29.07.2016 07:30:00 CET

Sanofi Announces Q2 2016 Results

Paris, July 29, 2016

Sanofi Announces Q2 2016 Results

  Q2 2016 Change Change (CER) H1 2016 Change Change (CER)
IFRS net sales reported €8,143m -5.1% -0.9% €15,926m -4.2% -0.8%
IFRS net income reported €1,158m -11.1%   €2,245m -3.4%  
IFRS EPS reported €0.90 -10.0%   €1.74 -2.2%  
Aggregate Company sales(1) €8,868m -4.3% -0.2% €17,411m -3.2% +0.2%
Business net income(2) €1,680m -8.7% -3.3% €3,402m -4.6% 0.0%
Business EPS(2) €1.31 -7.1% -2.1% €2.64 -3.3% +1.5%

Following the announcement of exclusive negotiations with Boehringer Ingelheim and as per the IFRS 5 presentation requirement for discontinued operations, net income for Sanofi's Animal Health business (Merial) will be reported on a separate line ("Net income from the held for exchange Animal Health Business") in the Consolidated Income Statement for Q2 2016 and for H1 2016, and the prior year. Until the closing of the transaction, Sanofi will continue to manage and report the performance of the Animal Health business, which will remain an operating segment consistent with IFRS 8 and be included in the key performance indicators of the Company.


Second quarter financial results and 2016 guidance confirmed

  • Aggregate Company sales(1) decreased 0.2%(3) (down 4.3% at 2016 exchange rates) to €8,868 million. Excluding Venezuela, Aggregate Company sales grew 1.9%
  • IFRS EPS reported was down 10.0% to €0.90
  • Business EPS(2) was down 2.1% at CER to €1.31 and down 7.1% on a reported basis
  • Sanofi continues to expect 2016 Business EPS(2) to be broadly stable(4) at CER, barring unforeseen major adverse events
Performance of Global Business Units (GBU) led by Sanofi Genzyme

  • Strong double-digit growth of Sanofi Genzyme (+20.1%) across multiple sclerosis and rare disease franchises
  • Sanofi Pasteur sales increased +6.3%, despite anticipated supply constraints of Pentacel in the U.S.
  • General Medicines & Emerging Markets(5) sales declined 5.6%, or down 1.9% excluding Venezuela.
  • Diabetes and Cardiovascular sales were down 3.5%. Global diabetes franchise sales declined 3.2%
  • Animal Health sales were up 9.1% to €725 million, driven by the success of the NexGard family of products
  • Aggregate sales in Emerging Markets grew 6.7% excluding Venezuela
Major launches update

  • Toujeo generated worldwide sales of €141 million
  • Praluent launch advancing globally with approval in Japan and market share improvement in the U.S.
  • Dengvaxiauptake delayed by recent political changes and economic volatility in Latin America
Key R&D milestones achieved
  • Positive CHRONOS data for dupilumab in atopic dermatitis 
  • Adlyxin(TM) (lixisenatide) approved in the U.S.
  • FDA Advisory Committee recommended approval of LixiLan

Sanofi Chief Executive Officer, Olivier Brandicourt, commented:
"Our second quarter financial performance was in-line with expectations and reflected anticipated headwinds. Sanofi Genzyme grew 20% and Sanofi Pasteur performed well despite a delay in Dengvaxiaฎ uptake. Recent highlights included the signing of the CHC asset swap, the approval of Praluentฎ in several countries and positive Phase III CHRONOS data for dupilumab. Following our first half performance, we confirm our broadly stable 2016 Business EPS guidance at CER."

(1) Including Merial (see Appendix 10 for definition of Aggregate Company sales) which is reported on a single line in the consolidated income statements in accordance with IFRS 5 (Non-current assets held for sale and discontinued operations). Additionally, Sanofi comments include Merial for every income statement line using the term "Aggregate"; (2) In order to facilitate an understanding of operational performance, Sanofi comments on the business net income statement. Business net income is a non-GAAP financial measure (see Appendix 10 for definitions). The consolidated income statement for Q2 2016 and H1 2016 is provided in Appendix 4 and a reconciliation of business net income to IFRS net income reported is set forth in Appendix 3; (3) Percentage changes in net sales and Aggregate sales are expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 10); (4) 2015 Business EPS was €5.64;(5) See page 8

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2016 second-quarter and first-half Aggregate Sanofi sales

Unless otherwise indicated, all percentage changes in sales in this press release are stated at CER(7).

In the second quarter of 2016, Aggregate Company sales were €8,868 million, down 4.3% at 2016 exchange rates. Exchange rate movements had a negative effect of 4.1 percentage points with the adverse evolution of the U.S. dollar as well as several emerging market currencies more than offsetting the positive effects from the Japanese Yen. At CER, Aggregate Company sales decreased 0.2%. First-half Aggregate Company sales reached €17,411 million, down 3.2% at 2016 exchange rates. Exchange rate movements had an unfavorable effect of 3.4 percentage points.

This performance included a negative currency impact related to the change of exchange rate applied for the translation of Venezuela operations, resulting from the evolution of the exchange system in February 2016 as well as from the persistent inability to exchange Venezuelan bolivars for U.S. dollars at the privileged official rate(8). In addition, in the second quarter of 2015, Sanofi benefited from a significant increase in product demand in Venezuela, due to buying patterns associated with local market conditions. As a consequence, sales in Venezuela were €6 million in the second quarter of 2016 compared to €199 million in the second quarter of 2015. Excluding Venezuela, Aggregate Company sales increased 1.9% and 2.5% in the second quarter and in the first half of 2016, respectively.

Global Business Units

The table below presents sales by Global Business Units (GBU) and reflects the organization of the Sanofi which became effective as of January 1, 2016. In this organizational structure, all Pharmaceutical sales in Emerging Markets are now included in the General Medicines and Emerging Markets GBU. This new reporting structure simplifies Sanofi, deepens specialization and allows clear focus on growth drivers.

