28.10.2014 07:30:00 CET

Sanofi delivers Business EPS(1) growth of 10.3% at CER in Q3 2014

Paris, October 28, 2014

Sanofi delivers Business EPS(1) growth of 10.3% at CER in Q3 2014

    Solid sales and business EPS(1) growth at CER in the third quarter

  • Group sales(2) up 5.1% to €8,781 million
  • Growth platforms(3) increased 10.0% to €6,862 million, representing 78.1% of total sales
  • Business net income(1) grew 9.4% at CER to €1,935 million (+7.8% on a reported basis)
  • Business EPS(1) increased 10.3% at CER to €1.47
    Steady sales increase in growth platforms

  • Diabetes grew 8.3% to €1,799 million despite increased price competition in the U.S.
  • Vaccines sales grew 11.2% driven by strong performance of flu vaccine and progressive supply recovery
  • Genzyme continued to deliver with sales growth of 24.6%
  • Animal Health grew 12.7% due to strong sales in the U.S. market
    Significant advances in bringing new medicines to market

  • Cerdelga(TM), the only oral therapy for adult Gaucher disease type 1 patients, approved in the U.S.
  • Detailed results from four pivotal Phase III alirocumab trials presented at the ESC congress
  • Final landmark Phase III efficacy study in Latin America for Dengue vaccine successfully completed
  • Dupilumab, an investigational therapy for moderate-to-severe atopic dermatitis, entered Phase III
  • Investigational rotavirus vaccine for Emerging Markets entered Phase III
  • Global licensing agreement announced for Afrezza, a new rapid-acting inhaled insulin
    Financial guidance for 2014 confirmed

  • 2014 business EPS(1) is expected to be between 6% to 8% higher than 2013 at CER, barring major unforeseen adverse events
     

Sanofi Chief Executive Officer, Christopher A. Viehbacher commented:
"We are pleased with our performance in the third quarter. We achieved solid Business EPS growth driven by continued strong contribution from our growth platforms, allowing us to confirm 2014 outlook. Growth platforms reached over 78% of sales and grew 10%. We have recently seen a more challenging U.S. diabetes price environment which will impact our diabetes sales throughout 2015, while growth platforms globally are expected to continue to show solid growth. At the same time, our pipeline delivered strong results, with the release of exciting Phase III data for alirocumab and our Dengue vaccine, the entry of dupilumab in Phase III as well as the FDA approval of Cerdelga(TM) and the licensing of Afrezza."

(1)        See Appendix 8 for definitions of financial indicators; (2) Growth in net sales is expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 8 for a definition); (3) See page 2

 

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2014 third-quarter and 9-month figures

  Q3 2014 Change (reported) Change
(CER)
9M 2014 Change (reported) Change
(CER)
Net sales €8,781m +4.1% +5.1% €24,698m +0.8% +5.0%
Business net income(1) €1,935 m +7.8% +9.4% €5,019m +3.0% +9.3%
Business EPS(1) €1.47 +8.1% +10.3% €3.81 +3.5% +10.1%

In order to facilitate an understanding of operational performance, Sanofi comments on the business net income statement. Business net income(1) is a non-GAAP financial measure. The consolidated income statement for 9M 2014 is provided in Appendix 4 and a reconciliation of business net income to consolidated net income in Appendix 3. Consolidated net income for 9M 2014 was €3,051 million compared to €2,656 million for 9M 2013. Consolidated EPS for 9M 2014 was €2.32 versus €2.01 for 9M 2013. Consolidated EPS for Q3 2014 was €0.91 versus €0.92 for Q3 2013.

2014 third-quarter and 9-month sales

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

In the third quarter of 2014, Sanofi generated sales of €8,781 million, an increase of 4.1% on a reported basis. Exchange rate movements had a negative effect of 1.0 percentage point primarily reflecting the strength of the euro versus other currencies, in particular the Argentine Peso, Japanese Yen and Russian Ruble.

Year-to-date sales increased 0.8% to €24,698 million on a reported basis. Exchange rate movements had an unfavorable effect of 4.2 percentage points.

Growth Platforms

In the third quarter, sales of the Group's growth platforms increased 10.0% to €6,862 million, driven by the performance of Genzyme (up 24.6%), Vaccines (up 11.2%), Animal Health (up 12.7%) and Other Innovative Products (up 18.0%). The Group's growth platforms accounted for 78.1% of total consolidated sales in the third quarter, up from 74.7% in the third quarter of 2013. Year-to-date sales of growth platforms reached €18,801 million, an increase of 10.8%, and accounted for 76.1% of total consolidated sales compared with 72.5% in the first nine month of 2013.

€ million Q3 2014
net sales
Change
(CER)
9M 2014
net sales
Change
(CER)
Diabetes 1,799 +8.3% 5,249 +12.5%
Vaccines 1,451 +11.2% 2,797 +4.1%
Consumer Healthcare (CHC) 819 +12.9% 2,520 +17,3%
Genzyme 649 +24.6% 1,858 +25.1%
Animal Health  515 +12.7% 1,569 +5.3%
Other Innovative Products(a) 227 +18.0% 606 +17.9%
Emerging Markets(b) 2,776 +7.6% 8,221 +9.9%(c)
of which Diabetes, Vaccines,
CHC, Animal Health, Genzyme
and Other Innovative Products
1,374 +14.0% 4,019 +14.8%
of which other products 1,402 +2.0% 4,202 +5.5%
Total Growth Platforms 6,862 +10.0% 18,801 +10.8%

(a)        Includes product launches since 2009 which do not belong to the other Growth Platforms listed above: Multaqฎ, Jevtanaฎ, Zaltrapฎ, Auvi-Q(TM) and Mozobilฎ.
(b)        World excluding the U.S. and Canada, Western Europe, Japan, Australia and New Zealand.
(c)        Excluding generics in Brazil, sales in Emerging Markets grew 6.1% in 9M 2014.

(1)        See Appendix 8 for definitions of financial indicators.

Pharmaceuticals

Third-quarter sales for the Pharmaceuticals business grew 3.4% to €6,815 million, driven by Emerging Markets. Year-to-date sales for Pharmaceuticals increased 5.1% to €20,332 million.

Diabetes

 € million Q3 2014
 net sales
Change
(CER)
9M 2014
 net sales
Change
(CER)
Lantus 1,567 +8.1% 4,572 +12.5%
Amaryl 87 -2.2% 269 +0.7%
Apidra 88 +21.9% 240 +20.3%
Insuman 34 0.0% 99 +3.0%
BGM (Blood Glucose Monitoring) 14 +25.0% 46 +34.3%
Lyxumia 8 - 19 -
Total Diabetes 1,799 +8.3% 5,249 +12.5%

Third-quarter sales of the Diabetes division reached €1,799 million, an increase of 8.3%. Year-to-date sales of the Diabetes division increased 12.5% to €5,249 million. Lantus sales increased 8.1% to €1,567 million in the third quarter. In the U.S., third-quarter sales of Lantus reached €1,042 million, an increase of 5.8%, reflecting increasing competitive pressure at the payor level. Lantus SoloSTAR represented 62.2% of total Lantus sales, versus 57.4% for the same period in 2013. In Emerging Markets, Lantus sales grew 19.7% to €232 million in the third quarter, reflecting good performance in China, Turkey, Middle East, Mexico and Africa. In Western Europe, sales of Lantus recorded a strong performance with sales up 9.5% to €222 million driven by Germany, France and Italy. Year-to-date sales of Lantus reached €4,572 million, up 12.5%.

Sanofi has recently concluded payor negotiations in the U.S. and has secured favorable formulary positions for Lantus with key payors. The level of rebates required to maintain these positions has increased significantly due to aggressive discounting by competitors. The rebates will not change the Group's Business EPS guidance for 2014. The increased rebates in the U.S. and the impact of the Affordable Care Act will continue in 2015. Sanofi expects to mitigate this impact on the Diabetes division in 2015 through the launches of Toujeo and Afrezza as well as continued strong growth in Emerging Markets. Therefore, global sales of the Diabetes division are expected to be broadly stable in 2015.

Third-quarter sales of Amaryl were €87 million, down 2.2%. In Emerging Markets, Amaryl sales increased 6.2% to €68 million. Year-to-date sales of Amaryl were €269 million (up 0.7%).

