation who cannot take
oral anticoagulant medication (based on the results of the ACTIVE-A
study) was filed in Europe in October. A similar submission will be
filed in the United States by end 2009.
2009 Guidance
Based on the good performance achieved over the first nine months of the year, and the expected contribution from approximately $500 million of H1N1 vaccine sales in the fourth quarter, sanofi-aventis has updated its guidance for 2009 full-year growth in adjusted EPS excluding selected items(1) of around 11%, calculated at constant exchange rates and barring major adverse events.
In light of the first-time application of IFRS 8 (Operating Segments), sanofi-aventis has reviewed its segment structure and financial indicators, and now presents disclosures on the following segments in the notes to the financial statements: Pharmaceuticals, Vaccines, and Other Activities. This information is given in the 2009 Half-Year Financial Report. From 2010, financial communications issued by sanofi-aventis will comment on the new indicator disclosed for segment reporting purposes ("Business net income - Pharmaceuticals, Vaccines and Other").
Use of this indicator is not expected to give rise to any material difference as compared with the performance measure currently used by sanofi-aventis. Growth in 2009 net income measured using this new indicator will therefore be close to growth in "Adjusted net income excluding selected items".
Forward-Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include product development, product potential projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future events, operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words "expects," "anticipates," "believes," "intends," "estimates," "plans" and similar expressions. Although sanofi-aventis' management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of sanofi-aventis, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include among other things, the uncertainties inherent in research and development, future clinical data and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or the EMEA, regarding whether and when to approve any drug, device or biological application that may be filed for any such product candidates as well as their decisions regarding labeling and other matters that could affect the availability or commercial potential of such products candidates, the absence of guarantee that the products candidates if approved will be commercially successful, the future approval and commercial success of therapeutic alternatives, the Group's ability to benefit from external growth opportunities as well as those discussed or identified in the public filings with the SEC and the AMF made by sanofi-aventis, including those listed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in sanofi-aventis' annual report on Form 20-F for the year ended December 31, 2008. Other than as required by applicable law, sanofi-aventis does not undertake any obligation to update or revise any forward-looking information or statements.
U.S. Contact: Jack Cox, 908-981-5280, jack.cox@sanofi-aventis.com
(1) See Appendix 7 for definitions of financial indicators.
Appendices
List of appendices
Appendix 1: 2009 third-quarter and 9-month consolidated net sales by
product
Appendix 2: 2009 third-quarter and 9-month consolidated net sales by
geographic region and product
Appendix 3: Consolidated net sales by business segment
Appendix 4: 2009 third-quarter and 9-month net sales by animal health
product
Appendix 5: 2009 third-quarter and 9-month adjusted income statements
excluding selected items
Appendix 6: Reconciliation of adjusted income statement excluding selected
items to adjusted income statement and consolidated income
statement
Appendix 7: Definitions of non-GAAP financial indicators
Appendix 1: 2009 third-quarter and 9-month consolidated net sales by
product
2009 Q3 Change at Change on a Change on a
net sales constant reported constant
exchange basis structure basis
rates and at constant
Millions of euros exchange rates
------------------ --------- --------- ----------- ---------------
Lovenox® 747 13.7% 17.6% 13.7%
------------------ --------- --------- ----------- ---------------
Lantus® 778 21.7% 27.1% 21.7%
------------------ --------- --------- ----------- ---------------
Plavix® 664 4.1% 5.6% 4.1%
------------------ --------- --------- ----------- ---------------
Taxotere® 526 1.4% 4.2% 1.4%
------------------ --------- --------- ----------- ---------------
Eloxatin® 193 -44.3% -40.6% -44.3%
------------------ --------- --------- ----------- ---------------
Aprovel® 299 1.7% 0.3% 1.7%
------------------ --------- --------- ----------- ---------------
Apidra® 34 32.0% 36.0% 32.0%
------------------ --------- --------- ----------- ---------------
Multaq® 13
------------------ --------- --------- ----------- ---------------
Flagship Products 3,254 4.4% 7.4% 4.4%
------------------ --------- --------- ----------- ---------------