Net Sales by GBU
(€ million)
Q2 2016 Change
(CER)
H1 2016 Change
(CER)
Sanofi Genzyme (Specialty Care)(a)   1,245   +20.1% 2,414 +20.3%
Diabetes & Cardiovascular(a)   1,603   -3.5% 3,102 -4.6%
General Medicines & Emerging Markets(b)   4,498   -5.6%(c) 8,988 -4.9%(d)
Sanofi Pasteur (Vaccines)   797   +6.3%(e) 1,422 +7.1%(f)
Merial (Animal Health)   725   +9.1% 1,485 +13.2%
Total Aggregate Company sales   8,868   -0.2%(g) 17,411 +0.2%(h)

(a) Does not include Emerging Markets sales- see definition page 8; (b) Includes Emerging Markets sales for Diabetes & Cardiovascular and Specialty Care; (c) Excluding Venezuela:-1.9%; (d) Excluding Venezuela: -1.1%; (e) Excluding Venezuela:+7.0%; (f) Excluding Venezuela: +7.8%; (g) Excluding Venezuela:+1.9%; (h) Excluding Venezuela: +2.5%.

Global Franchises

The table below presents sales by global franchises. The performance by franchise provides a bridge to our previous reporting methodology and allows straightforward peer comparisons. Appendix 1 provides a reconciliation of sales by GBU and by franchise.

Net sales by Franchise
(€ million)
Q2 2016 Change
(CER)
Developed
Markets
Change
(CER)
Emerging
Markets
Change
(CER)
Specialty Care 1,493 +19.5%(a) 1,245 +20.1% 248 +16.8%(b)
Diabetes & Cardiovascular 1,962 -2.0%(c) 1,603 -3.5% 359 +4.7%(d)
Established Products 2,617 -9.7%(e) 1,676 -10.9% 941 -7.7%(f)
Consumer Healthcare (CHC) 800 -4.3%(g) 511 +2.1% 289 -13.0%(h)
Generics 474 -1.9%(i) 271 -5.5% 203 +2.6%(j)
Vaccines 797 +6.3%(k) 463 +3.8% 334 +9.8%(l)
Animal Health 725 +9.1% 565 +7.3% 160 +15.6%
Total Aggregate net sales 8,868 -0.2%(m) 6,334 0.0% 2,534 -0.5%(n)

(a) Excluding Venezuela : +20.3%; (b) Excluding Venezuela : +21.1%; (c) Excluding Venezuela : -0.9%; (d) Excluding Venezuela : +11.4%; (e) Excluding Venezuela :
-6.6%; (f) Excluding Venezuela: +1.5%; (g) Excluding Venezuela: +0.6%; (h) Excluding Venezuela:-1.8%; (i) Excluding Venezuela: +0.4%; (j) Excluding Venezuela: +8.2%; (k) Excluding Venezuela: +7.0%; (l) Excluding Venezuela: +11.5%; (m) Excluding Venezuela: +1.9%; (n) Excluding Venezuela: +6.7%.
(7) See Appendix 10 for definitions of financial indicators. (8) In Q2 2016, the exchange rate used was the DICOM rate (628VEF per USD) versus the privileged official CENCOEX rate of 6.3VEF per USD in Q2 2015.

The table below presents sales for global franchise for the first half of 2016.

Net sales by Franchise
(€ million)
H1 2016 Change
(CER)
Developed
Markets
Change
(CER)
Emerging
Markets
Change
(CER)
Specialty Care 2,864 +19.0%(a) 2,414 +20.3% 450 +13.3%(b)
Diabetes & Cardiovascular 3,794 -2.8%(c) 3,102 -4.6% 692 +5.6%(d)
Established Products 5,208 -9.0%(e) 3,343 -11.2% 1,865 -5.1%(f)
Consumer Healthcare (CHC) 1,705 -3.6%(g) 1,105 +1.8% 600 -11.4%(h)
Generics 933 +0.6%(i) 553 0.0% 380 +1.4%(j)
Vaccines 1,422 +7.1%(k) 810 -1.7% 612 +20.7%(l)
Animal Health 1,485 +13.2% 1,177 +10.1% 308 +25.2%
Total Aggregate net sales 17,411 +0.2%(m) 12,504 -0.4% 4,907 +1.7%(n)

(a) Excluding Venezuela : +19.7%; (b) Excluding Venezuela : +17.3%; (c) Excluding Venezuela : -1.8%; (d) Excluding Venezuela : +11.8%; (e) Excluding Venezuela :
-5.7%; (f) Excluding Venezuela : +4.9%; (g) Excluding Venezuela: +1.5%; (h) Excluding Venezuela: +1.0%; (i) Excluding Venezuela: +3.3%; (j) Excluding Venezuela: +7.7%; (k) Excluding Venezuela: +7.8%; (l) Excluding Venezuela: +22.7%; (m) Excluding Venezuela: +2.5%; (n) Excluding Venezuela: +9.7%.

Pharmaceuticals

Second-quarter sales for Pharmaceuticals were down 1.7% to €7,346 million impacted by a decrease in Diabetes, CHC and Established Rx Products sales that was partially offset by the Multiple Sclerosis and Rare Disease franchises. Excluding Venezuela, second-quarter sales for Pharmaceuticals were up 0.8%. First-half sales for Pharmaceuticals decreased 1.5% to €14,504 million. Excluding Venezuela, first-half sales for Pharmaceuticals increased 1.0%.

Rare Diseases franchise

Net sales (€ million) Q2 2016 Change
(CER)
H1 2016 Change
(CER)
Cerezyme 199 +8.0%(a) 381 +5.9%(b)
Myozyme/ Lumizyme 182 +13.9% 348 +11.2%
Fabrazyme 167 +17.8% 316 +12.2%
Aldurazyme 50 +6.0% 98 +5.1%
Cerdelga 26 +62.5% 49 +88.5%
Total Rare Diseases 707 +14.2%(c) 1,353 +11.4%(d)

(a) Excluding Venezuela: +9.2%; (b) Excluding Venezuela: +7.9%; (c) Excluding Venezuela: +15.5%; (d) Excluding Venezuela: +12.7%;

In the second quarter, Gaucher (Cerezyme and Cerdelga) sales increased 12.1% to €225 million, sustained by Cerezyme in Emerging Markets (up 27.3% to €70 million) and the increasing contribution of Cerdelga (€26 million versus €16 million in the second quarter of 2015). In the U.S., second-quarter sales of the Gaucher franchise increased 4.7% to €65 million reflecting declining Cerezyme sales (€45 million, down 4.1%) which were more than offset by increasing Cerdelga sales (€20 million, up 33.3%). In Europe, where Cerdelga is now available in Germany, France, Denmark, and Nordic countries, sales of the Gaucher franchise were €76 million, up 5.5%. In the first-half, Gaucher sales were up 11.1% to €430 million. First half sales of Cerezyme and Cerdelga increased 5.9% (to €381 million) and 88.5% to €49 million, respectively.