Apidra sales increased 21.9% to €88 million. The product recorded strong growth in all territories. In the U.S., sales were up 20.7% to €35 million. In Emerging Markets, sales were up 25.0% to €19 million and in Western Europe, sales grew 19.0% to €26 million. Year-to-date sales of Apidra grew 20.3% to €240 million.

Third-quarter and year-to-date sales of Lyxumia were €8 million and €19 million, respectively.

In August, Sanofi and MannKind entered into a worldwide exclusive licensing agreement for development and commercialization of Afrezza, a new rapid-acting inhaled insulin therapy for adults with type 1 and type 2 diabetes. The companies plan to launch Afrezza in the United States in the first quarter of 2015. Under the collaboration and license agreement, Sanofi will be responsible for global commercial, regulatory and development activities.

Consumer Healthcare

€ million Q3 2014
net sales
Change
(CER)
9M 2014
net sales
Change
(CER)
Allegra 78 +31.7% 276 +30.4%
Doliprane 74 +4.2% 232 +5.4%
Essentiale 53 +46.2% 174 +32.0%
Enterogermina 48 +53.1% 122 +28.0%
No Spa 31 +6.3% 84 +9.3%
Lactacyd 24 -3.7% 81 +15.4%
Nasacort 23 - 91 -
Maalox 23 +9.5% 73 +11.6%
Dorflex 18 -25.0% 68 +10.0%
Other CHC Products 447 +4.1% 1,319 +8.6%
Total Consumer Healthcare 819 +12.9% 2,520 +17.3%

Sales of Consumer Healthcare products (CHC) were €819 million in the third quarter, an increase of 12.9%. Several products (amounting to €64 million in sales) previously recorded in prescription pharmaceuticals in the third quarter of 2013 were transferred to Consumer Healthcare products. Excluding this category change, sales of CHC grew 4.0% driven by the success of the Nasacort Rx-to-OTC switch in the U.S. and good performance in Emerging Markets (+7.8%). Sales of NasacortAllergy 24HR nasal spray, which has been available over-the-counter (OTC) in the U.S. since February, were €18 million in the third quarter in the U.S.

Year-to-date sales of CHC were €2,520 million, an increase of 17.3%. Excluding the category change mentioned above (€205 million in the first nine month of 2013), CHC sales grew 7.6%.

Genzyme

€ million Q3 2014
net sales
Change
(CER)
9M 2014
net sales
Change
(CER)
Cerezyme 175 +9.1% 518 +8.3%
Myozyme/ Lumizyme 138 +9.4% 392 +9.2%
Fabrazyme 116 +21.9% 337 +26.2%
Aldurazyme 41 +7.9% 127 +13.8%
Total Rare Diseases 530 +10.9% 1,553 +11.8%
Aubagio 112 +156.8% 287 +205.2%
Lemtrada(TM) 7 - 18 -
Total Multiple Sclerosis 119 +175.0% 305 +224.7%
Total Genzyme 649 +24.6% 1,858 +25.1%

Sales of Genzyme increased 24.6% to €649 million in the third quarter driven by the growth of Aubagioand Fabrazyme. Sales grew 28.2% to €259 million in the U.S., 25.0% to €207 million in Western Europe and 19.8% to €124 million in Emerging Markets. Year-to-date sales of Genzyme reached €1,858 million, an  increase of 25.1%.

Third quarter-sales of Cerezyme grew 9.1% to €175 million, reflecting double digit-growth in Western Europe (up 15.4% to €60 million). Sales of Cerezyme grew 7.0% to €56 million and 4.3% to €48 million in Emerging Markets and the U.S., respectively. Year-to-date sales of Cerezymegrew 8.3% to €518 million. In August, the FDA approved Cerdelga(TM), the only first-line oral therapy for Gaucher disease type 1 patients (GD1). The vast majority of adult GD1 patients should be eligible for Cerdelga(TM), which is now available in the U.S.

Fabrazyme continued its strong performance with sales of €116 million, up 21.9% in the third quarter driven by Western Europe (up 40.0% to €28 million) and Emerging Markets (up 33.3% to €15 million). In the U.S., sales of Fabrazyme reached €58 million, an increase of 14.0%. Year-to-date sales of Fabrazymegrew 26.2% to €337 million.

Third-quarter sales of Myozyme/Lumizyme increased 9.4% to €138 million, driven by Emerging Markets (up 42.1% to €25 million). In the U.S. and Western Europe, sales were €35 million (up 9.4%) and €69 million (up 1.5%), respectively. Year-to-date sales of Myozyme/Lumizyme grew 9.2% to €392 million.

Third-quarter sales of Aubagio reached €112 million versus €44 million in the third quarter of 2013. In the U.S., sales of Aubagio were €87 million versus €44 million in the third quarter of 2013. In Western Europe, where the launch of the product started in the fourth quarter of 2013, sales reached €18 million in the third quarter. The product is mainly commercially available in the U.S., Germany, Switzerland, Nordic countries, Canada, Argentina and Australia. Year-to-date sales of Aubagio totaled €287 million, up 205.2%.

In October, the Food and Drug Administration (FDA) approved the inclusion of efficacy and safety data from the TOWER and TOPIC studies of Aubagio in the product's U.S. label. Aubagio is the only oral treatment to significantly slow progression of disability in two Phase III studies of patients with relapsing multiple sclerosis (TEMSO and TOWER), and to have positive data on early multiple sclerosis in its label.

Third quarter and year-to-date sales of Lemtrada(TM) were €7 million and €18 million, respectively. In May, the U.S. Food and Drug Administration (FDA) accepted for review the resubmission of the supplemental Biologics License Application (sBLA) seeking approval of Lemtrada(TM) for the treatment of relapsing forms of multiple sclerosis. A six-month review period has been assigned for the Lemtrada(TM) sBLA.

Other Innovative Products(4)

€ million Q3 2014
net sales
Change
(CER)
9M 2014
net sales
Change
(CER)
Multaq 76 +13.4% 215 +11.1%
Jevtana 67 +15.3% 199 +23.6%
Auvi-Q(TM) 37 +26.7% 63 +32.7%
Mozobil 29 +20.0% 80 +7.9%
Zaltrap 18 +30.8% 49 +28.9%
Total Other Innovative Products 227 +18.0% 606 +17.9%

Other Innovative Products increased 18.0% to €227 million in the third quarter and 17.9% to €606 million in the first nine months.

Sales of Multaq were €76 million, up 13.4% in the third quarter. Year-to-date sales of the product increased 11.1% to €215 million.

Third-quarter sales of Jevtana increased 15.3% to €67 million driven by launches in Western Europe and Emerging Markets. Year-to-date sales of Jevtana grew 23.6% to €199 million.

Third-quarter sales of Auvi-Q(TM) were €37 million (up 26.7%). Year-to-date sales of the product were €63 million (up 32.7%).

In the third quarter, sales of Zaltrap reached €18 million, an increase of 30.8% driven by recent launches in Western Europe which offset lower sales in the U.S. Year-to-date sales of the product were €49 million (up 28.9%).

Other Pharmaceutical Products

€ million Q3 2014
net sales
Change
(CER)
9M 2014
net sales
Change
(CER)
Plavix 450 +9.0% 1,362 +5.8%
Lovenox 426 +7.2% 1,263 +2.9%
Aprovel/Avapro 178 -14.8% 550 -17.9%
Renvela/Renagel 162 -13.4% 471 -9.0%
Synvisc/Synvisc-One 88 -2.2% 251 -4.8%
Myslee/Ambien/Stilnox 78 -16.0% 229 -15.3%
Taxotere 59 -28.6% 195 -31.7%
Eloxatin 43 -12.0% 136 -14.2%
Allegra 32 -52.1% 151 -47.6%

(4) Includes new product launches which do not belong to the other Growth Platforms

Sales of Plavix grew 9.0% to €450 million in the third quarter, driven by strong performance in Emerging Markets (up 21.3% to €203 million) and Japan (up 8.7% to €190 million). The performance of the product in Emerging Markets was driven by China where sales grew 47.1% to €125 million. Year-to-date sales of Plavix increased 5.8% to €1,362 million.

Third-quarter sales of Lovenox were up 7.2% to €426 million sustained by the strong performance in Emerging Markets where sales increased 16.9% to €147 million driven by China and Latin America. In Western Europe, sales of the product grew 5.8% to €221 million. Year-to-date sales of Lovenox totaled €1,263 million, an increase of 2.9%.

