Letter to shareholders

Transcription

1 SANOFI JUNE 2012 Letter to shareholders N 30 Dear Shareholders, I am pleased that so many of you were able to attend our Annual General Meeting on May 4. The meeting was an opportunity to present to you our results for 2011 and the results of the strategy we adopted in was an important year for Sanofi, marked by the acquisition of Genzyme but also by the loss of patent exclusivity for major molecules. Our diversification and acquisition strategy has started to bear fruit is a transitional year because of the loss of patent exclusivity for Plavix in the United States. However, thanks to the commitment of our people, the prospect of stronger growth platforms and our increased capacity for innovation, we are confident that Sanofi can return to robust, sustainable growth from Our share price has risen significantly since we unveiled our new strategy in September Sanofi was the second-best performer in the CAC 40 in 2011, and we have been one of the best-performing pharmaceutical stocks since Regarding our dividend policy, a 6% increase to 2.65 was approved by the Annual General Meeting. Despite the expected fall in profits, we can already say that there will be no cut in dividend for This is a sign of our confidence in Sanofi s growth prospects. We are committed to continuing Sanofi growth, to improving patient health, to developing our employees and maintaining the confidence of our shareholders. Thank you for your loyalty. Serge Weinberg Chairman of the Board of Directors Dear Shareholders, In 2011, our research efforts led to the submission of five new drug applications to the regulatory authorities. We also completed a number of key acquisitions, including Genzyme. The Group has diversified further, we have developed our growth platforms and generated further cost savings. Our strategy is one that has gained credibility, underlining the strength of the Group. In the first quarter of 2012, Sanofi posted net sales of 8,511 million, up 9.4% on a reported basis (7.0% at constant exchange rates), reflecting the performance of our growth platforms and the acquisition of Genzyme, despite the impact of austerity measures in the European Union and the loss of 235 million net sales due to competition from generics. Although 2012 brings the loss of exclusivity for Plavix in the United States in May and the need to continue adapting to the challenges and opportunities of tomorrow, the first quarter of 2012 has revealed promising net sales and medium-term growth prospects. During this first quarter, our business earnings per share rose by 7.2% at constant exchange rates. This performance was underpinned by our seven growth platforms Emerging Markets, Diabetes, Vaccines, Consumer Health Care, New Genzyme, Animal Health and New Products and cost savings. Our growth platforms, which continually progress, represented 63.2% of total consolidated net sales in the first quarter of 2012, versus 59.2% in the first quarter of Emerging Markets recorded double-digit growth in the BRIC countries of 16.5% at constant exchange rates (11% with Genzyme pro forma), and we believe this dynamism will continue. Genzyme is also making further progress in rare diseases. The first shipments of Fabrazyme from the new facility at Framingham, Massachusetts, USA, reflect the improvement in production at Genzyme. At the end of April 2012, our R&D portfolio contained 61 new candidate molecules and vaccines, 18 of which were in phase III or had been submitted to the healthcare authorities for marketing approval. We have also submitted applications to the regulatory authorities for three new products in 2012, and presented impressive clinical results for our anti-pcsk9 monoclonal antibody and Lemtrada at recent medical conferences. Thank you for your support. Christopher A. Viehbacher Chief Executive Officer Sanofi - Shareholder Relations 54, rue La Boétie Paris - France Toll free number: Tel. Europe: individualshareholders@sanofi.com - Website:

2 NEWS 2 PROMISING RESULTS IN THE FIGHT AGAINST MULTIPLE SCLEROSIS Detailed results from the Lemtrada (alemtuzumab) CARE MS II study from Genzyme were reported at the American Academy of Neurology annual meeting in New Orleans, Louisiana, USA, in April The additional new data from the pivotal CARE-MS II trial compared Lemtrada to Rebif, a standard multiple sclerosis therapy, in patients who experienced disease progression despite prior treatment. The results of the trial showed that patients treated with Lemtrada during the study experienced a slowing or reversal of the progression of their disability. The patients with pre-existing disability treated with alemtuzumab were more than twice as likely to experience a sustained