Sales of Fabrazyme were up 17.8% to €167 million in the second quarter driven by the U.S. (up 14.5% to €85 million), Europe (up 14.3% to €40 million), Japan and Emerging Markets (up 23.5% to €16 million). First-half sales of Fabrazyme increased 12.2% to €316 million.

Second-quarter sales of Myozyme/Lumizyme increased 13.9% to €182 million, driven by the U.S. (up 15.7% to €58 million) and Europe (up 11.7% to €84 million). In Emerging Markets, sales were up 7.1% to €26 million. First-half sales of Myozyme/Lumizyme increased 11.2% to €348 million.


Multiple Sclerosis franchise

Net sales (€ million) Q2 2016 Change
(CER)
H1 2016 Change
(CER)
Aubagio 315 +58.3% 594 +61.0%
Lemtrada 108 +100.0% 196 +113.8%
Total Multiple Sclerosis 423 +67.3% 790 +71.6%

In the second quarter, sales of Aubagio increased 58.3% to €315 million driven by the U.S. (up 55.6% to €216 million) and Europe (up 68.8% to €80 million). First-half sales of Aubagio increased 61.0% to €594 million.

Second-quarter sales of Lemtrada were €108 million (versus €56 million in the second quarter of 2015), including €56 million in the U.S. (up 96.6%), and €40 million in Europe (versus €21 million in the second quarter of 2015), mainly in the UK and Germany. First-half sales of Lemtrada were €196 million (versus €94 million in the first half of 2015).

Oncology franchise

Net sales (€ million) Q2 2016 Change
(CER)
H1 2016 Change
(CER)
Jevtana 88 +8.5% 178 +12.6%
Thymoglobulin 69 +4.3% 134 +10.5%
Taxotere 46 -21.0% 92 -16.5%
Eloxatin 44 -15.8% 86 -17.1%
Mozobil 37 +11.4% 72 +7.2%
Zaltrap 17 -15.0% 34 -15.0%
Total Oncology 363 -3.6% 721 -1.2%

Second-quarter Oncology sales were €363 million, down 3.6% due to lower sales of Taxotere and Eloxatin. First-half sales of Oncology were €721 million, down 1.2%.

Sales of Jevtana (cabazitaxel) increased 8.5% to €88 million in the second quarter led by the U.S. (up 12.1% to €37 million) and Japan. First-half sales of Jevtana were up 12.6% to €178 million.

Second-quarter Thymoglobulin sales increased 4.3% to €69 million supported by the U.S. performance (up 7.9% to €39 million). First-half sales of Thymoglobulin increased 10.5% to €134 million.

Second-quarter sales of Eloxatinwere down 15.8% to €44 million reflecting generic competition in Canada more than offsetting the performance in China. Over the same period, sales of Taxotere (docetaxel) decreased 21.0% (to €46 million), impacted by generic competition especially in Japan more than offsetting the performance in China. First-half sales of Taxotere and Eloxatin were down 16.5% (€92 million) and down 17.1% (€86 million), respectively.

Diabetes franchise

Net sales (€ million) Q2 2016 Change
(CER)
H1 2016 Change
(CER)
Lantus 1,465 -11.2% 2,860 -11.1%
Toujeo 141 ns 244 ns
Total glargine 1,606 -3.5% 3,104 -4.3%
Amaryl 93 -9.2% 181 -7.3%
Apidra 93 +3.2% 178 0.0%
Insuman 34 +8.8% 66 +4.5%
BGM (Blood Glucose Monitoring) 17 +6.3% 34 +6.3%
Lyxumia 8 -10.0% 17 0.0%
Total Diabetes 1,857 -3.2%(a) 3,591 -3.8%(b)

(a) Excluding Venezuela: -2.0%; (b) Excluding Venezuela:-2.8%

In the second quarter, Diabetes franchise sales were down 3.2% to €1,857 million, reflecting lower sales of Lantus in the U.S. Second-quarter U.S. Diabetes sales were down 7.1% to €1,033 million. Outside the U.S., sales were €824 million, an increase of 2.0% driven by Emerging Markets (up 5.0% to €358 million; excluding Venezuela up 11.7%). Sales in Europe were €338 million, an increase of 0.9% reflecting the performance of Toujeo which offset lower sales of Lantus. First-half sales for the Diabetes franchise were €3,591 million down 3.8%.

Second-quarter sales of Sanofi's glargine (Lantus and Toujeo) were €1,606 million, down 3.5%. In the U.S., Sanofi's glargine sales of €1,002 million were down 6.7%. In Europe, sales of Sanofi's glargine increased 1.2% to €255 million despite the launch of a biosimilar glargine in several European markets. First-half sales of Sanofi's glargine were €3,104 million down 4.3%.

Over the quarter, sales of Lantus were €1,465 million down 11.2%. In the U.S., as anticipated, sales of Lantus decreased 15.7% to €896 million mainly reflecting lower average net price and patients switching to Toujeo. In Europe, second-quarter Lantus sales were €228 million, down 9.1% while in Emerging Markets, sales were €250 million, up 5.3% (up 9.8% excluding Venezuela), driven by China. First-half sales of Lantus were €2,860 million, down 11.1%.

Second-quarter sales of Toujeo were €141 million of which €106 million were recorded in the U.S. and €27 million were from Europe. The global roll-out of this product continues and Sanofi expects Toujeo to be available in over 40 countries by the end of 2016. First-half sales of Toujeo were €244 million.