Stilnox®/Ambien®/
Ambien CR®/Myslee® 213 -3.0% 7.0% -3.0%
------------------ --------- --------- ----------- ---------------
Allegra® 153 5.3% 16.8% 5.3%
------------------ --------- --------- ----------- ---------------
Copaxone® 118 20.0% 18.0% 20.0%
------------------ --------- --------- ----------- ---------------
Tritace® 107 -5.1% -8.5% -5.1%
------------------ --------- --------- ----------- ---------------
Amaryl® 103 5.4% 12.0% 5.4%
------------------ --------- --------- ----------- ---------------
Depakine® 80 5.1% 13.0% 5.1%
------------------ --------- --------- ----------- ---------------
Xatral® 72 -7.9% -5.3% -7.9%
------------------ --------- --------- ----------- ---------------
Actonel® 62 -23.5% -27.1% -9.7%
------------------ --------- --------- ----------- ---------------
Nasacort® 48 -11.8% -5.9% -11.8%
------------------ --------- --------- ----------- ---------------
Other Products 1,486 -4.7% -4.8% -2.0%
------------------ --------- --------- ----------- ---------------
OTC 356 26.3% 18.7% 7.4%
------------------ --------- --------- ----------- ---------------
Generics 302 273.3% 251.2% 16.3%
------------------ --------- --------- ----------- ---------------
Total
Pharmaceuticals 6,354 6.2% 7.6% 2.9%
------------------ --------- --------- ----------- ---------------
Vaccines 1,046 4.8% 10.5% 4.8%
------------------ --------- --------- ----------- ---------------
Total 7,400 6.0% 8.0% 3.2%
------------------ --------- --------- ----------- ---------------
2009 Change at Change on a Change on a
9-month constant reported constant
net sales exchange basis structure basis
rates and at constant
Millions of euros exchange rates
------------------ --------- --------- ----------- ---------------
Lovenox® 2,289 9.1% 15.1% 9.1%
------------------ --------- --------- ----------- ---------------
Lantus® 2,317 24.9% 32.8% 24.9%
------------------ --------- --------- ----------- ---------------
Plavix® 2,053 4.1% 5.2% 4.1%
------------------ --------- --------- ----------- ---------------
Taxotere® 1,644 6.8% 10.2% 6.8%
------------------ --------- --------- ----------- ---------------
Eloxatin® 890 -18.4% -10.2% -18.4%
------------------ --------- --------- ----------- ---------------
Aprovel® 919 3.9% 2.3% 3.9%
------------------ --------- --------- ----------- ---------------
Apidra® 100 42.6% 47.1% 42.6%
------------------ --------- --------- ----------- ---------------
Multaq® 13
------------------ --------- --------- ----------- ---------------
Flagship Products 10,255 7.6% 11.9% 7.6%
------------------ --------- --------- ----------- ---------------
Stilnox®/Ambien®/
Ambien CR®/Myslee® 660 -2.0% 10.6% -2.0%
------------------ --------- --------- ----------- ---------------
Allegra® 591 2.2% 19.4% 2.2%
------------------ --------- --------- ----------- ---------------
Copaxone® 349 -31.7% -32.9% 22.0%
------------------ --------- --------- ----------- ---------------
Tritace® 328 -10.3% -13.7% -10.3%
------------------ --------- --------- ----------- ---------------
Amaryl® 310 3.6% 12.7% 3.6%
------------------ --------- --------- ----------- ---------------
Depakine® 245 7.6% 2.9% 7.6%
------------------ --------- --------- ----------- ---------------
Xatral® 225 -9.7% -5.5% -9.7%
------------------ --------- --------- ----------- ---------------
Actonel® 199 -15.8% -19.4% -5.9%
------------------ --------- --------- ----------- ---------------
Nasacort® 168 -14.4% -7.2% -14.4%
------------------ --------- --------- ----------- ---------------
Other Products 4,585 -6.5% -6.0% -3.8%
------------------ --------- --------- ----------- ---------------
OTC 996 19.6% 12.3% 4.5%
------------------ --------- --------- ----------- ---------------
Generics 679 177.5% 163.2% 12.1%
------------------ --------- --------- ----------- ---------------
Total
Pharmaceuticals 19,560 4.0% 6.7% 3.4%
------------------ --------- --------- ----------- ---------------
Vaccines 2,385 4.2% 10.8% 4.2%
------------------ --------- --------- ----------- ---------------
Total 21,945 4.1% 7.2% 3.5%
------------------ --------- --------- ----------- ---------------
Appendix 2: 2009 third-quarter and 9-month consolidated net sales by
geographic region and product
Pharmaceuticals
Europe Change at United Change at Other Change at
constant States constant Countries constant
2009 Q3 net sales exchange exchange exchange
(euro million) rates rates rates
----------------- ------ --------- ------ --------- -------- ---------
Lovenox® 220 23.0% 442 8.0% 85 19.2%
----------------- ------ --------- ------ --------- -------- ---------
Lantus® 189 11.4% 478 21.3% 111 48.6%
----------------- ------ --------- ------ --------- -------- ---------
Plavix® 388 -6.0% 57* 32.6% 219 22.3%
----------------- ------ --------- ------ --------- -------- ---------
Taxotere® 227 3.5% 203 3.3% 96 -7.2%
----------------- ------ --------- ------ --------- -------- ---------
Eloxatin® 22 -55.1% 122 -53.0% 49 16.7%