Aprovel/Avapro generated sales of €178 million in the third quarter, down 14.8%, reflecting generic competition in Western Europe where sales decreased 47.4% to €41 million. In Emerging Markets, sales of Aprovel/Avaproincreased 9.3% to €105 million driven by China. Year-to-date sales of Aprovel/Avapro were €550 million, down 17.9%.

Third-quarter sales of Renvela/Renagel were €162 million in the third quarter, down 13.4%. In the U.S., sales of the product decreased 22.0% to €103 million reflecting the impact of the agreement with Impax which was granted a license to sell a limited allotment of bottles of an authorized generic version of Renvela tablets in the U.S. starting from April 2014. The specific allotment corresponds to up to 10% of the total 2013 sevelamer sales in the U.S. In Emerging Markets, sales of Renvela/Renagel increased 22.2% to €22 million. In Western Europe sales were stable at €32 million. Year-to-date sales of Renvela/Renagel were €471 million, a decrease of 9.0%.

In the third quarter, sales of Allegra as a prescription drug were €32 million, down 52.1% (excluding the change of category, sales decreased 19.0%) and sales of the Ambienfamily of products were €78 million, down 16.0%, reflecting generic competition in Japan for both products. Year-to-date sales of Allegra and the Ambien family of products were €151 million and €229 million, respectively.

Third-quarter and year-to-date sales of Taxoteredecreased 28.6% (€59 million) and 31.7% (€195 million), respectively, mainly due to generic erosion. Third-quarter and year-to-date sales of Eloxatin decreased 12.0% (€43 million) and 14.2% (€136 million), respectively.

Generics

Third-quarter sales of Generics increased 8.3% to €451 million reflecting the recovery in Brazil where sales were €76 million. Third-quarter sales of Generics decreased 3.9% in Western Europe (to €125 million) and 24.3% in the U.S. (to €28 million). In Emerging Markets, sales of Generics grew 19.8% to €287 million driven by the recovery in Brazil. Year-to-date sales of Generics increased 23.2% to €1,338 million.

Vaccines

 € million Q3 2014
net sales
Change
(CER)
9M 2014
net sales
Change
(CER)
Polio/Pertussis/Hib Vaccines
(incl. Pentacel, Pentaximand Imovax)
259 +7.4% 754 -2.4%
Influenza Vaccines
(incl. Vaxigrip and Fluzone)
650 +15.0% 844 +16.0%
Meningitis/Pneumonia Vaccines
(incl. Menactra)
191 -10.0% 362 -10.4%
Adult Booster Vaccines (incl. Adacel ) 131 +54.8% 295 +3.1%
Travel and Other Endemic Vaccines 99 -3.0% 277 +5.9%
Other Vaccines 121 +21.8%  265 +14.2%
Total Vaccines
(consolidated sales)
1,451 +11.2% 2,797 +4.1%

Third-quarter consolidated sales of Sanofi Pasteur increased 11.2% to €1,451 million driven by strong performance of influenza vaccines in the U.S. and in Emerging Markets as well as continued gradual recovery of Pentacel and Adacel in the U.S. Year-to-date consolidated sales of Sanofi Pasteur increased 4.1% to €2,797 million.

Third-quarter sales of Influenza vaccines grew 15.0% to €650 million due to strong influenza vaccines sales in the U.S. and in Emerging Markets. In the U.S., Sanofi Pasteur's strategy to offer differentiating vaccines leads to a strong uptake of Fluzone High-Dose for elderly people and Fluzone Quadrivalent vaccine, a four-strain influenza vaccine. Year-to-date sales of influenza vaccines increased 16.0% to €844 million.

Sales of Polio/Pertussis/Hib vaccines increased 7.4% to €259 million in the third quarter. In the U.S., Polio/Pertussis/Hib vaccines sales were €97 million, an increase of 94.0% sustained by the continued gradual recovery of Pentacel. In Emerging Markets sales of Polio/Pertussis/Hib vaccines decreased 20.6% to €120 million reflecting lower sales of Pentaxim and Polio vaccines in Asia. Year-to-date sales of Polio/Pertussis/Hib vaccines were €754 million, down 2.4%.

Third-quarter sales of Menactra were €174 million, down 10.3%. In the U.S., lower sales of Menactra reflected phasing of public orders while strong market share was maintained. Year-to-date sales of Menactra were €327 million down 6.9%.

Sales of Travel and Other Endemic vaccines were down 3.0% to €99 million and up 5.9% to €277 million in the third quarter and the first nine months of 2014, respectively.

Third-quarter sales of Adult Booster vaccines increased 54.8% to €131 million, reflecting supply improvement and positive phasing of Adacel sales. Year-to-date sales of Adult booster vaccines were €295 million, an increase of 3.1%.

Sanofi Pasteur MSD (not consolidated), the joint venture with Merck & Co. in Europe, reported stable sales at €295 million. Increased sales of Zostavaxwere offset by lower sales of Gardasil. Year-to-date sales of Sanofi Pasteur MSD were €608 million, down 3.4% on a reported basis.

Animal Health

€ million Q3 2014
net sales
Change
(CER)
9M 2014
net sales
Change
(CER)
Companion Animal 317 +13.3% 1,006 +5.9%
Production Animal 198 +11.7% 563 +4.2%
Total Animal Health 515 +12.7% 1,569 +5.3%
  of which fipronil products 143 -5.3% 483 -3.3%
  of which NexGardTM 27 - 85 -
  of which avermectin products 101 +11.1% 313 -3.3%
  of which Vaccines 176 +11.3% 510 +1.7%

Third-quarter sales of Animal Health increased 12.7% to €515 million driven by the launch of NexGard(TM) and the strong performance of the production animal segment. In the U.S., Animal Health sales grew 23.2% to €220 million. Year-to-date sales of Animal Health increased 5.3% to €1,569 million.

Third-quarter sales of the Companion Animals segment increased 13.3% to €317 million, reflecting the NexGard(TM) launch as well as performance of pet vaccines and Heartgard. Merial launched, its next generation flea and tick product for dogs, NexGard(TM), in the U.S. in the first quarter and in several European countries during the first nine months of the year. Third-quarter sales of NexGard(TM) reached €27 million of which €23 million was generated in the U.S. Sales of the Companion Animals segment increased 19.5% in the U.S. to €185 million. Year-to-date sales of the Companion Animals segment increased 5.9% to €1,006 million.

Third-quarter sales of the Production Animals segment increased 11.7% to €198 million driven by double-digit growth of products for ruminants and swine. Furthermore, favorable phasing for tenders of Veterinary Public Health products had a positive impact in the quarter. Sales of the Production Animals segment increased 4.2% to €563 million year-to-date.

Net sales by geographic region

€ million Q3 2014
 net sales
Change
(CER)
9M 2014
 net sales
Change
(CER)
Emerging Markets(a) 2,776 +7.6% 8,221 +9.9%
  of which Latin America 811 +8.0% 2,429 +23.7%
  of which Asia 814 +9.6% 2,333 +6.8%
  of which Eastern Europe, Russia and Turkey 629 +4.8% 1,868 +4.7%
  of which Africa 257 +13.9% 743 +2.5%
  of which Middle East 236 +3.5% 756 +1.7%
United States 3,208 +7.2% 8,192 +8.0%
Western Europe(b) 2,003 +3.1% 5,909 +0.0%
Rest of the world(c) 794 -5.4% 2,376 -6.8%
  of which Japan 507 -7.2% 1,569 -7.4%
TOTAL 8,781 +5.1% 24,698 +5.0%

(a)        World less the U.S., Canada, Western Europe, Japan, Australia and New Zealand;
(b)        France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg, Portugal, Netherlands, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark;
(c)        Japan, Canada, Australia and New Zealand

In the third quarter, sales in Emerging Markets grew 7.6% to €2,776 million. Pharmaceuticals sales increased 9.2% driven by Diabetes (up 17.5%), Genzyme (up 19.8%), and Generics (up 19.8%). Sales in China grew 10.5% to €386 million reflecting strong performance of Pharmaceuticals (up 20.1%) partially offset by Vaccines notably due to lower sales of Pentaxim. In China, the Pharmaceuticals sales growth was driven by Plavix, Lantus and Aprovel. Sales in Eastern Europe, Russia and Turkey were up 4.8%, supported by good performance in Turkey and Hungary. Sales in Russia reached €195 million, an increase of 4.3%. In the Middle-East, sales grew 3.5% to €236 million. In Brazil, sales increased 17.5% to €318 million sustained by the performance of generics. Year-to-date sales in Emerging Markets increased 9.9% to €8,221 million. Excluding Brazil generics, sales in Emerging Markets grew 6.1%.