Sales of Amaryl were €93 million (down 9.2%, up 2.1% excluding Venezuela) in the second-quarter of which €74 million were generated in Emerging Markets (down 6.9%). Excluding Venezuela, sales of Amaryl in Emerging Markets increased 8.0%. First-half sales of Amaryl were €181 million, down 7.3%.

Second-quarter sales of Apidra were up 3.2% to €93 million, reflecting lower sales in the U.S. (down 11.8% to €30 million), which were more than offset by the performance in Emerging Markets (up 27.8% to €20 million). First-half sales of Apidra were stable at €178 million.

Cardiovascular franchise

Praluent (alirocumab, collaboration with Regeneron) was launched in the U.S. in 2015 and in a number of European markets in 2015 and 2016. Second-quarter sales of Praluent were €21 million of which €18 million were in the U.S. and €3 million in Europe, where the product has recently become commercially available in a few countries (including the UK, Germany, Spain, Netherlands, and Nordic countries). First-half sales of Praluent were €33 million reflecting current payer restrictions limiting uptake.

Second-quarter sales and first-half sales of Multaq were €84 million (down 1.1%) and €170 million (up 0.6%), respectively.

Established Rx Products

Net sales (€ million) Q2 2016 Change
(CER)
H1 2016 Change
(CER)
Plavix 392 -25.7% 780 -22.2%
Lovenox 414 +0.5% 818 -1.7%
Renvela/Renagel 208 -7.4% 442 -2.4%
Aprovel/Avapro 175 -16.1%(a) 344 -14.6%(b)
Synvisc/Synvisc-One 109 -3.4% 197 0.0%
Myslee/Ambien/Stilnox 78 +5.4% 148 0.0%
Allegra 39 -2.7% 114 -7.7%
Other 1,202 -7.4%(c) 2,365 -7.7%(d)
Total Established Rx Products 2,617 -9.7%(e) 5,208 -9.0%(f)

(a) Excluding Venezuela: -1.1%; (b) Excluding Venezuela: -1.9%; (c) Excluding Venezuela: -4.5%; (d) Excluding Venezuela: -4.1%; (e) Excluding Venezuela: -6.6%; (f) Excluding Venezuela: -5.7%;

Second-quarter sales of Established Rx Products were €2,617 million, down 9.7%, reflecting lower sales in Venezuela and generic competition to Plavix in Japan. Excluding Venezuela, sales of Established Rx Products were down 6.6%. In Emerging Markets, sales of Established Rx Products were €941 million, down 7.7% and up 1.5% excluding Venezuela. In Europe and the U.S., sales of Established Rx Products were down 3.0% (to €942 million) and 8.3% (to €374 million), respectively. First-half sales of Established Rx Products decreased 9.0% to €5,208 million and down 5.7% excluding Venezuela.

Second-quarter sales of Lovenox increased 0.5% to €414 million and 1.6% excluding Venezuela. In Emerging Markets, sales of Lovenox were up 2.4% to €113 million, and up 6.6% excluding Venezuela. In Europe, sales of the product were down 0.8% to €262 million. In July, two biosimilars containing enoxaparin sodium received positive opinion from the CHMP (European Medicines Agency's Committee for Medicinal Products for Human Use). First-half sales of Lovenox were €818 million down 1.7% and down 0.7% excluding Venezuela.

In the second quarter, Plavix sales declined 25.7% to €392 million due to generic competition in Japan that started in June 2015 (sales in Japan were down 59.1% to €93 million), which was partially offset by the growth in China (up 10.4% to €177 million). First-half sales of Plavix decreased 22.2% to €780 million.

Second-quarter sales of Renvela/Renagel decreased 7.4% to €208 million. In the U.S., sales of the product were €170 million (down 0.6%). Generics of the product are currently marketed in a number of European countries, which resulted in Europe sales of Renvela/Renagel down 32.3% to €21 million. Sanofi expects generic competition in the U.S. in 2016. First-half sales of Renvela/Renagel were down 2.4% to €442 million.

Sales of Aprovel/Avapro were down 16.1% to €175 million in the second quarter. Excluding Venezuela, sales of Aprovel/Avapro were down 1.1%. First-half sales of Aprovel/Avapro decreased 14.6% to €344 million and 1.9% excluding Venezuela.

In the second quarter and the first half of 2015, sales of Auvi-Q and Allerject were €35 million and €52 million, respectively. Sanofi no longer commercializes this product in the U.S. where no sales were recorded in 2016.  

Consumer Healthcare

Net sales (€ million) Q2 2016 Change
(CER)
H1 2016 Change
(CER)
Allegra 97 -11.2% 237 -5.0%
Doliprane 77 +11.4% 154 0.0%
Enterogermina 43 +27.8% 85 -3.2%
Essentiale 32 -22.2% 71 -17.9%
Nasacort 23 -25.0% 68 -6.8%
Lactacyd 22 -42.9% 41 -32.4%
Maalox 21 -15.4% 45 -11.1%
No Spa 19 0.0% 40 +2.3%
Magne B6 16 -19.0% 36 -4.9%
Dorflex 15 -15.0% 34 -2.3%
Other CHC Products 435 +0.9% 894 0.0%
Total Consumer Healthcare 800 -4.3%(a) 1,705 -3.6%(b)

(a) Excluding Venezuela: +0.6%; (b) Excluding Venezuela: +1.5%;

Second-quarter Consumer Healthcare (CHC) sales were €800 million, down 4.3%. Excluding Venezuela and the divestiture of smaller products, CHC sales were up 2.7% driven by the strong performance in Australia, Mexico and Argentina, which was partially offset by Russia. Second-quarter sales of CHC in the U.S. were down 0.8% to €229 million reflecting a mild allergy season impacting sales of Allegra (down 18.3% to €56 million). In Emerging Markets, sales were down 13.0% to €289 million (down 1.8% excluding Venezuela) impacted by lower sales in Russia. In the Rest of the World, second-quarter sales grew 18.0% to €69 million sustained by the allergy franchise and the vitamins business in Australia. Over the quarter, in Europe, sales increased 0.9% to €213 million (impacted by divestitures of small products), buoyed by a strong Doliprane performance due to a successful DTC campaign. First-half sales of CHC reached €1,705 million, down 3.6% and up 3.4% excluding Venezuela and the divestiture of several small products.