----------------- ------ --------- ------ --------- -------- ---------
Aprovel® 226 1.8% 73 1.4%
----------------- ------ --------- ------ --------- -------- ---------
Apidra® 18 46.2% 12 20.0% 4 0.0%
----------------- ------ --------- ------ --------- -------- ---------
Multaq® 13
----------------- ------ --------- ------ --------- -------- ---------
Stilnox®/Ambien®
/Ambien CR®/
Myslee® 17 -5.6% 137 -4.5% 59 2.0%
----------------- ------ --------- ------ --------- -------- ---------
Allegra® 5 -16.7% 76 -1.4% 72 17.0%
----------------- ------ --------- ------ --------- -------- ---------
Copaxone® 115 19.6% 3 33.3%
----------------- ------ --------- ------ --------- -------- ---------
Tritace® 73 -6.2% 34 -2.8%
----------------- ------ --------- ------ --------- -------- ---------
Amaryl® 20 0.0% 1 0.0% 82 7.4%
----------------- ------ --------- ------ --------- -------- ---------
Depakine® 51 1.9% 29 11.5%
----------------- ------ --------- ------ --------- -------- ---------
Xatral® 22 -28.1% 36 17.9% 14 -12.5%
----------------- ------ --------- ------ --------- -------- ---------
Actonel® 38 -32.8% 24 -3.7%
----------------- ------ --------- ------ --------- -------- ---------
Nasacort® 7 -12.5% 35 -13.5% 6 0.0%
----------------- ------ --------- ------ --------- -------- ---------
*Sales of active ingredient to the American joint venture managed by BMS
Europe Change at United Change at Other Change at
2009 9-month constant States constant Countries constant
net sales exchange exchange exchange
(euro million) rates rates rates
----------------- ------ --------- ------ --------- -------- ---------
Lovenox® 663 16.3% 1,379 3.8% 247 18.0%
----------------- ------ --------- ------ --------- -------- ---------
Lantus® 568 13.6% 1,449 26.5% 300 45.1%
----------------- ------ --------- ------ --------- -------- ---------
Plavix® 1,234 -2.7% 170* 19.7% 649 17.4%
----------------- ------ --------- ------ --------- -------- ---------
Taxotere® 697 7.4% 628 5.3% 319 8.0%
----------------- ------ --------- ------ --------- -------- ---------
Eloxatin® 79 -53.2% 670 -13.9% 141 3.7%
----------------- ------ --------- ------ --------- -------- ---------
Aprovel® 686 3.4% 233 5.4%
----------------- ------ --------- ------ --------- -------- ---------
Apidra® 50 44.4% 40 33.3% 10 80.0%
----------------- ------ --------- ------ --------- -------- ---------
Multaq® 13
----------------- ------ --------- ------ --------- -------- ---------
Stilnox®/Ambien®
/Ambien CR®/
Myslee® 55 -1.8% 426 -6.0% 179 9.4%
----------------- ------ --------- ------ --------- -------- ---------
Allegra® 20 -19.2% 260 -6.9% 311 14.9%
----------------- ------ --------- ------ --------- -------- ---------
Copaxone® 339 22.0% -100.0% 10 -60.7%
----------------- ------ --------- ------ --------- -------- ---------
Tritace® 229 -6.9% 99 -17.4%
----------------- ------ --------- ------ --------- -------- ---------
Amaryl® 62 -6.9% 6 25.0% 242 7.0%
----------------- ------ --------- ------ --------- -------- ---------
Depakine® 154 3.8% 91 15.4%
----------------- ------ --------- ------ --------- -------- ---------
Xatral® 71 -31.8% 110 19.5% 44 -10.2%
----------------- ------ --------- ------ --------- -------- ---------
Actonel® 124 -22.6% 75 -2.4%
----------------- ------ --------- ------ --------- -------- ---------
Nasacort® 28 -6.5% 121 -18.9% 19 5.6%
----------------- ------ --------- ------ --------- -------- ---------
*Sales of active ingredient to the American joint venture managed by BMS
Vaccines
Europe Change at United Change at Other Change at
constant States constant Countries constant
2009 Q3 net sales exchange exchange exchange
(euro million) rates rates rates
----------------- ------ --------- ------ --------- -------- ---------
Polio/Pertussis/Hib
Vaccines 35 20.0% 130 43.9% 64 -22.0%
----------------- ------ --------- ------ --------- -------- ---------
Influenza Vaccines* 86 17.3% 230 -14.9% 62 +24.0%
----------------- ------ --------- ------ --------- -------- ---------
Meningitis/
Pneumonia Vaccines 7 75.0% 178 16.4% 20 +75.0%
----------------- ------ --------- ------ --------- -------- ---------
Adult Booster
Vaccines 21 17.6% 79 -15.1% 9 +50.0%
----------------- ------ --------- ------ --------- -------- ---------
Travel and Other
Endemics Vaccines 5 -33.3% 16 -25.0% 51 -2.0%
----------------- ------ --------- ------ --------- -------- ---------
Other Vaccines 4 66.7% 44 39.3% 5 +25.0%
----------------- ------ --------- ------ --------- -------- ---------
* Seasonal and pandemic influenza vaccines
Europe Change at United Change at Other Change at
2009 9-month constant States constant Countries constant
net sales exchange exchange exchange
(euro million) rates rates rates
----------------- ------ --------- ------ --------- -------- ---------
Polio/Pertussis/Hib
Vaccines 115 -2.4% 388 59.3% 221 +4.8%
----------------- ------ --------- ------ --------- -------- ---------
Influenza Vaccines* 85 17.6% 267 -35.9% 146 +24.0%