In the U.S., sales were up 7.2% to €3,208 million in the third quarter, due largely to strong performance of Genzyme (up 28.2%), Vaccines (up 15.8%) and Animal Health (up 23.2%). Year-to-date sales in the U.S. increased 8.0% to €8,192 million.

Western Europe returned to growth in the third-quarter with sales increasing 3.1% to €2,003 million. Strong performance of Genzyme (up 25.0%) was offset by the impact of generic competition to Aprovel. Year-to-date sales in Western Europe were stable at €5,909 million.

Third-quarter sales in Japan were €507 million, a decrease of 7.2%, reflecting the impact of generic competition to Allegra, Myslee, Amaryl and Taxotere partially offset by the performance of Plavix and Vaccines. Year-to-date sales in Japan were €1,569 million (down 7.4%).

R&D update

Consult Appendix 6 for full overview of Sanofi's R&D pipeline

Regulatory update

Regulatory updates since the publication of the second-quarter 2014 results on July 31, 2014 include the following:

At the end of October 2014, the R&D pipeline contained 46 projects (excluding Life Cycle Management) and vaccine candidates in clinical development of which 14 are in Phase III or have been submitted to the regulatory authorities for approval.

Portfolio update

Phase III:

*95 percent CIs overall efficacy [52.0 percent, 68.0 percent]; Efficacy per serotype (ST1 50.3%, ST2 42.3%, ST3 74.0%, ST4 77.7%); 95 percent CIs reduction of the risk of hospitalization [64.7 percent, 89.5 percent]

Phase II:

Phase I:

New Collaborations:

Third-quarter and first 9-months 2014 financial results

Business Net Income(1)

In the third quarter, Sanofi generated net sales of €8,781 million, an increase of 4.1% on a reported basis (up 5.1% at constant exchange rates). Year-to-date sales were €24,698 million, an increase of 0.8% on a reported basis (up 5.0% at constant exchange rates).

Other revenues were €87 million (up 1.2%) and €241 million (down 9.7%) in the third quarter and the first nine months, respectively, reflecting the end of royalties on Enbrel sales in the U.S during Q1 2013.

Gross profit was €6,004 million in the third quarter, an increase of 6.3% (up 7.3% at constant exchange rates). The ratio of cost of sales to net sales (CoS ratio) improved by 1.4 percentage points to 32.6%, versus the third quarter of 2013. This reflected the resolution of Toronto manufacturing issues, improved industrial performance of Genzyme combined with higher sales in multiple sclerosis and positive mix effect in the U.S. and China. Year-to-date gross profit was €16,951 million, up 1.6% (or up 6.1% at constant exchange rates). In the first nine months, the ratio of cost of sales to net sales improved by 0.6 percentage points to 32.4% versus the same period of 2013.

Research and Development expenses were down 3.0% at €1,146 million in the third quarter. At constant exchange rates, R&D expenses decreased by 2.6% reflecting lower spend in oncology and completion of the ToujeoEDITION program more than offsetting higher spend on dupilumab. Year-to-date R&D expenses were down 1.4% to €3,473 million (or up 0.6% at constant exchange rates), the ratio of R&D to net sales was 0.3 percentage points lower at 14.1% compared with the same period of 2013.

Third-quarter selling and general expenses increased 9.0% to €2,193 million. At constant exchange rates, SG&A increased 10.0% reflecting a rebound of commercial activity in China, higher Advertising & Promotional expenses in the U.S. on NexGard(TM) and Frontline as well as Genzyme's launch investments in multiple sclerosis and Rare Diseases. The ratio of selling and general expenses to net sales was 1.1 percentage points higher to 25.0% compared with the third quarter of 2013. Year-to-date SG&A expenses increased 1.1% to €6,526 million (an increase of 4.9% at constant exchange rates). In the first nine months, the ratio of selling and general expenses to net sales was stable at 26.4%.

Other current operating income net of expenses was €39 million in the third quarter versus €28 million in the third quarter of 2013. This quarter included a €40 million gain associated with the termination of a licence of a U.S. product.

The share of profits from associates was €43 million in the third quarter (versus €38 million in the third quarter of 2013) and included our share in Regeneron profit recorded under the equity method since the beginning of April as well as our share of profit in Sanofi Pasteur MSD (the Vaccines joint venture with Merck & Co. in Europe).

Non-controlling interests were -€31 million in the third quarter versus -€36 million in the third quarter of 2013.

In the third-quarter, business operating income increased 9.3% to €2,716 million. At constant exchange rates, business operating income grew 11.0%. The ratio of business operating income to net sales improved by 1.4 percentage points to 30.9%. Year-to-date business operating income grew 2.6% to €7,006 million (up 8.6% at constant exchange rates). The ratio of business operating income to net sales was 28.4%, compared to 27.9% in the same period of 2013.

Net financial expenses were €139 million in the third quarter compared to €123 million in the third quarter of 2013). Year-to-date net financial expenses were €309 million versus €400 million in the same period of 2013.

The third quarter and year-to-date effective tax rate was 25% (versus 24% in the third quarter of 2013).

Third-quarter business net income(1) increased 7.8% to €1,935 million. At constant exchange rates, the growth was 9.4%. The ratio of business net income to net sales improved by 0.7 percentage points to 22.0% in the third quarter of 2014 compared to the third quarter of 2013. Year-to-date business net income grew 3.0% to €5,019 million (an increase of 9.3% at constant exchange rates). The ratio of business net income to net sales improved by 0.4 percentage points to 20.3% compared to the first nine months of 2013.

(1)   See Appendix 8 for definitions of financial indicators, and Appendix 3 for reconciliation of business net income to consolidated net income attributable to equity holders of Sanofi

In the third quarter of 2014, business earnings per share(1) (EPS) was €1.47, up 8.1% on a reported basis and up 10.3% at constant exchange rates. The average number of shares outstanding was 1,313.0 million this quarter versus 1,323.5 million in the third quarter of 2013. In the first nine months of 2014, business earnings per share(1) was €3.81, up 3.5% on a reported basis and up 10.1% at constant exchange rates. The average number of shares outstanding was 1,315.8 million in the first nine months of 2014 versus 1,323.8 million in the first nine months of 2013.

From business net income to consolidated net income (see Appendix 3)

In the first nine months of 2014, the main reconciling items between business net income and consolidated net income attributable to equity holders of Sanofi were:

Capital Allocation

In the first nine months of 2014, net cash generated by operating activities increased 15.8% to €4,239 million after capital expenditures of €802 million and an increase in working capital by €577 million. This net Cash Flow has contributed to finance a share repurchase (€1,102 million) partially offset by proceeds from the issuance of new shares (€635 million), dividend paid by Sanofi (€3,676 million), acquisitions and partnerships net of disposals (€2,220 million of which €1,492 million was related to Regeneron and €535 million was related to Alnylam) and restructuring costs (€603 million).

(1)   See Appendix 8 for definitions of financial indicators, and Appendix 3 for reconciliation of business net income to consolidated net income attributable to equity holders of Sanofi

As a consequence, net debt increased from €6,043 million at December 31, 2013 to €9,228 million at the end of September 2014 (amount net of €6,526 million cash and cash equivalents).

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 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, 2013. Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.