reduction in disability as patients given Rebif. In June 2012, the company has filed for U.S. and European regulatory approval. Bayer HealthCare has been co-developing alemtuzumab in MS with Genzyme. Lemtrada is the trade name file, upon regulatory approval. PHASE 2 DATA FOR POTENTIAL FIRST-IN-CLASS LIPID-LOWERING PCSK9 ANTIBODY On March 26, 2012, during the American College of Cardiology s Annual Scientific Meeting in Chicago, Sanofi and Regeneron Pharmaceuticals Inc., announced Phase 2 trials results with an investigational, high-affinity, subcutaneously administered, fully-human antibody targeting PCSK9 (1). The data were published in The Lancet on May 26, Many patients are not able to lower their LDL-C sufficiently by diet and medication despite the availability of statins. The Phase 2 trial results suggest that SAR236553/REGN727 may enable patients for whom statins are insufficient to further reduce LDL-C. These results are very encouraging. A global Phase 3 program will be initiated in June and will be the first late-stage study with an investigational drug targeting PCSK9. (1) PCSK9: proprotein convertase subtilisin/kexin type 9. SANOFI EXPENDS ITS PRESENCE IN BIOSURGERY Sanofi announced on March 16, 2012, the acquisition of Pluromed Inc., a medical device company based in Woburn, Massachusetts, USA. Sanofi will commercialize Pluromed s LeGoo, a highly innovative FDA approved and CE marked gel for temporary endovascular occlusion of blood vessels during surgical procedures. This breakthrough gives surgeons a way to temporarily stop blood flow into the surgical field which is imperative for clear visualization and accurate placement of sutures. This acquisition reflects Sanofi s commitment to bring innovative solutions designed to ease surgical procedures and improve patient outcomes, and to strengthen its biosurgery portfolio acquired in 2011 via Genzyme. APPROVAL OF IMOVAX POLIO IN JAPAN The Japanese Ministry of Health, Labor and Welfare (MHLW) approved the company s standalone Inactivated Poliovirus Vaccine (IPV) against acute flaccid poliomyelitis. IMOVAX POLIO will be added to the country s public immunization program on September 1, Since its launch in France in 1982, IMOVAX POLIO has been approved in 86 countries. The poliovirus, responsible virus for poliomyelitis, enters the body through the mouth and multiplies in the intestine, causing severe paralysis in some cases. One in 200 infections leads to irreversible paralysis (usually the legs). 5% to 10% die when their breathing muscles become immobilized. Japan, similar to many countries in the world, supports a national routine immunization program. COLLABORATION WITH MICHAEL J. FOX FOUNDATION Sanofi and the Michael J. Fox Foundation have entered into a collaboration to conduct a clinical trial to assess the safety and tolerability of AVE 8112, a PDE4 (1) inhibitor, in patients with Parkinson s disease. We hope to continue to develop relationships to pool our resources and maximize the potential of our drug portfolio to address unmet medical needs said Elias Zerhouni, President, Global R&D. The clinical trial will be conducted at clinical sites in the United States in Baltimore, MD, and Los Angeles, CA. Patient enrollment in the study is expected to begin during (1) PDE4: phosphodiesterase type 4 inhibitor CORPORATE SOCIAL RESPONSIBILITY Helping to eradicate sleeping sickness Chris Viehbacher ended his first official visit to Africa in late March 2012 with a trip to Chad. He met with the authorities and local healthcare workers, and also went to a remote village to observe how sleeping sickness is diagnosed and treated. Since 2001, over 170,000 patients have been treated under the auspices of the World Health Organization (WHO) program supported by Sanofi. By 2009, active detection and management had reduced the number of patients treated annually below the symbolic 10,000 mark for the first time in 25 years, and the numbers are still falling. Sanofi produces and supplies to the WHO three of the five drugs used to combat sleeping sickness, which is fatal if left untreated. The current challenge is to develop fexinidazole, a promising new treatment currently in the clinical research phase, and to help eradicate other neglected diseases. Ongoing commitment to fighting malaria Sanofi s long-standing commitment to fighting malaria was strengthened in 2001 when we set up our Impact Malaria program. As well as supplying the Winthrop /Coarsucam ASAQ treatment (a fixed dose combination of artesunate and amodiaquine), over 150 million doses of which have been dispensed in endemic countries since 2008, Impact Malaria is also developing special education and awareness programs for healthcare workers.