----------------- ------ --------- ------ --------- -------- ---------
Meningitis/Pneumonia
Vaccines 12 33.3% 383 3.6% 69 +61.9%
----------------- ------ --------- ------ --------- -------- ---------
Adult Booster
Vaccines 51 30.8% 235 -16.1% 25 +19.0%
----------------- ------ --------- ------ --------- -------- ---------
Travel and Other
Endemics Vaccines 20 -16.0% 56 -16.7% 161 +6.0%
----------------- ------ --------- ------ --------- -------- ---------
Other Vaccines 35 169.2% 102 13.9% 14 +36.4%
----------------- ------ --------- ------ --------- -------- ---------
* Seasonal and pandemic influenza vaccines
Appendix 3: Consolidated net sales by business segment
Millions of 2009 Q3 2008 Q3 2009 Q2 2008 Q2 2009 Q1 2008 Q1
euros net sales net sales net sales net sales net sales net sales
-------------- --------- --------- --------- --------- --------- ---------
Pharmaceuticals 6,354 5,906 6,726 6032 6,480 6,389
-------------- --------- --------- --------- --------- --------- ---------
Vaccines 1,046 947 712 657 627 548
-------------- --------- --------- --------- --------- --------- ---------
Total 7,400 6,853 7,438 6,689 7,107 6,937
-------------- --------- --------- --------- --------- --------- ---------
Appendix 4: 2009 third-quarter and 9-month net sales by animal health
product
Millions of 2009 Q3 2008 Q3 Change at 2009 Q3 2008 Q3 Change at
dollars net sales net sales constant net sales net sales constant
exchange exchange
rates rates
----------- --------- --------- --------- --------- --------- ---------
Frontline®
and other
fipronil 248 253 +0.4% 834 901 -1.9%
----------- --------- --------- --------- --------- --------- ---------
Vaccines 192 198 +1.6% 552 581 +4.5%
----------- --------- --------- --------- --------- --------- ---------
Avermectin 113 129 -9.0% 363 415 -6.6%
----------- --------- --------- --------- --------- --------- ---------
Other 73 72 +5,4% 212 221 +3,5%
----------- --------- --------- --------- --------- --------- ---------
Total 626 652 -0.5% 1 961 2 118 -0.5%
----------- --------- --------- --------- --------- --------- ---------
Appendix 5: Adjusted income statements excluding selected items
2009 third-quarter income statement
2009 as % of 2008 as % of % change
Millions of euros Q3 net sales Q3 net sales
----------------- ----- --------- ------ --------- --------
Net sales 7,400 100.0% 6,853 100.0% +8.0%
----------------- ----- --------- ------ --------- --------
Other revenues 372 5.0% 312 4.6% +19.2%
----------------- ----- --------- ------ --------- --------
Cost of sales (2,028) (27.4%) (1,793) (26.2%) +13.1%
----------------- ----- --------- ------ --------- --------
Gross profit 5,744 77.6% 5,372 78.4% +6.9%
----------------- ----- --------- ------ --------- --------
Research and
development
expenses (1,109) (15.0%) (1,089) (15.9%) +1.8%
----------------- ----- --------- ------ --------- --------
Selling and general
expenses (1,707) (23.1%) (1,651) (24.1%) +3.4%
----------------- ----- --------- ------ --------- --------
Other current
operating
income/expenses 86 49
----------------- ----- --------- ------ --------- --------
Amortization of
intangibles (59) (41)
----------------- ----- --------- ------ --------- --------
Operating income -
current(*) 2,955 39.9% 2,640 38.5% +11.9%
----------------- ----- --------- ------ --------- --------
Restructuring costs
----------------- ----- --------- ------ --------- --------
Impairment of PP&E
and intangibles
----------------- ----- --------- ------ --------- --------
Gain/loss on
disposals,
litigation
----------------- ----- --------- ------ --------- --------
Operating income 2,955 39.9% 2,640 38.5% +11.9%
----------------- ----- --------- ------ --------- --------
Financial expenses (74) (89)
----------------- ----- --------- ------ --------- --------
Financial income 5 29
----------------- ----- --------- ------ --------- --------
Income before tax
and associates 2,886 39.0% 2,580 37.6% +11.9%
----------------- ----- --------- ------ --------- --------
Income tax expense (837) (765)
----------------- ----- --------- ------ --------- --------
Effective tax rate 29.0% 29.6%
----------------- ----- --------- ------ --------- --------
Share of
profit/loss of
associates 235 189
----------------- ----- --------- ------ --------- --------
Net income
from the Merial
business(**) 59 30
----------------- ----- --------- ------ --------- --------
Minority interests (114) (111)
----------------- ----- --------- ------ --------- --------
Net income (after
minority
interests) 2,229 30.1% 1,923 28.1% +15.9%
----------------- ----- --------- ------ --------- --------
Average number of
shares outstanding
(millions) 1,305.7 1,304.8
----------------- ----- --------- ------ --------- --------
Earnings per share
(in euro) 1.71 1.47 +16.3%
----------------- ----- --------- ------ --------- --------
*Operating income before restructuring, impairment of property, plant and
equipment and intangibles, gains/losses on disposals, and litigation.