Appendices

List of appendices

Appendix 1:      2014 third-quarter and 2014 9-month of consolidated net sales by geographic region and product

Appendix 2:      2014 third-quarter and 2014 9-month business net income statement

Appendix 3:      Reconciliation of business net income to net income attributable to equity holders of Sanofi

Appendix 4:      2014 third-quarter and 2014 9-month consolidated income statement

Appendix 5:      2014 currency sensitivity

Appendix 6:      R&D pipeline

Appendix 7:      Expected R&D milestones in H2 2014 / 9M 2015

Appendix 8:      Definitions

Appendix 1: 2014 Third-quarter and 9-month consolidated net sales by geographic region and product

Q3 2014 net sales
(€ million)
Total % CER % reported Western Europe % CER United States % CER Emerging Markets % CER Rest of the World % CER
Lantus 1,567 8.1% 7.6% 222 9.5% 1,042 5.8% 232 19.7% 71 4.2%
Apidra 88 21.9% 20.5% 26 19.0% 35 20.7% 19 25.0% 8 28.6%
Amaryl 87 -2.2% -4.4% 5 0.0% 2 - 68 6.2% 12 -38.1%
Insuman 34 0.0% 0.0% 21 -4.5% 0 - 13 8.3% 0 -
Lyxumia 8 166.7% 166.7% 4 100.0% 0 - 2 - 2 100.0%
Diabetes 1,799 8.3% 7.7% 292 10.3% 1,079 6.4% 336 17.5% 92 -3.9%
Taxotere 59 -28.6% -29.8% 3 -40.0% 2 -33.3% 35 -23.9% 19 -33.3%
Jevtana (*) 67 15.3% 13.6% 34 22.2% 23 9.5% 8 12.5% 2 0.0%
Eloxatine 43 -12.0% -14.0% 2 0.0% -4 -500.0% 31 -3.1% 14 0.0%
Thymoglobulin 54 3.8% 3.8% 8 0.0% 28 7.7% 14 -12.5% 4 100.0%
Mozobil (*) 29 20.0% 16.0% 10 12.5% 17 21.4% 2 0.0% 0 -
Zaltrap (*) 18 30.8% 38.5% 9 100.0% 6 -25.0% 2 - 1 -
Other Oncology 61 -6.3% -4.7% 14 7.7% 34 -12.2% 8 -14.3% 5 33.3%
Oncology 331 -4.0% -4.6% 80 16.2% 106 -5.3% 100 -10.7% 45 -13.2%
Aubagio 112 156.8% 154.5% 18 - 87 97.7% 3 300.0% 4 -500.0%
Lemtrada 7 - - 6 - 0 - 1 - 0 -
Cerezyme 175 9.1% 6.1% 60 15.4% 48 4.3% 56 7.0% 11 10.0%
Myozyme 138 9.4% 8.7% 69 1.5% 35 9.4% 25 42.1% 9 0.0%
Fabrazyme 116 21.9% 20.8% 28 40.0% 58 14.0% 15 33.3% 15 14.3%
Aldurazyme 41 7.9% 7.9% 16 14.3% 8 28.6% 12 0.0% 5 -20.0%
Other Rare Diseases products 60 3.4% 1.7% 10 -10.0% 23 0.0% 12 20.0% 15 6.3%
Genzyme 649 24.6% 22.7% 207 25.0% 259 28.2% 124 19.8% 59 19.2%
Plavix 450 9.0% 6.4% 52 -17.5% 0 - 203 21.3% 195 6.8%
Lovenox 426 7.2% 6.2% 221 5.8% 34 -12.8% 147 16.9% 24 0.0%
Aprovel 178 -14.8% -15.2% 41 -47.4% 4 0.0% 105 9.3% 28 -9.7%
Renagel And Renvela 162 -13.4% -13.4% 32 0.0% 103 -22.0% 22 22.2% 5 0.0%
Allegra 32 -52.1% -54.9% 2 0.0% 0 -100.0% 1 -96.7% 29 -24.4%
Stilnox 78 -16.0% -17.0% 10 -9.1% 19 -5.0% 16 0.0% 33 -27.7%
Depakine 100 -1.0% -2.0% 36 0.0% 0 - 61 0.0% 3 -25.0%
Synvisc / Synvisc One 88 -2.2% -2.2% 6 0.0% 69 -4.2% 11 10.0% 2 0.0%
Tritace 69 -5.3% -8.0% 31 -8.8% 0 - 38 0.0% 0 -33.3%
Multaq (*) 76 13.4% 13.4% 11 10.0% 62 17.0% 3 0.0% 0 -50.0%
Lasix 42 2.3% -2.3% 19 0.0% 1 0.0% 13 18.2% 9 -8.3%
Targocid 40 8.1% 8.1% 20 17.6% 0 - 17 5.9% 3 -33.3%
Orudis 33 -8.3% -8.3% 4 0.0% 0 - 28 -12.9% 1 -
Cordarone 31 -3.0% -6.1% 6 0.0% 0 - 17 6.3% 8 -18.2%
Xatral 22 -15.4% -15.4% 9 -10.0% 0 -100.0% 13 -14.3% 0 0.0%
Actonel 21 -8.7% -8.7% 4 -33.3% 0 - 11 0.0% 6 0.0%
Auvi-Q / Allerject (*) 37 26.7% 23.3% 1 - 33 22.2% 0 - 3 33.3%
Other Rx Drugs 881 -12.1% -13.1% 382 -3.3% 75 -37.8% 324 -12.1% 100 -16.1%
Total Other Rx Drugs 2,766 -5.4% -6.6% 887 -5.4% 400 -14.4% 1,030 -0.6% 449 -7.2%
Consumer Healthcare 819 12.9% 10.4% 157 0.0% 158 3.3% 452 26.2% 52 -11.9%
Generics 451 8.3% 6.4% 125 -3.9% 28 -24.3% 287 19.8% 11 0.0%
Pharma-
ceuticals
6,815 3.4% 2.1% 1,748 1.3% 2,030 2.3% 2,329 9.2% 708 -5.7%
Polio Pertussis 259 7.4% 6.1% 8 0.0% 97 94.0% 120 -20.6% 34 9.7%
Influenza Vaccines 650 15.0% 16.3% 89 15.6% 456 11.7% 99 31.6% 6 25.0%
Meningite / Pneumonie 191 -10.0% -9.5% 2 100.0% 168 -6.1% 19 -34.5% 2 -50.0%
Adult Booster Vaccines 131 54.8% 56.0% 28 107.7% 90 58.9% 11 -8.3% 2 0.0%
Travel And Other Andemics Vaccines 99 -3.0% -2.0% 6 50.0% 31 -18.4% 50 6.3% 12 -9.1%
Other Vaccines 121 21.8% 19.8% 0 -50.0% 116 21.3% 5 300.0% 0 0.0%
Vaccines 1,451 11.2% 11.6% 133 26.7% 958 15.8% 304 -4.0% 56 3.6%
Fipronil products 143 -5.3% -5.3% 39 -4.9% 67 -9.6% 28 16.0% 9 -25.0%
Nexgard 27 - - 3 - 23 - 1 - 0 -
Vaccines 176 11.3% 10.0% 47 23.7% 40 11.1% 84 6.1% 5 0.0%
Avermectin products 101 11.1% 12.2% 11 0.0% 61 27.1% 14 7.1% 15 -25.0%
Others 68 21.1% 19.3% 22 -5.0% 29 45.0% 16 15.4% 1 50.0%
Animal Health 515 12.7% 12.4% 122 8.1% 220 23.2% 143 9.7% 30 -13.9%
Total Group 8,781 5.1% 4.1% 2,003 3.1% 3,208 7.2% 2,776 7.6% 794 -5.4%