On June 27, 2016, Sanofi and Boehringer Ingelheim announced the signing of contracts to secure the strategic transaction initiated in December 2015 which consists of an exchange of Sanofi's animal health business and Boehringer Ingelheim's consumer healthcare business. This step marks a major milestone before closing of the transaction which is expected by year-end 2016 and remains subject to approval by all regulatory authorities in different territories.

Generics

Second-quarter sales of Generics were down 1.9% to €474 million. Excluding Venezuela, sales were up 0.4% driven by Emerging Markets (up 8.2%) offsetting lower sales of the Plavix authorized generic in Japan. First-half sales of Generics increased 0.6% to €933 million (up 3.3% excluding Venezuela).


Vaccines

Net sales (€ million) Q2 2016 Change
(CER)
H1 2016 Change
(CER)
Polio/Pertussis/Hib Vaccines
(incl. Pentacel, Pentaximand Imovax)
339 +28.6% 627 +17.1%
Meningitis/Pneumonia Vaccines
(incl. Menactra)
139 -1.4% 261 +10.3%
Adult Booster Vaccines (incl. Adacel ) 104 -9.3% 184 -12.2%
Influenza Vaccines
(incl. Vaxigrip and Fluzone)
96 -10.5% 116 -8.1%
Travel and Other Endemic Vaccines 101 +7.2% 184 +6.1%
Dengvaxia 1 - 20  
Other Vaccines 17 -36.7% 30 -34.7%
Total Vaccines (consolidated sales) 797 +6.3%*(a) 1,422 +7.1%*(b)

*Comparability based on the new presentation of VaxServe sales (see below)
(a) Excluding Venezuela: +7.0%; (b) Excluding Venezuela: +7.8%;

VaxServe sales

VaxServe is a U.S. entity of the Vaccines segment. VaxServe activities include products distribution in the U.S. in channels that are not the primary focus of Sanofi Pasteur. VaxServe complements its Sanofi Pasteur products offering by distributing vaccines and other products from third party manufacturers. All VaxServe sales were reported on the line Net sales in the past.

In order to provide more relevant published information, VaxServe sales of non-Sanofi products are reported on the line Other revenues in the income statement from January 1, 2016. Accordingly, prior period comparative net sales have been reclassified to the line Other revenues.

The 2015 quarterly and full-year 2015 business P&L as well as sales of GBUs and franchises by geographic region reflecting this reclassification are available on the Investors section of Sanofi's website.

In the second quarter of 2015 and in full-year 2015, sales of VaxServe(9) of non-Sanofi products were €110 million and €482 million, respectively.

Vaccines

In the second quarter, consolidated vaccines sales were up 6.3% to €797 million driven by the Polio/Pertussis/Hib Vaccines franchise in Emerging Markets and Travel and other endemics vaccines. In the U.S., sales of vaccines decreased 2.3% to €331 million due to increased competitive pressure on Adaceland lower sales of Menactrareflecting favorable CDC order phasing in the U.S during the first quarter of 2016. In Emerging Markets sales of vaccines increased 9.8% driven by Pentaxim and Hexaxim growth. First-half sales of Sanofi Pasteur were up 7.1% to €1,422 million.

Second quarter sales of Polio/Pertussis/Hib Vaccines were up 28.6% to €339 million. In Emerging Markets, sales of the franchise increased 43.6% to €178 million driven by the growth of Pentaxim and Hexaxim in the Middle-East, Africa, Turkey and Mexico. This performance more than offset lower sales of Pentaxim and Polio vaccines in China due to local market disruption. In the U.S., sales of Polio/Pertussis/Hib Vaccines were down 1.1% to €88 million reflecting a slight decrease in sales of IPV vaccines. Pentacel sales in the U.S. were €56 million, up 1.8%. As previously communicated, Sanofi Pasteur is experiencing Pentacel manufacturing delays and is not meeting all current demand. Supply improvements are expected in the second half of 2016. First-half sales of Polio/Pertussis/Hib vaccines increased 17.1% to €627 million.

Dengvaxia, the world's first dengue vaccine is now approved in five countries (Mexico, the Philippines, Brazil, El Salvador and Costa Rica). Dengvaxia was launched in the Philippines in the first quarter and in El Salvador in July. Additionally, a public vaccination program in Paranแ State in Brazil was announced in late July and is expected to cover half a million people. Despite these developments, the overall uptake of Dengvaxia is delayed by recent political changes and economic volatility in Latin America. With only a limited number of public immunization programs confirmed to date in endemic countries and the majority of regulatory approvals still pending in Asia, Dengvaxia is unlikely to meet Sanofi's prior sales expectations for 2016. Dengvaxia sales in the second quarter were limited to private market sales in the Philippines. First-half sales of Dengvaxia were €20 million corresponding to the sales of the first dose of the first public dengue immunization program in the Philippines in the first quarter of 2016.

 Sales of Influenza Vaccines were €96 million, a decrease of 10.5% reflecting lower sales in Brazil due to increased supply of the Butantan Institute.

(9) Sales of VaxServe in Q2 2016 and first-half 2016 are provided in the Financial Results
Menactra sales were €126 million, a decrease of 3.0% due to favorable CDC order phasing in the U.S in the first quarter of 2016. First-half sales of Menactra increased 10.0% to €237 million.

Second-quarter Adult Booster Vaccines sales were down 9.3% to €104 million reflecting increased Adacel competitive pressure in the U.S. First-half sales of Adult Booster vaccines decreased 12.2% to €184 million.

Second-quarter sales of Travel and Other Endemic Vaccines increased 7.2% to €101 million driven by increased sales of rabies and typhoid vaccines. First-half sales of Travel and Other Endemic Vaccines were up 6.1% to €184 million.