**Held with a view to being exchanged under an option deal agreed with
Merck/Schering-Plough that will enable the Animal Health business to be
combined in a joint venture (accounting classification in accordance
with IFRS 5)
2009 9-month income statement
2009 as % of 2008 as % of % change
Millions of euros 9 months net sales 9 months net sales
-------------------- -------- --------- -------- --------- --------
Net sales 21,945 100.0% 20,479 100.0% +7.2%
-------------------- -------- --------- -------- --------- --------
Other revenues 1,075 4.9% 882 4.3% +21.9%
-------------------- -------- --------- -------- --------- --------
Cost of sales (5,628) (25.6%) (5,408) (26.4%) +4.1%
-------------------- -------- --------- -------- --------- --------
Gross profit 17,392 79.3% 15,953 77.9% +9.0%
-------------------- -------- --------- -------- --------- --------
Research and
development
expenses (3,369) (15.4%) (3,269) (16.0%) +3.1%
-------------------- -------- --------- -------- --------- --------
Selling and general
expenses (5,334) (24.3%) (5,223) (25.5%) +2.1%
-------------------- -------- --------- -------- --------- --------
Other current
operating
income/expenses 366 227
-------------------- -------- --------- -------- --------- --------
Amortization of
intangibles (156) (124)
-------------------- -------- --------- -------- --------- --------
Operating income
- current(*) 8,899 40.6% 7,564 36.9% +17.6%
-------------------- -------- --------- -------- --------- --------
Restructuring costs
-------------------- -------- --------- -------- --------- --------
Impairment of PP&E
and intangibles
-------------------- -------- --------- -------- --------- --------
Gain/loss on
disposals,
litigation
-------------------- -------- --------- -------- --------- --------
Operating income 8,899 40.6% 7,564 36.9% +17.6%
-------------------- -------- --------- -------- --------- --------
Financial expenses (225) (249)
-------------------- -------- --------- -------- --------- --------
Financial income 42 101
-------------------- -------- --------- -------- --------- --------
Income before tax and
associates 8,716 39.7% 7,416 36.2% +17.5%
-------------------- -------- --------- -------- --------- --------
Income tax expense (2,528) (2,196)
-------------------- -------- --------- -------- --------- --------
Effective tax rate 29.0% 29.6%
-------------------- -------- --------- -------- --------- --------
Share of profit/loss
of associates 644 527
-------------------- -------- --------- -------- --------- --------
Net income from
the Merial
business(**) 189 143
-------------------- -------- --------- -------- --------- --------
Minority interests (346) (331)
-------------------- -------- --------- -------- --------- --------
Net income (after
minority interests) 6,675 30.4% 5,559 27.1% +20.1%
-------------------- -------- --------- -------- --------- --------
Average number of
shares outstanding
(millions) 1,305.6 1,310.7
-------------------- -------- --------- -------- --------- --------
Earnings per share
(in euro) 5.11 4.24 +20.5%
-------------------- -------- --------- -------- --------- --------
*Operating income before restructuring, impairment of property, plant and
equipment and intangibles, gains/losses on disposals, and litigation.
**Held with a view to being exchanged under an option deal agreed with
Merck/Schering-Plough that will enable the Animal Health business to be
combined in a joint venture (accounting classification in accordance
with IFRS 5)
Appendix 6: Reconciliation of adjusted income statement excluding selected
items to adjusted income statement and consolidated income statement
2009 third-quarter income statement
Adjusted Selected Adjusted Adjustments Consolidated
excluding items
selected
Millions of euros items
----------------- --------- -------- -------- ----------- ------------
Net sales 7,400 7,400 7,400
----------------- --------- -------- -------- ----------- ------------
Other revenues 372 372 372
----------------- --------- -------- -------- ----------- ------------
Cost of sales (2,028) (2,028) (2,028)
----------------- --------- -------- -------- ----------- ------------
Gross profit 5,744 5,744 5,744
----------------- --------- -------- -------- ----------- ------------
Research and
development
expenses (1,109) (1,109) (1,109)
----------------- --------- -------- -------- ----------- ------------
Selling and
general expenses (1,707) (1,707) (1,707)
----------------- --------- -------- -------- ----------- ------------
Other current
operating
income/expenses 86 86 86
----------------- --------- -------- -------- ----------- ------------
Amortization of
intangibles (59) (59) (814) (873)
----------------- --------- -------- -------- ----------- ------------
Operating income -
current* 2,955 2,955 (814) 2,141
----------------- --------- -------- -------- ----------- ------------
Restructuring
costs (42) (42) (42)
----------------- --------- -------- -------- ----------- ------------
Impairment of
PP&E and
intangibles (344) (344)
----------------- --------- -------- -------- ----------- ------------
Gain/loss on
disposals,
litigation
----------------- --------- -------- -------- ----------- ------------
Operating income 2,955 (42) 2,913 (1,158) 1,755
----------------- --------- -------- -------- ----------- ------------
Financial
expenses (74) (74) (74)
----------------- --------- -------- -------- ----------- ------------
Financial income 5 5 5
----------------- --------- -------- -------- ----------- ------------
Income before tax
and associates 2,886 (42) 2,844 (1,158) 1,686
----------------- --------- -------- -------- ----------- ------------
Income tax
expense (837) 14 (823) 391 (432)
----------------- --------- -------- -------- ----------- ------------
Share of profit/
loss of
associates 235 235 (6) 229
----------------- --------- -------- -------- ----------- ------------
Net income from
the Merial
business 59 59 (9) 50
----------------- --------- -------- -------- ----------- ------------
Minority
interests (114) (114) (114)
----------------- --------- -------- -------- ----------- ------------
2009 net income
(after minority
interests) 2,229 (28) 2,201 (782) 1,419
----------------- --------- -------- -------- ----------- ------------
2008 net income
(after minority
interests) 1,923 (35) 1,888 (554) 1,334
----------------- --------- -------- -------- ----------- ------------
Change 2009 vs.