9 months net sales
(€ million)
Total % CER % reported Western Europe % CER United States % CER Emerging Markets % CER Rest of the World % CER
Lantus 4,572 12.5% 8.8% 643 6.5% 3,028 13.3% 700 17.8% 201 4.2%
Apidra 240 20.3% 15.9% 73 18.0% 90 17.9% 54 28.3% 23 18.2%
Amaryl 269 0.7% -5.3% 15 -11.8% 3 200.0% 210 9.9% 41 -28.6%
Insuman 99 3.0% 0.0% 61 -9.0% 1 0.0% 37 29.0% 0 -
Lyxumia 19 375.0% 375.0% 11 266.7% 0 - 3 - 5 400.0%
Diabetes 5,249 12.5% 8.6% 846 7.7% 3,122 13.5% 1,007 17.5% 274 1.0%
Taxotere 195 -31.7% -36.3% 11 -42.1% 7 -78.8% 110 -25.0% 67 -24.5%
Jevtana (*) 199 23.6% 20.6% 106 38.2% 65 6.3% 25 27.3% 3 0.0%
Eloxatine 136 -14.2% -19.5% 4 -20.0% -3 -118.8% 90 -3.1% 45 -2.0%
Thymoglobulin 160 11.5% 8.1% 24 4.3% 78 5.3% 49 27.5% 9 11.1%
Mozobil (*) 80 7.9% 5.3% 26 4.2% 44 7.1% 8 12.5% 2 50.0%
Zaltrap (*) 49 28.9% 28.9% 25 177.8% 20 -28.6% 4 300.0% 0 -
Other Oncology 192 3.7% 1.6% 43 4.9% 112 3.5% 23 4.5% 14 0.0%
Oncology 1,011 -3.8% -7.3% 239 20.3% 323 -10.2% 309 -5.8% 140 -13.0%
Aubagio 287 205.2% 195.9% 56 - 218 130.9% 6 700.0% 7 -900.0%
Lemtrada 18 - - 16 - 0 - 1 - 1 -
Cerezyme 518 8.3% 2.2% 179 8.5% 138 6.0% 171 12.1% 30 -2.9%
Myozyme 392 9.2% 6.2% 199 -2.5% 99 10.9% 71 47.2% 23 19.0%
Fabrazyme 337 26.2% 20.8% 81 32.8% 164 14.3% 51 58.3% 41 31.4%
Aldurazyme 127 13.8% 9.5% 48 6.8% 24 19.0% 43 20.5% 12 8.3%
Other Rare Diseases products 179 3.4% 0.0% 31 3.3% 63 -11.0% 37 39.3% 48 4.2%
Genzyme 1,858 25.1% 20.1% 610 20.9% 706 28.7% 380 28.4% 162 18.8%
Plavix 1,362 5.8% -0.3% 168 -14.7% 1 -80.0% 629 10.4% 564 8.8%
Lovenox 1,263 2.9% -0.2% 672 5.3% 95 -27.9% 430 10.0% 66 -1.4%
Aprovel 550 -17.9% -20.2% 147 -45.8% 13 30.0% 306 3.9% 84 -14.0%
Renagel And Renvela 471 -9.0% -11.6% 97 -3.0% 305 -14.7% 55 20.0% 14 -6.7%
Allegra 151 -47.6% -52.7% 8 0.0% 0 -100.0% 4 -95.6% 139 -30.5%
Stilnox 229 -15.3% -20.2% 31 -3.1% 53 -8.5% 48 0.0% 97 -26.0%
Depakine 291 -2.6% -6.4% 103 0.0% 0 - 178 -3.5% 10 -9.1%
Synvisc / Synvisc One 251 -4.8% -7.7% 20 11.1% 196 -7.4% 28 20.0% 7 -33.3%
Tritace 212 -5.6% -9.0% 96 -6.8% 0 - 112 -2.5% 4 -37.5%
Multaq (*) 215 11.1% 8.6% 33 6.5% 174 12.6% 7 16.7% 1 -50.0%
Lasix 123 3.2% -2.4% 59 5.4% 2 0.0% 38 16.7% 24 -15.6%
Targocid 115 -5.6% -8.0% 61 0.0% 0 - 48 -7.1% 6 -33.3%
Orudis 116 14.7% 6.4% 14 -16.7% 0 - 99 20.2% 3 50.0%
Cordarone 96 -1.9% -8.6% 18 -5.3% 0 - 53 3.6% 25 -9.7%
Xatral 69 -7.8% -10.4% 28 -3.4% 0 -100.0% 40 -2.3% 1 -50.0%
Actonel 62 -12.0% -17.3% 13 -23.5% 0 - 32 -5.6% 17 -13.6%
Auvi-Q / Allerject (*) 63 32.7% 28.6% 2 0.0% 54 31.0% 0 - 7 60.0%
Other Rx Drugs 2,717 -10.5% -13.9% 1,156 -5.9% 272 -25.1% 1,015 -9.0% 274 -16.6%
Total Other Rx Drugs 8,356 -6.3% -10.1% 2,726 -7.0% 1,165 -12.8% 3,122 -1.6% 1,343 -9.3%
Consumer Healthcare 2,520 17.3% 10.4% 518 0.0% 536 15.0% 1,321 32.4% 145 -16.8%
Generics 1,338 23.2% 16.7% 400 -3.2% 94 -32.6% 815 56.4% 29 22.2%
Pharma-
ceuticals
20,332 5.1% 0.7% 5,339 -0.2% 5,946 6.1% 6,954 12.9% 2,093 -6.8%
Polio Pertussis 754 -2.4% -6.6% 20 -20.0% 263 56.1% 361 -19.1% 110 -15.5%
Influenza Vaccines 844 16.0% 15.5% 90 15.4% 477 14.1% 259 20.2% 18 11.1%
Meningite / Pneumonie 362 -10.4% -12.6% 2 -50.0% 299 1.3% 56 -42.9% 5 0.0%
Adult Booster Vaccines 295 3.1% 0.7% 44 -15.4% 213 10.1% 30 -6.1% 8 -10.0%
Travel And Other Andemics Vaccines 277 5.9% 1.5% 19 58.3% 77 1.3% 144 4.1% 37 5.3%
Other Vaccines 265 14.2% 10.9% 1 -50.0% 248 14.0% 10 42.9% 6 12.5%
Vaccines 2,797 4.1% 1.5% 176 1.7% 1,577 15.3% 860 -8.4% 184 -8.1%
Fipronil products 483 -3.3% -6.2% 151 -1.3% 231 -9.2% 74 12.5% 27 0.0%
Nexgard 85 - - 7 - 76 - 1 - 1 -
Vaccines 510 1.7% -2.1% 135 4.7% 112 2.7% 250 -0.4% 13 7.7%
Avermectin products 313 -3.3% -6.6% 39 -2.5% 185 -3.0% 39 2.4% 50 -8.9%
Others 178 8.2% 4.7% 62 -1.6% 65 8.2% 43 27.8% 8 0.0%
Animal Health 1,569 5.3% 1.8% 394 2.4% 669 8.9% 407 4.8% 99 -2.7%
Total Group 24,698 5.0% 0.8% 5,909 0.0% 8,192 8.0% 8,221 9.9% 2,376 -6.8%

Appendix 2: Business net income statement

Third quarter 2014 Group Total Pharmaceuticals Vaccines Animal Health Others
€ million Q3 2014 Q3
2013
(1)
Change Q3 2014 Q3
2013
(1)
Change Q3 2014 Q3
2013
(1)
Change Q3 2014 Q3
2013
(1)
Change Q3 2014 Q3
2013
(1)
Net sales 8,781 8,432 4.1% 6,815 6,674 2.1% 1,451 1,300 11.6% 515 458 12.4% - -
Other revenues 87 86 1.2% 69 69 - 9 9 - 9 8 12.5% - -
Cost of sales (2,864) (2,870) (0.2%) (2,036) (2,133) (4.5%) (629) (580) 8.4% (199) (157) 26.8% - -
As % of net sales (32.6%) (34.0%)   (29.9%) (32.0%)   (43.3%) (44.6%)   (38.6%) (34.2%)      
Gross profit 6,004 5,648 6.3% 4,848 4,610 5.2% 831 729 14.0% 325 309 5.2% - -
As % of net sales 68.4% 67.0%   71.1% 69.1%   57.3% 56.1%   63.1% 67.5%      
Research and develop-
ment expen-
ses
(1,146) (1,182) (3.0%) (987) (1,011) (2.4%) (121) (133) (9.0%) (38) (38) - - -
As % of net sales (13.1%) (14.0%)   (14.5%) (15.1%)   (8.3%) (10.2%)   (7.4%) (8.3%)      
Selling and general expenses (2,193) (2,012) 9.0% (1,859) (1,706) 9.0% (170) (154) 10.4% (164) (152) 7.9% - -
As % of net sales (25.0%) (23.9%)   (27.3%) (25.6%)   (11.7%) (11.8%)   (31.8%) (33.2%)      
Other current opera-
ting income / expen-
ses
39 28   57 33   2 (1)   1 (1)   (21) (3)
Share of profit / loss of associates* and joint ventures 43 38   22 3   21 36   - (1)   - -
Net income attribute-
able to non-
controlling interests
(31) (36)   (31) (37)   - 1   - -   - -
Business operating income 2,716 2,484 9.3% 2,050 1,892 8.4% 563 478 17.8% 124 117 6.0% (21) (3)
As % of net sales 30.9% 29.5%   30.1% 28.3%   38.8% 36.8%   24.1% 25.5%      
Financial income and expenses (139) (123)                        
Income tax expense (642) (566)                        
Tax rate** 25.0% 24.0%                        
Business net income 1,935 1,795 7.8%                      
As % of net sales 22.0% 21.3%                        
Busi-
ness earnings per share
*** (in euros)
1.47 1.36 8.1%                      

*   Net of tax.
**  Determined on the basis of Business income before tax, associates and non-controlling interests.
*** Based on an average number of shares outstanding of 1,313.0 million in the third quarter of 2014 and 1,323.5 million in the third quarter of 2013.
(1) Including impact of transition to IFRIC 21.