Sales of Sanofi Pasteur MSD (not consolidated), the joint venture with Merck & Co. in Europe, increased 9.0% (on a reported basis) to €175 million and 13.4% (on a reported basis) to €340 million in the second quarter and first half of 2016, respectively. In March, Sanofi Pasteur and Merck announced their intent to end their joint vaccines operations in Europe, Sanofi Pasteur MSD, to pursue their own distinct growth strategies in Europe. Sanofi Pasteur and Merck expect the project to be completed by the end of 2016, subject to local labor laws and regulations and regulatory approvals.

Animal Health(10)

Net sales (€ million) Q2 2016 Change
(CER)
H1 2016 Change
(CER)
Companion Animal 493 +8.6% 1,022 +14.2%
Production Animal 232 +10.1% 463 +11.1%
Total Animal Health 725 +9.1% 1,485 +13.2%
  of which Vaccines 205 +4.9% 417 +11.3%
  of which fipronil products 169 -10.3% 350 -7.5%
  of which avermectin products 142 +12.2% 312 +10.4%

In the second quarter, Animal Health sales were up 9.1% to €725 million driven by the success of NexGard family of products, Merial's next generation flea and tick products for dogs, in the U.S., Europe and Japan.

Second-quarter sales of the Companion Animals segment increased 8.6% to €493 million boosted by the success of NexGard and NexGard Spectra which more than offset the decline in the Frontline family of products. HeartGard also contributed to growth in the Companion Animals segment.

Sales of the Production Animals segment increased 10.1% to €232 million in the second quarter reflecting strong performance of the Avian business in Emerging Markets as well as Ruminant business in the U.S. and Europe.

Aggregate Company sales by geographic region    

Aggregate Sanofi sales (€ million) Q2 2016 Change
(CER)
H1 2016 Change
(CER)
United States 3,118 +1.3% 6,084 +1.4%
Emerging Markets(a) 2,534 -0.5% 4,907 +1.7%
  of which Latin America 698 -15.1% 1,269 -15.0%
  of which Asia 804 +5.3% 1,637 +10.2%
  of which Africa, Middle East and South Asia(b) 736 +10.3% 1,404 +11.0%
  of which Eurasia(c) 270 +4.3% 529 +6.9%
Europe(d) 2,360 +3.3% 4,732 +2.5%
Rest of the world(e) 856 -12.3% 1,688 -12.8%
  of which Japan 446 -24.4% 893 -24.9%
Total Aggregate Sanofi sales 8,868 -0.2% 17,411 +0.2%
  1. World excluding U.S., Canada, Western & Eastern Europe (except Eurasia), Japan, South Korea, Australia, New Zealand and Puerto Rico
  2. India, Pakistan, Bangladesh, Sri Lanka
  3. Russia, Ukraine, Georgia, Belarus, Armenia and Turkey
  4. Western Europe + Eastern Europe except Eurasia
  5. Japan, South Korea, Canada, Australia, New Zealand, Puerto Rico

In the second quarter, sales in the U.S. increased 1.3% to €3,118 million. The strong performance of the multiple sclerosis franchise (up 62.6%), rare disease franchise (up 12.3%) and Animal Health (up 4.6%) more than offset lower sales of the diabetes franchise (down 7.1%), Vaccines (down 2.3%) and the Auvi-Q impact.
(10) Merial is reported on a single line in the consolidated income statements in accordance with IFRS 5 (Non-current assets held for sale and discontinued operations). Sanofi will continue to manage and report the performance of Merial, which will remain an operating segment consistent with IFRS 8.
First-half sales in the U.S. increased 1.4% to €6,084 million.

Aggregate sales in Emerging Markets were down 0.5% to €2,534 million in the second quarter. Excluding Venezuela, Aggregate sales in Emerging Markets grew 6.7% driven by Diabetes (up 11.7%), Rare Diseases (up 28.2%), Vaccines (up 11.5%) and Animal Health (up 15.6%). In the Asia region, Aggregate sales were up 5.3% to €804 million in the second quarter. Over the quarter, sales in China increased 2.6% to €512 million; the strong performance of Pharmaceuticals (up 11.7%) was partially offset by lower vaccines sales (-84.9%). In Latin America, second-quarter Aggregate sales were down 15.1% to €698 million and up 5.7% excluding Venezuela driven by sales in Argentina, Colombia and Mexico. Aggregate sales in Brazil were down 3.3% to €280 million impacted by lower sales of Flu vaccines and Renagel. Aggregate sales in the Eurasia region increased 4.3% to €270 million driven by Turkey. Sales in Russia were down 12.6% to €110 million associated with the CHC business. In Africa, the Middle-East and South Asia, Aggregate sales were up 10.3% to €736 million sustained by the strong performance in Africa (up 16.6%). In the Emerging Markets, first-half sales increased 1.7% to €4,907 million. Excluding Venezuela, Aggregate first-half sales in Emerging Markets grew 9.7%.  

Aggregate sales in Europe were up 3.3% to €2,360 million in the second quarter. The performance of Multiple Sclerosis (up 78.3%), Rare Diseases (up 10.7%) and Vaccines (up 34.9%) franchises was partially offset by lower sales of Established Rx products (down 3.0%) mainly impacted by generic competition to Renagel. In Europe, first-half sales increased 2.5% to €4,732 million.

Aggregate second-quarter sales in Japan decreased 24.4% to €446 million, impacted by generic competition to Plavix (down 59.1%). In Japan, first-half sales decreased 24.9% to €893 million.

R&D update

Consult Appendix 8 for full overview of Sanofi's R&D pipeline

Regulatory update

Regulatory updates since the publication of the first quarter results on April 29, 2016 include the following:

             

             
At the end of July 2016, the R&D pipeline contained 44 pharmaceutical new molecular entities (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:

(11) The members of the Advisory Committee voted 12-2 for an approval of LixiLan

             

Phase II:

Phase I:

2016 second-quarter and first-half Aggregate financial results(12)

Business Net Income(12)

In the second quarter of 2016, Sanofi generated Aggregate sales of €8,868 million, a decrease of 4.3% (down 0.2% at CER). First-half Aggregate sales were €17,411 million, down 3.2% on a reported basis (up 0.2% at CER).