2008 (in %) 15.9% 16.6% 6.4%
----------------- --------- -------- -------- ----------- ------------
2009 earnings per
share (in euro)** 1.71 (0.02) 1.69 (0.60) 1.09
----------------- --------- -------- -------- ----------- ------------
2008 earnings
per share
(in euro) 1.47 (0.02) 1.45 (0.43) 1.02
----------------- --------- -------- -------- ----------- ------------
Change 2009 vs.
2008 (in %) 16.3% 16.6% 6.9%
----------------- --------- -------- -------- ----------- ------------
*Operating income before restructuring, impairment of property,
plant and equipment and intangibles, gains/losses on disposals,
and litigation
** Based on an average number of shares outstanding of 1,305.7
million in the third quarter of 2009 and 1,304.8 million in the
third quarter of 2008
Refer to page 10 for a description of 2009 third-quarter selected items.
The material effects of the application of purchase accounting to acquisitions, primarily that of Aventis, on the consolidated income statement were as follows:
Third quarter of 2009
- An amortization charge against intangible assets of euro 814 million.
- Impairment losses of euro 344 million, mainly charged against Benzaclin®, Nasacort® and Actonel®, in light of changes in the competitive environment and the dates of approval for generics.
- Deferred taxes of euro 391 million generated by the euro 814 million amortization charge and the euro 344 million of impairment losses.
- In "Share of profits/losses of associates" and "Net income from the Merial business", reversals of euro 6 million and euro 9 million respectively, relating primarily to the amortization of intangible assets (net of tax).
These adjustments have no cash impact for the Group.
2009 9-month income statement
Adjusted Selected Adjusted Adjustments Consolidated
excluding items
selected
Millions of euros items
----------------- --------- -------- -------- ----------- ------------
Net sales 21,945 21,945 21,945
----------------- --------- -------- -------- ----------- ------------
Other revenues 1,075 1,075 1,075
----------------- --------- -------- -------- ----------- ------------
Cost of sales (5,628) (5,628) (19) (5,647)
----------------- --------- -------- -------- ----------- ------------
Gross profit 17,392 17,392 (19) 17,373
----------------- --------- -------- -------- ----------- ------------
Research and
development
expenses (3,369) (3,369) (3,369)
----------------- --------- -------- -------- ----------- ------------
Selling and
general
expenses (5,334) (5,334) (5,334)
----------------- --------- -------- -------- ----------- ------------
Other current
operating
income/expenses 366 366 366
----------------- --------- -------- -------- ----------- ------------
Amortization of
intangibles (156) (156) (2,522) (2,678)
----------------- --------- -------- -------- ----------- ------------
Operating income -
current* 8,899 8,899 (2,541) 6,358
----------------- --------- -------- -------- ----------- ------------
Restructuring
costs (949) (949) (949)
----------------- --------- -------- -------- ----------- ------------
Impairment of PP&E
and intangibles (20) (20) (352) (372)
----------------- --------- -------- -------- ----------- ------------
Gain/loss on
disposals,
litigation
----------------- --------- -------- -------- ----------- ------------
Operating income 8,899 (969) 7,930 (2,893) 5,037
----------------- --------- -------- -------- ----------- ------------
Financial
expenses (225) (225) (225)
----------------- --------- -------- -------- ----------- ------------
Financial income 42 42 42
----------------- --------- -------- -------- ----------- ------------
Income before tax
and associates 8,716 (969) 7,747 (2,893) 4,854
----------------- --------- -------- -------- ----------- ------------
Income tax
expense (2,528) 333 (2,195) 968 (1,227)
----------------- --------- -------- -------- ----------- ------------
Share of profit/
loss of
associates 644 644 (21) 623
----------------- --------- -------- -------- ----------- ------------
Net income from
the Merial
business 189 189 (37) 152
----------------- --------- -------- -------- ----------- ------------
Minority interests (346) (346) (346)
----------------- --------- -------- -------- ----------- ------------
2009 net income
(after minority
interests) 6,675 (636) 6,039 (1,983) 4,056
----------------- --------- -------- -------- ----------- ------------
2008 net income
(after minority
interests) 5,559 (203) 5,356 (1,687) 3,669
----------------- --------- -------- -------- ----------- ------------
Change 2009 vs.
2008 (in %) 20.1% 12.8% 10.5%
----------------- --------- -------- -------- ----------- ------------
2009 earnings per
share (in euro )** 5.11 (0.48) 4.63 (1.52) 3.11
----------------- --------- -------- -------- ----------- ------------
2008 earnings
per share
(in euro ) 4.24 (0.15) 4.09 (1.29) 2.80
----------------- --------- -------- -------- ----------- ------------
Change 2009 vs.
2008 (in %) 20.5% 13.2% 11.1%
----------------- --------- -------- -------- ----------- ------------
*Operating income before restructuring, impairment of property, plant and
equipment and intangibles, gains/losses on disposals, and litigation
** Based on average number of shares outstanding of 1,305.6 million for
the first nine months of 2009 and 1,310.7 million for the first nine
months of 2008
Refer to page 10 for a description of selected items for the first nine months of 2009.