3 FINANCIAL NEWS 3 FIRST-QUARTER 2012 RESULTS Total sales (1) reached 8,511 million, an increase of 7.0% versus Q Sales of growth platforms which now include new Genzyme were growing of 14.8% at constant exchange rates with 5,381 million and accounted for 63.2% of total sales. Business EPS (2) of 1.85 was up 7.2% at constant exchange rates. Q Change on a Change at reported basis constant exchange rates Net sales 8,511m +9.4% +7.0% Business net income (2) 2,442m +12.5% +8.4% Business EPS (2) % +7.2% Although as expected, Plavix will lose exclusivity in May in the U.S., the strong underlying performance of the business is consistent with our medium term growth outlook. Christopher A. Viehbacher STRONG PERFORMANCE IN FIRST QUARTER 2012 INCLUDING GENZYME CONTRIBUTION Net sales for the first quarter of 2012 rose by 9.4% on a reported basis to 8,511 million. At constant exchange rates, net sales rose by 7.0%, reflecting on the upside the inclusion of Genzyme ( 841 million) and the performance of our growth platforms, and on the downside the impact of austerity measures within the European Union and sales erosion due to competition from generics. Exchange rate fluctuations had a positive impact of 2.4 percentage points, as the U.S. dollar, Japanese yen and Chinese yuan all appreciated against the euro. Sales of the Group s growth platforms (including new Genzyme ) were 5,381 million, an increase of 14.8%, or 5.7% with Genzyme pro forma. Business net income (2) increased 12.5% (or 8.4% at constant exchange rates) to 2,442 million. In Q1 2012, Business earnings per share (2) (EPS) was 1.85, up 7.2% at constant exchange rates, or up 11.4% on a reported basis. The average number of shares outstanding increased to 1,321.2 million this quarter versus 1,305.2 million in Q (1) Growth in net sales is expressed at constant exchange rates (CER) unless otherwise indicated. (2) Business net income is a key non-gaap indicator and is defined as net income attributable to equity holders of Sanofi excluding: amortization of intangible assets, impairment of intangible assets, fair value remeasurement of contingent consideration liabilities related to business combinations, other impacts associated with acquisitions (including impacts of acquisitions on associates), restructuring costs*, other gains and losses (including gains and losses on disposals of non-current assets*), costs or provisions associated with litigation*, tax effects related to the items listed above as well as effects of major tax disputes. * Reported in the line items Restructuring costs and Gains and losses on disposals, and litigation, which are defined in Note B.20. to our consolidated financial statements. Business EPS: Business earnings per share are defined as business net income divided by the weighted average number of shares outstanding. CONTINUOUS PROGRESSION OF GROWTH PLATFORMS The Group s growth platforms accounted for 63.2% of total consolidated sales in the first quarter of 2012, up from 59.2% in the first quarter of From January 2012, growth platforms include New Genzyme which consists of Rare Diseases products and future Multiple Sclerosis products (Aubagio and Lemtrada (1) ). Sales in Emerging Markets (2) were 2,624 million, an increase of 9.9%. BRIC (Brazil, Russia, India, China) sales were 917 million, up 16.5%, or up 11.0% with Genzyme pro forma. China recorded sales of 286 million, up 24.1%, led by the performance of Plavix and Lantus. The Diabetes business registered strong growth increasing 14.4% in Q1 driven by solid performance of Lantus (up 17.2% to 1,118 million). In Emerging Markets, sales of Lantus increased 32.4%. Consolidated sales of Vaccines totaled 617 million (down 0.2%), impacted by timing of supply in Emerging Markets particularly for seasonal flu vaccines in the Southern Hemisphere. Consumer Health Care achieved record sales of 805 million, up 11.4% led by dynamic organic growth and acquisitions (BMP Sunstone in China and Universal Medicare in India). Sales of Animal Health (Merial) were 578 million in the first quarter, down 5.4%, impacted by a tough comparable first quarter Sales of Merial in Emerging Markets grew 6.0% to 124 million. New Genzyme increased sales by 13.7% to 400 million. In March, Genzyme began shipping Fabrazyme produced at its newly approved plant in Framingham, Massachusetts, USA. Sales of new products grew to 139 million. (1) Aubagio and Lemtrada are registered trade names submitted to health authorities for investigational agents. (2) World less the U.S. and Canada, Western Europe, Japan, Australia and New Zealand.