Aggregate other revenues decreased 10.4% to €173 million and include VaxServe sales of non-Sanofi products (down 19.1% to €89 million) following the change in presentation as of January 1, 2016(13). At CER, Aggregate other revenues were down 8.3%. First-half Aggregate other revenues decreased 12.1% to €328 million of which €172 million were generated by VaxServe (down 18.1%)

Aggregate gross profit was €6,276 million, down 3.8% and up 0.2% at CER in the second quarter. The Aggregate gross margin ratio improved by 0.4 percentage points to 70.8% versus the second quarter of 2015. The positive impact from the multiple sclerosis franchise, pharmaceuticals in China and industrial productivity largely offset the negative impact of U.S. Diabetes, and Plavix generic competition in Japan. Sanofi expects its 2016 Aggregate gross margin ratio to be above 69% and below 70% at CER. In the first half of 2016, the Aggregate gross margin ratio improved by 0.3 percentage points to 70.5% versus the first half of 2015.

Second-quarter Aggregate Research and Development expenses were €1,325 million, an increase of 2.7%. At CER, Aggregate R&D expenses were up 4.6% reflecting in particular the new immuno-oncology alliance with Regeneron. In the first half of 2016, the ratio of Aggregate R&D to Aggregate sales was 1.2 percentage points higher at 15.0% compared to the same period of 2015.

Aggregate selling general and administrative expenses (SG&A) increased 0.1% to €2,650 million in the second quarter. At CER, Aggregate SG&A was up 3.9% mainly reflecting the U.S. launch expenses of Praluent, and pre-launch costs for sarilumab and dupilumab. The ratio of Aggregate SG&A to Aggregate sales increased 1.3 percentage points to 29.9% compared with the second quarter of 2015. In the first half of 2016, the ratio of Aggregate selling and general expenses to Aggregate sales was 0.8 percentage points higher to 29.1% compared with the first half of 2015.

Second-quarter Aggregate other current operating income net of expenses was -€23 million versus -€20 million for the same period of 2015. In the second quarter of 2015, this line included a foreign exchange loss of €34 million booked in connection with Sanofi's Venezuelan operations. First-half Aggregate other current operating income net of expenses was €56 million versus -€87 million in the first half of 2015.

The Aggregate share of profits from associates was stable at €30 million in the second quarter. The Aggregate share of profits from associates included Sanofi's share in Regeneron profit as well as Sanofi's share of profit in Sanofi Pasteur MSD (the Vaccines joint venture with Merck & Co. in Europe). In the first half, the share of profits from associates was €53 million versus €61 million for the same period of 2015.

Aggregate non-controlling interests were -€23 million in the second quarter versus -€29 million in the second quarter of 2015. First-half non-controlling interests were -€50 million versus -€62 million for the same period of 2015.

Aggregate business operating income was €2,285 million, down 11.0%. At CER, Aggregate business operating income decreased 5.8%. The ratio of Aggregate business operating income to Aggregate net sales decreased 1.9 percentage points to 25.8% versus the same period of 2015. First-half Aggregate business operating income was €4,669 million, down 5.9% (or down 1.6% at CER). In the first half of 2016, the ratio of Aggregate business operating income to Aggregate sales decreased 0.8 percentage points to 26.8%.

Net Aggregate financial expenses were €76 million in the second quarter versus €112 million in the second quarter of 2015. In the second quarter of 2016, this line included a limited capital gain on a minor asset sale. First-half net financial expenses were €194 million versus €209 million in the first half of 2015.

Second-quarter and first-half 2016 effective tax rate (including Animal Health) were 24.0% compared with 25.0% in the same periods of 2015.

Second-quarter business net income(12) decreased 8.7% to €1,680 million (down 3.3% at CER). The ratio of business net income to Aggregate sales was 18.9%, a decrease of 1.0 percentage points compared with the second quarter of 2015. First-half business net income decreased 4.6% to €3,402 million, (stable at CER). The ratio of business net income to net sales decreased 0.3 percentage points to 19.5% compared to the first half of 2015.
(12) See Appendix 4 for 2016 second-quarter and 2016 first-half Consolidated income statement; see Appendix 10 for definitions of financial indicators, and Appendix 3 for reconciliation of business net income to IFRS net income reported
(13) See page 7, chapter on Vaccines

In the second quarter of 2016, business earnings per share(12) (EPS) was €1.31, a decrease of 7.1% on a reported basis and 2.1% at CER. The average number of shares outstanding was 1,286.8 million in the second quarter of 2016 versus 1,305.9 million in the second quarter of 2015. In the first half of 2016, business earnings per share(12) was €2.64, down 3.3% on a reported basis and up 1.5% at CER. The average number of shares outstanding was 1,287.6 million in the first half versus 1,307.2 million in the first half of 2015.

2016 guidance

Sanofi continues to expect 2016 Business EPS to be broadly stable at CER, barring unforeseen major adverse events. In addition, the currency impact on 2016 full-year business EPS is estimated to be around -4%, applying June 2016 average rates to the two remaining quarters of 2016.

From business net income to IFRS net income reported (see Appendix 3)

In the first half of 2016, the main reconciling items between business net income and IFRS net income reported were:
             

             

             

             

             

             

             

             

(12) See Appendix 4 for 2016 second-quarter and 2016 first-half Consolidated income statement; see Appendix 10 for definitions of financial indicators, and Appendix 3 for reconciliation of business net income to IFRS net income reported

Capital Allocation

In the first half of 2016, net cash generated by operating activities decreased by 17.6% to €2,541 million after capital expenditures of €700 million and an increase in working capital of €753 million. This net Cash Flow has contributed to finance a share repurchase (€1,403 million), dividend paid by Sanofi (€3,759 million), acquisitions and partnerships net of disposals (€663 million) and restructuring costs and similar items (€347 million). As a consequence, net debt increased from €7,254 million at December 31, 2015 to €11,001 million at the end of June 2016 (amount net of €6,076 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, Sanofi's ability to benefit from external growth opportunities and/or obtain regulatory clearances, risks associated with intellectual property and any related pending or future litigation and the  ultimate outcome of such litigation,  trends in exchange rates and prevailing interest rates, volatile economic conditions, the impact of cost containment initiatives 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, 2015. 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:  2016 second-quarter and 2016 first-half net sales and Aggregate Company sales by GBU, by franchise, by geographic region and product  
     