The material effects of the application of purchase accounting to acquisitions, primarily that of Aventis, on the consolidated income statement were as follows:
First nine months of 2009
- A charge of euro 19 million arising from the workdown of inventories of Zentiva and other companies acquired during the period remeasured at fair value.
- An amortization charge of euro 2,522 million against intangible assets.
- Impairment losses of euro 352 million, of which euro 344 million was charged in the third quarter primarily against Benzaclin®, Nasacort® and Actonel® in light of changes in the competitive environment and the dates of approval for generics. The remaining euro 8 million was charged against the Di-Antalvic asset in the second quarter.
- Deferred taxes of euro 968 million generated by the euro 2,522 million amortization charge, the euro 19 million charge on the workdown of inventories of companies acquired during the period, and the euro 352 million of impairment losses.
- In "Share of profits/losses of associates" and "Net income from the Merial business", reversals of euro 21 million and euro 37 million respectively, relating primarily to the amortization of intangible assets (net of tax).
These adjustments have no cash impact for the Group.
2008 third-quarter income statement
Adjusted Selected Adjusted Adjustments Consolidated
excluding items
selected
Millions of euros items
----------------- --------- -------- -------- ----------- ------------
Net sales 6,853 6,853 6,853
----------------- --------- -------- -------- ----------- ------------
Other revenues 312 312 312
----------------- --------- -------- -------- ----------- ------------
Cost of sales (1,793) (1,793) (1,793)
----------------- --------- -------- -------- ----------- ------------
Gross profit 5,372 5,372 5,372
----------------- --------- -------- -------- ----------- ------------
Research and
development
expenses (1,089) (1,089) (1,089)
----------------- --------- -------- -------- ----------- ------------
Selling and
general
expenses (1,651) (1,651) (1,651)
----------------- --------- -------- -------- ----------- ------------
Other current
operating
income/expenses 49 49 49
----------------- --------- -------- -------- ----------- ------------
Amortization of
intangibles (41) (41) (807) (848)
----------------- --------- -------- -------- ----------- ------------
Operating income -
current* 2,640 2,640 (807) 1,833
----------------- --------- -------- -------- ----------- ------------
Restructuring
costs (51) (51) (51)
----------------- --------- -------- -------- ----------- ------------
Impairment of
PP&E and
intangibles
----------------- --------- -------- -------- ----------- ------------
Gain/loss on
disposals,
litigation
----------------- --------- -------- -------- ----------- ------------
Operating income 2,640 (51) 2,589 (807) 1,782
----------------- --------- -------- -------- ----------- ------------
Financial
expenses (89) (89) (89)
----------------- --------- -------- -------- ----------- ------------
Financial income 29 29 29
----------------- --------- -------- -------- ----------- ------------
Income before tax
and associates 2,580 (51) 2,529 (807) 1,722
----------------- --------- -------- -------- ----------- ------------
Income tax expense (765) 16 (749) 273 (476)
----------------- --------- -------- -------- ----------- ------------
Share of profit/
loss of
associates 189 189 (9) 180
----------------- --------- -------- -------- ----------- ------------
Net income from
the Merial
business 30 30 (11) 19
----------------- --------- -------- -------- ----------- ------------
Minority
interests (111) (111) (111)
----------------- --------- -------- -------- ----------- ------------
2008 net income
(after minority
interests) 1,923 (35) 1,888 (554) 1,334
----------------- --------- -------- -------- ----------- ------------
2008 earnings per
share (in euro )** 1.47 (0.02) 1.45 (0.43) 1.02
----------------- --------- -------- -------- ----------- ------------
*Operating income before restructuring, impairment of property, plant and
equipment and intangibles, gains/losses on disposals, and litigation
** Based on an average number of shares outstanding of 1,304.8 million in
the third quarter of 2008
2008 9-month income statement
Adjusted Selected Adjusted Adjustments Consolidated
excluding items
selected
Millions of euros items
----------------- --------- -------- -------- ----------- ------------
Net sales 20,479 20,479 20,479
----------------- --------- -------- -------- ----------- ------------
Other revenues 882 882 882
----------------- --------- -------- -------- ----------- ------------
Cost of sales (5,408) (5,408) (5,408)
----------------- --------- -------- -------- ----------- ------------
Gross profit 15,953 15,953 15,953
----------------- --------- -------- -------- ----------- ------------
Research and
development
expenses (3,269) (3,269) (3,269)
----------------- --------- -------- -------- ----------- ------------
Selling and
general
expenses (5,223) (5,223) (5,223)
----------------- --------- -------- -------- ----------- ------------
Other current
operating
income/expenses 227 227 227
----------------- --------- -------- -------- ----------- ------------
Amortization of
intangibles (124) (124) (2,433) (2,557)
----------------- --------- -------- -------- ----------- ------------
Operating income
- current* 7,564 7,564 (2,433) 5,131
----------------- --------- -------- -------- ----------- ------------
Restructuring
costs (258) (258) (258)
----------------- --------- -------- -------- ----------- ------------
Impairment of
PP&E and
intangibles (69) (69) (57) (126)
----------------- --------- -------- -------- ----------- ------------
Gain/loss on
disposals,
litigation
----------------- --------- -------- -------- ----------- ------------
Operating income 7,564 (327) 7,237 (2,490) 4,747
----------------- --------- -------- -------- ----------- ------------
Financial expenses (249) (249) (249)