4 EVENT COMBINED GENERAL SHAREHOLDER MEETING Shareholder approval of the corporate and consolidated financial statements for Dividend of 2.65 per share payable as of May 15, Nomination and partial renewal of the Board of Directors. Ratification of the change of Sanofi corporate headquarters in PRESENTATIONS This year, over 1,400 people attended our Annual General Meeting, which provided an invaluable opportunity for an exchange of views between Sanofi management and our shareholders. Key members of the management team addressed the meeting held on May 4, 2012, at the Palais des Congrès in Paris. The Chairman of the Board of Directors, Serge Weinberg, told attendees: Thanks to the efforts of employees on the scientific, commercial, industrial and legal fronts, Sanofi has retained significant market share even where generics have been introduced. Our growth and diversification strategy is proving its worth as the growth platforms develop. We are now drawing on our strengths to continue driving the Group forward. Gérard Van Kemmel, a Board member and chairman of the Compensation Committee, gave an update on the Group s compensation policy. Christopher A. Viehbacher, Chief Executive Officer, gave an overview of 2011 and the outlook for the future. He said he remains optimistic: To negotiate the patent cliff, we set three strategic priorities: increase innovation in research and development, use our cash flow to generate external growth, and move towards greater diversification by developing growth platforms and implementing cost savings. Finally, Jérôme Contamine, Chief Financial Officer, commented on our financial performance for 2011, which confirmed that the Group is in good health. Between December 31, 2011 and March 31, 2012, our net debt fell from 10.8 billion to 8.6 billion. Sanofi is a leading player in the pharmaceutical industry: we are the joint world leader in Vaccines, and world number 2 in Diabetes and number 3 in Animal Health. Within our sector, we have the strongest presence in Emerging Markets, where we generate 30.3% of our sales. VOTES OF RESOLUTIONS During the meeting, shareholders approved, among other resolutions, the corporate and consolidated financial statements for the year At the General Meeting, shareholders decided the distribution of a dividend in the amount of 2.65 per share that will be detached on Euronext Paris on May 10, 2012 with payment as of May 15, The General Meeting also approved the appointment of Mr. Laurent Attal as a director for a term of four years, i.e., until the General Meeting is called to approve the financial statements for the year Finally, Mr. Uwe Bicker, Mr. Jean-René Fourtou, Ms. Claudie Haigneré, Ms. Carole Piwnica and Mr. Klaus Pohle have all been reappointed for a term of four years. After the Shareholder Meeting, the Board of Directors is comprised as follows: Serge Weinberg, Chairman of the Board of Directors Christopher Viehbacher, Chief Executive Officer Laurent Attal Uwe Bicker Robert Castaigne Thierry Desmarest 20% of the Board of Directors is composed of women. Sanofi Shareholding structure as of April 30, Lord Douro Jean-René Fourtou Claudie Haigneré Igor Landau Suet-Fern Lee Christian Mulliez Carole Piwnica Klaus Pohle Gérard Van Kemmel During the meeting, the shareholders approved the appointment of statutory and deputy auditors. The shareholders additionally ratified the move of the registered headquarters of Sanofi to 54, rue La Boétie, Paris. During the Board of Directors session following the meeting, Mr. Klaus Pohle was renewed as Chairman of the Audit Committee. The quorum consisted of 64% of share capital for the ordinary meeting and 63.9% for the extraordinary meeting Voting rights as of April 30, 2012 Information on 2012 Combined general shareholder meeting is on our website: Public l Oréal Total Employees Treasury

5 GROWTH PLATFORMS 5 SANOFI, ONE OF THE WORLD S LEADING CONSUMER HEALTH CARE PLAYERS Consumer Health Care is one of our growth platforms. Since 2008, we have embarked on a major expansion strategy, driven by targeted acquisitions. In 2011, our Consumer Health Care sales exceeded 2.6 billion, representing CER (1) growth of 22.8%, while in the first quarter of 2012 sales grew at CER (1) by 11.4% to 805 million. Emerging Markets accounted for 45.6% of our Consumer Health Care sales (up 21.9%), with particularly good performances in Latin America, Asia, the Middle East and Africa. Consumer Health Care is now one of our best-performing businesses, delivering constant growth year after year, to the extent that Sanofi now ranks in the Top five OTC (2) companies in the world and is number two in Europe. A DIVERSE RANGE OF BRANDS Our brands are now grouped into three main categories: global brands (Allegra, Maalox, Magné B6, Oenobiol ), regional and local brands. The Consumer Health Care business focuses particularly on digestive remedies, pain relief, coughs and colds, and allergies, as well as beauty and wellness products. We are investing in a range of well-known consumer brands such as Oenobiol, Magné B6, Allegra and Maalox in Europe, and Mitosyl, Essentiale Forte and Doliprane in various other countries. These brands are available in pharmacies and parapharmaceutical outlets. The three biggest markets in 2011 were the United States, France and Russia. In the first quarter of 2012, several products Hao Wawa, Dorflex, Lactacyd, Maalox, No Spa and Enterogermina enjoyed robust double-digit growth. BECOMING A DIVERSIFIED GLOBAL HEALTHCARE PARTNER Building on previous major acquisitions, such