Nine months 2014 Group Total Pharmaceuticals Vaccines Animal Health Others
€ million 9M 2014 9M
2013
(1)
Change 9M 2014 9M
2013
(1)
Change 9M 2014 9M
2013
(1)
Change 9M 2014 9M
2013
(1)
Change 9M 2014 9M
2013
(1)
Net sales 24,698 24,494 0.8% 20,332 20,196 0.7% 2,797 2,757 1.5% 1,569 1,541 1.8% - -
Other revenues 241 267 (9.7%) 195 224 (12.9%) 23 21 9.5% 23 22 4.5% - -
Cost of sales (7,988) (8,085) (1.2%) (6,082) (6,307) (3.6%) (1,329) (1,275) 4.2% (577) (503) 14.7% - -
As % of net sales (32.4%) (33.0%)   (29.9%) (31.2%)   (47.5%) (46.3%)   (36.8%) (32.6%)      
Gross profit 16,951 16,676 1.6% 14,445 14,113 2.4% 1,491 1,503 (0.8%) 1,015 1,060 (4.2%) - -
As % of net sales 68.6% 68.1%   71.0% 69.9%   53.3% 54.5%   64.7% 68.8%      
Research and develop-
ment expenses
(3,473) (3,524) (1.4%) (3,012) (3,019) (0.2%) (351) (382) (8.1%) (110) (123) (10.6%) - -
As % of net sales (14.1%) (14.4%)   (14.8%) (14.9%)   (12.5%) (13.9%)   (7.0%) (8.0%)      
Selling and general expen-
ses
(6,526) (6,458) 1.1% (5,580) (5,507) 1.3% (441) (455) (3.1%) (505) (496) 1.8% - -
As % of net sales (26.4%) (26.4%)   (27.4%) (27.3%)   (15.8%) (16.5%)   (32.2%) (32.2%)      
Other current operating income / expenses 68 198   76 163   3 6   18 (2)   (29) 31
Share of profit / loss of associates* and joint ventures 82 59   55 30   27 32   - (3)   - -
Net income attribute-
able to non-
controlling interests
(96) (122)   (96) (123)   - 1   - -   - -
Business operating income 7,006 6,829 2.6% 5,888 5,657 4.1% 729 705 3.4% 418 436 (4.1%) (29) 31
As % of net sales 28.4% 27.9%   29.0% 28.0%   26.1% 25.6%   26.6% 28.3%      
Financial income and expenses (309) (400)                        
Income tax expense (1,678) (1,557)                        
Tax rate** 25.0% 24.0%                        
Business net income 5,019 4,872 3.0%                      
As % of net sales 20.3% 19.9%                        
Business earnings per share*** (in euros) 3.81 3.68 3.5%                      

*   Net of tax.
**  Determined on the basis of Business income before tax, associates and non-controlling interests.
*** Based on an average number of shares outstanding of 1,315.8 million in the first nine months of 2014 and 1,323.8 million in the first nine months of 2013.
(1) Including impact of transition to IFRIC 21.


Appendix 3: Reconciliation of Business net income to Net income attributable to equity holders of Sanofi

€ million Q3 2014 Q3 2013(1) Change
Business net income 1,935 1,795 7.8%
Amortization of intangible assets(2) (561) (689)  
Impairment of intangible assets (35) (28)  
Fair value remeasurement of contingent
consideration liabilities
(45) (68)  
Expenses arising from the impact of acquisitions on inventories - (1)  
Restructuring costs (163) (71)  
Additional year expense related to US Branded Prescription Drug Fee(3) (116) -  
Tax effect of items listed above: 261 289  
Amortization of intangible assets 188 233  
Impairment of intangible assets 13 9  
Fair value remeasurement of contingent consideration liabilities 5 23  
Expenses arising from the impact of acquisitions on inventories - -  
Restructuring costs 55 24  
 

Other tax items
 

-
 

-
 
 

Share of items listed above attributable to non-controlling interests
- 1  
 

Restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures
(86) (9)  
Net income attributable to equity holders of Sanofi 1,190 1,219 (2.4%)
Consolidated earnings per share(4) (in euros) 0.91 0.92  

(1)    Including impact of transition to IFRIC 21.

(2)    Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations: €540 million in the third quarter of 2014 and €658 million in the third quarter of 2013.

(3)    Annual fee related to 2013 sales in the U.S. following the final IRS regulation issued in July 2014 that has changed the timing of liability recognition and leads to a one-time "double" expense in the year of 2014.

(4)    Based on an average number of shares outstanding of 1,313.0 million in the third quarter of 2014 and 1,323.5 in the third quarter of 2013.

See page 12 for comments on the reconciliation of business net income to consolidated net income.

€ million 9M 2014 9M 2013(1) Change
Business net income 5,019 4,872 3.0%
Amortization of intangible assets(2) (1,862) (2,232)  
Impairment of intangible assets (109) (468)  
Fair value remeasurement of contingent
consideration liabilities
(177) (185)  
Expenses arising from the impact of acquisitions on inventories - (7)  
Restructuring costs (298) (230)  
Other gains and losses, and litigation(3) 35 -  
Additional year expense related to US Branded Prescription Drug Fee(4) (116) -  
Tax effect of items listed above: 783 1,038  
Amortization of intangible assets 639 723  
Impairment of intangible assets 39 189  
Fair value remeasurement of contingent consideration liabilities 19 43  
Expenses arising from the impact of acquisitions on inventories - 2  
Other gains and losses, and litigation (13) -  
Restructuring costs 99 81  
 

Other tax items(5)
 

(110)
 

(109)
 
 

Share of items listed above attributable to non-controlling interests
4 3  
 

Restructuring costs of associates and joint ventures. and expenses arising from the impact of acquisitions on associates and joint ventures
(118) (26)  
Net income attributable to equity holders of Sanofi 3,051 2,656 14.9%
Consolidated earnings per share(6) (in euros) 2.32 2.01  

(1)    Including impact of transition to IFRIC 21.

(2)    Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations: €1,798 million  in the first nine months of 2014 and €2,147 million in the first nine months of 2013.

(3)    Day one profit on Alnylam shares presented in financial result.

(4)    Annual fee related to 2013 sales following the final IRS regulation issued in July 2014 that has changed the timing of liability recognition and leads to a one-time "double" expense in the year of 2014.

(5)    Tax on dividends paid to shareholders of  Sanofi.

(6)    Based on an average number of shares outstanding of 1,315.8 million in the first nine months of 2014 and 1,323.8 million in the first nine months of 2013.

Appendix 4: Consolidated income statement

€ million Q3 2014 Q3 2013(1) 9M 2014 9M 2013(1)
Net sales 8,781 8,432 24,698 24,494
Other revenues 87 86 241 267
Cost of sales (2,864) (2,871) (7,988) (8,092)
Gross profit 6,004 5,647 16,951 16,669
Research and development expenses (1,146) (1,182) (3,473) (3,524)
Selling and general expenses (2,309) (2,012) (6,642) (6,458)
Other operating income 47 56 163 403
Other operating expenses (8) (28) (95) (205)
Amortization of intangible assets (561) (689) (1,862) (2,232)
Impairment of intangible assets (35) (28) (109) (468)
Fair value remeasurement of contingent consideration liabilities (45) (68) (177) (185)
Restructuring costs (163) (71) (298) (230)
Operating income 1,784 1,625 4,458 3,770
Financial expenses (154) (147) (446) (458)
Financial income 15 24 172 58
Income before tax and associates and joint ventures 1,645 1,502 4,184 3,370
Income tax expense(2) (381) (277) (1,005) (628)
Share of profit/loss of associates and joint ventures (43) 29 (36) 33
Net income 1,221 1,254 3,143 2,775
Net income attributable to non-controlling interests 31 35 92 119
Net income attributable to equity holders of Sanofi 1,190 1,219 3,051 2,656
Average number of shares outstanding (million) 1,313.0 1,323.5 1,315.8 1,323.8
Earnings per share (in euros) 0.91 0.92 2.32 2.01

(1)    Including impact of transition to IFRIC 21.