----------------- --------- -------- -------- ----------- ------------
Financial income 101 38 139 139
----------------- --------- -------- -------- ----------- ------------
Income before tax
and associates 7,416 (289) 7,127 (2,490) 4,637
----------------- --------- -------- -------- ----------- ------------
Income tax expense (2,196) 86 (2,110) 863 (1,247)
----------------- --------- -------- -------- ----------- ------------
Share of profit/loss
of associates 527 527 (24) 503
----------------- --------- -------- -------- ----------- ------------
Net income from
the Merial
business 143 143 (36) 107
----------------- --------- -------- -------- ----------- ------------
Minority interests (331) (331) (331)
----------------- --------- -------- -------- ----------- ------------
2008 net income
(after minority
interests) 5,559 (203) 5,356 (1,687) 3,669
----------------- --------- -------- -------- ----------- ------------
2008 earnings per
share (in euro )** 4.24 (0.15) 4.09 (1.29) 2.80
----------------- --------- -------- -------- ----------- ------------
*Operating income before restructuring, impairment of property, plant and
equipment and intangibles, gains/losses on disposals, and litigation
** Based on an average number of shares outstanding of 1,310.7 million for
the first nine months of 2008
Appendix 7: Definitions of non-GAAP financial indicators
Net sales at constant exchange rates
When we refer to changes in our net sales "at constant exchange rates", this means that we exclude the effect of changes in exchange rates.
We eliminate the effect of exchange rates by recalculating net sales for the relevant period at the exchange rates used for the previous period.
Reconciliation of reported net sales to net sales at constant exchange rates for the third quarter of 2009 and the first nine months of 2009:
Millions of euros 2009: Q3 2009: 9 months
------------------------------------ -------- --------------
Net sales 7,400 21,945
------------------------------------ -------- --------------
Effect of exchange rates (136) (634)
------------------------------------ -------- --------------
Net sales at constant exchange rates 7,264 21,311
------------------------------------ -------- --------------
Net sales on a constant structure basis
We eliminate the effect of changes in structure by restating prior-period net sales as follows:
- by including sales from the acquired entity or product rights for a portion of the prior period equal to the portion of the current period during which we owned them, based on sales information we receive from the party from whom we make the acquisition;
- similarly, by excluding sales in the relevant portion of the prior period when we have sold an entity or rights to a product;
- for a change in consolidation method, by recalculating the prior period on the basis of the method used for the current period.
Worldwide presence of Plavix®/Iscover®, Avapro®/Aprovel®
When we refer to the "worldwide presence" of a product, we mean our consolidated net sales of that product, minus sales of the product to our alliance partners plus non-consolidated sales made through our alliances with Bristol-Myers Squibb on Plavix®/Iscover® (clopidogrel bisulfate) and Aprovel®/Avapro®/Karvea® (irbesartan), based on information provided to us by our alliance partner.
Operating income - current
We define "operating income - current" as operating income before restructuring, impairment of property, plant and equipment and intangibles, gains/losses on disposals, and litigation.
Adjusted net income (see appendix 5 for a detailed reconciliation)
We define "adjusted net income" as accounting net income after minority interests adjusted to exclude the material after-tax impacts of (i) the application of purchase accounting to acquisitions and (ii) acquisition-related integration and restructuring costs. We believe that eliminating these impacts from net income gives investors a better understanding of the underlying economic performance of the combined Group.
The material impacts of the application of purchase accounting to acquisitions, primarily the acquisition of Aventis, are as follows:
- charges arising from the remeasurement of inventories at fair value, net of tax;
- amortization/impairment expense generated by the remeasurement of intangible assets, net of tax;
- any impairment of goodwill.
Adjusted net income excluding selected items
We define "selected items" as accounting items reflecting significant events occurring during the period that would alter a user's understanding of our operational performance if they were not disclosed separately. Consequently, selected items are limited in number, unusual in nature, and involve significant amounts.
Selected items are primarily recorded in the following line items:
-- Restructuring costs
- Restructuring costs include early retirement benefits, compensation
for early termination of contracts, and rationalization costs
relating to restructured sites. Asset impairment losses directly
attributable to restructuring are also recorded on this line.
Restructuring costs included on this line relate only to unusual
and major restructuring plans.
-- Impairment of property, plant and equipment and intangibles
- This line includes major impairment losses (other than those
directly attributable to restructuring) on property, plant and
equipment and intangibles, including goodwill. It also includes any
reversals of such losses.
-- Gains and losses on disposals, and litigation
- This line comprises gains and losses on major disposals of
property, plant and equipment and intangible assets, and costs and
provisions related to major litigation.
-- Income tax expense, as regards the effect of material tax disputes and
any tax effects of other income or expenses that are treated as
selected items.
SOURCE: sanofi-aventis
Web site: http://www.sanofi-aventis.us/
http:// www.sanofi-aventis.com/
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