as Oenobiol in France and Chattem in the United States, we further reinforced our Consumer Health Care business in 2011 by acquiring BMP Sunstone in China and Universal Medicare in India. The BMP Sunstone deal will enable us to become a leading player in the Chinese consumer health market by giving us a strong position in the market s two biggest segments vitamins and mineral supplements and in cough and cold remedies. Universal Medicare is one of India s largest suppliers of neutraceuticals and products such as vitamins, antioxidants, mineral supplements and antiarthritics. These two tactical acquisitions have strengthened our presence in Consumer Health Care in Emerging countries. (1) CER: at constant exchange rates. (2) OTC: over-the-counter, or products which are traded over the counter, said of medicines that can be legally bought without a physician's prescription. CONSUMER HEALTH CARE - KEY FIGURES Sanofi markets 150 Consumer Health Care brands. Net sales: 2.6bn in 2011, 22.8% CER growth (1). Number 1 in France Number 2 in Europe Number 5 in worldwide OTC (2) market KEY PRODUCTS Dorflex is number 1 in the Brazilian analgesics market, with market share of 16.7%. MagnéVieB6 is number 1 in the French magnesium supplements market, having achieved 16.8% market share in two years. No Spa was the number 1 antispasmodic in Russia in 2011, with market share of 47.9%. Hao Wawa is the number 1 pediatric cough and cold remedy in China: over 50 million packs were sold in 2011, and the product has market share of 20.7%. Sources: OTC IMS MAT Dec. 2011, Euromonitor 2012 report FOCUS ON ALLEGRA Over 40 million adults currently suffer from allergies in the United States. Allegra is available for adults and children aged over 2 years is without a prescription in the U.S.. Sanofi entered this market in 2011 with the launch of Allegra OTC a resounding success, which has continued with a promising start to This anti-histamine has become the second biggest brand in its category, and Sanofi s leading OTC brand worldwide. In the first quarter of 2012, sales of Allegra OTC advanced by 4.8% to 95 million, following the product s transfer to the off-prescription market in the U.S. in 2011.

6 SHARE PERFORMANCE SHARE PRICE TREND SINCE DECEMBER 31 ST, 2010 PARIS % % CALENDAR July 26, 2012 Second-quarter 2012 results September 24, 2012 Shareholder meeting in Marseille October 4, 2012 Shareholder meeting in Pau October 25, 2012 Third-quarter 2012 results November 23-24, 2012 Shareholding fair Actionnaria Palais des Congrès in Paris, France November 29, 2012 Shareholder meeting in Bordeaux SANOFI Since May 16, 2011, Sanofi shares are listed ex-dividend. CAC 40 rebased on the Sanofi share price - Source : Bloomberg Between December 31, 2010 and May 31, 2012, Sanofi shares were up 19.4%. During this period, the CAC 40 was down 19%. FOCUS CAC 40 (rebased on Sanofi) 30 12/31/10 1/31/11 2/28/11 3/31/11 4/30/11 5/31/11 6/30/11 7/31/11 8/31/11 9/30/11 10/31/11 11/30/11 12/31/11 1/31/12 2/29/12 3/31/12 4/30/12 WHY NOT DOWNLOAD OUR PUBLICATIONS? Sanofi share ISIN code: FR Listed on Euronext Paris, compartiment A Member code: SAN Listed on the New York Stock Exchange (NYSE) in the form of American Depository shares (1 ADS = 0.5 share) Ticker symbol: SNY CUSIP number: 80105N All our publications can be downloaded from our website, We encourage our shareholders to read and view our publications electronically, and because we update our website every day you can be sure of getting the very latest news and publications. However, if you prefer to receive our publications in hard copy, you can order them from our website. Just go to and select your documents. RECEIVE THE LETTER TO SHAREHOLDERS BY If you would like to receive your Letter to shareholders by as soon as it is published, just a request to us at relations-actionnaires@sanofi.com, giving your full contact details so that we can update our database. Alternatively, you can call us on: in U.S. or in Europe. Contact us to update your address, or if you want to unsubscribe. Forward-Looking statement This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forwardlooking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, 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 s 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, 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 EMA, 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 labelling and other matters that could affect the availability or commercial potential of such product candidates, the absence of guarantee that the product 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, trends in exchange rates and prevailing interest rates, the impact of cost containment policies and subsequent changes thereto, the average number of shares outstanding as well as those discussed or identified in the public filings with the SEC and the AMF made by Sanofi, including those listed under Risk Factors and Cautionary Statement Regarding Forward-Looking Statements in Sanofi s annual report on Form 20-F for the year ended December 31, Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any forward-looking information or statements. Design and production: Huitième Jour Photographs: Page 1: Marthe Lemelle, Marthe Lemelle Page 2: Kenishirotie / Fotolia, Julien Chraïbi Page 4: Bahi Abdelmalek / Jade Image Page 5: OJO Images / Gettyimages, Sanofi Page 6: Sanofi The Letter to Shareholders is published by Investor Relations / Shareholder Relations. Sanofi 54 rue La Boétie Paris France Status: June 1, 2012