(2)    In 2014, including a tax on dividends paid to shareholders of Sanofi: (110) M€ compared to (109) M€ in 2013.

Appendix 5: 2014 currency sensitivity

Business EPS currency sensitivity

Currency exposure on Q3 2014 sales

Currency  
US $ 37.3%
Euro € 23.1%
Japanese Yen 5.5%
Brazilian Real 3.5%
Chinese Yuan 4.3%
Russian Ruble 2.2%
2.2%
Mexican Peso 2.0%
Canadian $ 1.5%
Australian $ 1.6%
Others 16.8%

Currency average rates

  Q3 2013 Q3 2014 Change
€/$ 1.32 1.33 +0.8%
€/Yen 131.05 137.74 +5.1%
€/Real 3.03 3.01 -0.7%
€/Ruble 43.45 48.08 +10.7%

Appendix 6: R&D Pipeline

Registration

N
Toujeo (U300)
Insulin glargine
Type 1+2 diabetes, U.S., EU

 
 

PR5i
DTP-HepB-Polio-Hib
Pediatric hexavalent vaccine, U.S.

 

Lemtrada(TM) (alemtuzumab)
Anti-CD52 mAb
Multiple sclerosis, U.S.

 

Fluzone QIV ID
Quadrivalent inactivated
influenza vaccine intradermal

N
Cerdelga(TM) (eliglustat tartrate)
Glucosylceramide synthetase inhibitor
Gaucher disease, EU

 

Quadracel
Diphtheria, tetanus, pertussis
& polio vaccine; 4-6 y of age



Phase III

 

LixiLan
lixisenatide + insulin glargine
Fixed-Ratio / Type 2 diabetes

N
alirocumab
Anti-PCSK-9 mAb
 Hypercholesterolemia

 

Dengue
Mild-to-severe
dengue fever vaccine

N
Lyxumia (lixisenatide)
GLP-1 agonist
Type 2 diabetes, U.S.

 

Kynamro (mipomersen)
Apolipoprotein B-100 antisense
Severe HeFH, U.S.

 

Clostridium difficile
Toxoid vaccine

N
sarilumab
Anti-IL-6R mAb
Rheumatoid arthritis

 

Jevtana (cabazitaxel)
Metastatic prostate cancer (1L)


Rotavirus

Live attenuated tetravalent
Rotavirus oral vaccine

N
dupilumab
Anti-IL4R ALPHA mAb
Atopic dermatitis

 

SYNVISC-ONE
Medical device
Pain in hip OA

 

VaxiGrip QIV IM
Quadrivalent inactivated
influenza vaccine

N
patisiran
mRNA inhibitor
Familial amyloid polyneuropathy

   



Phase II

 

dupilumab
Anti-IL4R ALPHA mAb
Asthma; Nasal polyposis

N
SAR391786
Anti-GDF8 mAb
Sarcopenia

 

Rabies VRVg
Purified vero rabies vaccine

N
valetizumab
Anti-VLA 2 mAb
Multiple sclerosis

N
SAR650984
Anti-CD38 naked mAb
Multiple myeloma

 

Meninge ACYW conj.
2nd generation meningococcal
conjugate infant vaccine 

N
SAR156597
 IL4/IL13 Bi-specific mAb
Idiopathic pulmonary fibrosis

N
SAR3419
Maytansin-loaded anti-CD19 mAb
B-cell refractory/relapsed malignancies

 

Tuberculosis
Recombinant subunit vaccine

N
SAR438714 (ALN-TTRsc)
RNAi
Familial amyloid cardiomyopathy

N
Combination
SAR245409 (XL765) / MSC1936369B
Oral dual inhibitor of PI3K & mTOR / pimasertib
Ovarian cancer

 
 

sarilumab
Anti-IL-6R mAb
Uveitis

N
Combination
ferroquine / OZ439
 Antimalarial
Malaria

 
N
fresolimumab
TGF BETA antagonist
Focal segmental glomerulosclerosis

 



Phase I

N
SAR405838 (MI-773)
HDM2 / p53 antagonist
Solid tumors

N
SAR113244
Anti-CXCR5 mAb
Systemic lupus erythematosus

N
SAR438584 (REGN2222)
anti-RSV-F protein mAb
Respiratory syncytial virus

N
SAR566658
Maytansin-loaded anti-CA6 mAb
Solid tumors
N
SAR252067
Anti-LIGHT mAb
Crohn's disease

N
GZ402665
(rhASM)
Niemann-Pick type B

 
N
SAR125844
C-MET kinase inhibitor
Solid tumors

N
SAR228810
Anti-protofibrillar AB mAb
Alzheimer's disease

N
GZ402671
Oral GCS Inhibitor
Fabry Disease

N
SAR260301
PI3K BETA selective inhibitor
PTEN - Deficient tumors

N
SAR425899
GLP-1 / GCGR agonist
Diabetes

N
GZ402666
neo GAA
Pompe Disease

N
SAR307746
Anti-ANG2 mAb
Solid tumors

 

SAR342434
Insulin Lispro
Diabetes

 

Streptococcus pneumonia
Meningitis & pneumonia vaccine

N
SAR245408 (XL147)
Oral PI3K inhibitor
Solid tumors

N
GZ402663 (sFLT-01)
Gene therapy
Age-related macular degeneration (AMD)

 

Herpes Simplex Virus Type 2
HSV-2 vaccine

 

Combination
SAR405838 / MSC1936369B
Solid tumors

N
StarGen
Gene therapy
Stargardt disease

 
N
SAR408701
Anti-CEACAM5 ADC
Solid tumors

 
N
UshStat
Gene therapy
Usher syndrome 1B

 

N : New molecular entity

Appendix 7: Expected R&D milestones in Q4 2014 / H1 2015

Product Event Timing
Dupilumab (anti-IL4R ALPHA mAb) Start of Phase III trial in Atopic Dermatitis Q3 2014
Rotavirus vaccine Start of Phase III trial Q4 2014
New Insulin Lispro (SAR342434) Expected start of Phase III trial in Diabetes Q4 2014
Lemtrada(TM) (alemtuzumab) Expected U.S. regulatory decision in Multiple Sclerosis Q4 2014
Cerdelga(TM) (eliglustat tartrate) Expected EU regulatory decision in Gaucher disease Q4 2014
Alirocumab (anti-PCSK9 mAb) Expected U.S. and EU regulatory submissions in Hypercholesterolemia Q4 2014
Fluzone QIV ID Expected U.S. regulatory decision Q4 2014
Fluzone High Dose Expected U.S. label upgrade Q4 2014
Dupilumab (anti-IL4R ALPHA mAb) Expected Phase IIb top-line results in Asthma Q4 2014
Dengue vaccine Expected regulatory submission in priority countries Q1 2015
PR5i (DTP-HepB-Polio-Hib) Expected EU regulatory submission Q1 2015
Quadracel Expected U.S. regulatory decision Q1 2015
Toujeo (U300) Expected U.S. regulatory decisions in Diabetes Q1 2015
Toujeo (U300) Expected EU regulatory decisions in Diabetes Q2 2015
Lyxumia(lixisenatide) Expected ELIXA CV outcome trial top-line results Q2 2015

Appendix 8: Definitions of non-GAAP financial indicators

Net sales at constant exchange rates (CER)
When we refer to changes in our net sales "at constant exchange rates" (CER), 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 and the first nine month of 2014

€ million Q3 2014 9M 2014
Net sales 8,781 24,698
Effect of exchange rates 81 1,021
Net sales at constant exchange rates 8,862 25,719

Net sales on a constant structure basis
We eliminate the effect of changes in structure by restating prior-period net sales as follows:

Business net income
Sanofi publishes a key non-GAAP indicator. This indicator "Business net income", replaced "adjusted net income excluding selected items".
Business net income is defined as net income attributable to equity holders of Sanofi excluding:

Additionally, the business net income was adjusted by the one-time additional yearly expense, unrelated to segment performance and recorded in 2014 on the income statement line selling and general expenses, following the final US IRS regulation related to annual Branded Prescription Drug Fee issued in July 2014.

(1)    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.

Q3 2014 Results