Appendix 2:

 

Appendix 3:

 
2016 second-quarter and 2016 first-half Business income statement

 

Reconciliation of Business net income to IFRS net income reported

 
 
Appendix 4

 

Appendix 5:

 

Appendix 6:
2016 second-quarter and 2016 first-half Consolidated income statement

 

Change in net debt

 

Simplified consolidated balance sheet

 
 
Appendix 7:

 

Appendix 8:

 

Appendix 9:
2016 currency sensitivity

 

R&D pipeline

 

Expected R&D milestones
 
 

Appendix 10:
 

Definitions of non-GAAP financial indicators
 
   

Appendix 1: 2016 second-quarter net sales and Aggregate Company sales by GBU, by franchise by geographic region and product

                                         
Q2
2016

million)
Total
GBUs
%
CER
%
re-
ported
  Eu-
rope
%
CER
  United
States
%
CER
  Rest
of the
World
%
CER
  Emer-
ging
Mar-
kets
%
CER
  Total
Fran-
chises
%
CER
%
re-
ported
 
Aubagio 306 57.6% 54.5%   80 68.8%   216 55.6%   10 25.0%   9 83.3%   315 58.3% 54.4%  
Lemtrada 103 100.0% 94.3%   40 100.0%   56 96.6%   7 133.3%   5 100.0%   108 100.0% 92.9%  
Total MS 409 66.5% 62.9%   120 78.3%   272 62.6%   17 54.5%   14 88.9%   423 67.3% 62.7%  
Cerezyme 129 -1.5% -3.0%   71 0.0%   45 -4.1%   13 0.0%   70 27.3%   199 8.0% 0.0%  
Cerdelga 26 62.5% 62.5%   5 400.0%   20 33.3%   1 -   0 -   26 62.5% 62.5%  
Myozyme 156 15.3% 13.9%   84 11.7%   58 15.7%   14 44.4%   26 7.1%   182 13.9% 10.3%  
Fabrazyme 151 17.1% 17.1%   40 14.3%   85 14.5%   26 33.3%   16 23.5%   167 17.8% 14.4%  
Aldurazyme 36 8.8% 5.9%   19 0.0%   11 0.0%   6 100.0%   14 0.0%   50 6.0% 0.0%  
Total
Rare
Disease
570 12.5% 11.1%   236 10.7%   249 12.3%   85 18.3%   137 20.9%   707 14.2% 9.3%  
Taxotere 12 -47.8% -47.8%   1 0.0%   1 0.0%   10 -55.0%   34 -5.1%   46 -21.0% -25.8%  
Jevtana 83 10.8% 12.2%   36 -2.8%   37 12.1%   10 100.0%   5 -12.5%   88 8.5% 7.3%  
Eloxatine 7 -66.7% -70.8%   1 0.0%   0 -100.0%   6 -68.2%   37 21.2%   44 -15.8% -22.8%  
Thymo-
  globulin
56 9.4% 5.7%   11 0.0%   39 7.9%   6 50.0%   13 -12.5%   69 4.3% 0.0%  
Mozobil 35 9.1% 6.1%   11 10.0%   23 14.3%   1 -50.0%   2 50.0%   37 11.4% 5.7%  
Zaltrap 16 -20.0% -20.0%   12 -7.7%   3 -50.0%   1 0.0%   1 -   17 -15.0% -15.0%  
Total
Oncology
266 -6.6% -8.0%   85 -3.4%   142 2.8%   39 -33.3%   97 5.0%   363 -3.6% -6.9%  
Sanofi
Genzyme
(Specialty
Care)
1,245 20.1% 18.2%   441 19.9%   663 25.8%   141 -0.7%   248 16.8%   1,493 19.5% 15.1%  
Lantus 1,215 -14.2% -15.8%   228 -9.1%   896 -15.7%   91 -10.6%   250 5.3%   1,465 -11.2% -14.3%  
Apidra 73 -2.7% -2.7%   32 3.2%   30 -11.8%   11 10.0%   20 27.8%   93 3.2% 0.0%  
Amaryl 19 -18.2% -13.6%   8 33.3%   0 -   11 -37.5%   74 -6.9%   93 -9.2% -14.7%  
Insuman 23 -4.0% -8.0%   22 -12.0%   0 -100.0%   1 -300.0%   11 44.4%   34 8.8% 0.0%  
Toujeo 140 992.3% 976.9%   27 2600.0%   106 881.8%   7 600.0%   1 -   141 1000.0% 984.6%  
Total
Diabetes
1,499 -5.1% -6.7%   338 0.9%   1,033 -7.1%   128 -3.7%   358 5.0%   1,857 -3.2% -6.6%  
Multaq 83 0.0% -2.4%   12 20.0%   70 -4.1%   1 100.0%   1 -50.0%   84 -1.1% -3.4%  
Praluent 21 - -   3 -   18 -   0 -   0 -   21 - -  
Total
Cardio-
vascular
104 25.9% 22.4%   15 50.0%   88 20.3%   1 200.0%   1 -50.0%   105 24.1% 20.7%  
Diabetes
& Cardio-
vascular
1,603 -3.5% -5.2%   353 2.3%   1,121 -5.4%   129 -2.2%   359 4.7%   1,962 -2.0% -5.4%  
Plavix 392 -25.7% -28.1%   43 -10.4%   0 -   107 -55.2%   242 -4.4%   392 -25.7% -28.1%  
Lovenox 414 0.5% -4.4%   262 -0.8%   14 -11.8%   25 12.5%   113 2.4%   414 0.5% -4.4%  
Renagel /
  Renvela
208 -7.4% -10.0%   21 -32.3%   170 -0.6%   7 28.6%   10 -42.1%   208 -7.4% -10.0%  
Aprovel 175 -16.1% -21.9%   33 -12.8%   2 -60.0%   35 2.7%   105 -20.3%   175 -16.1% -21.9%  
Allegra 39 -2.7% 5.4%   3 0.0%   0 -   36 -3.0%   0 -   39 -2.7% 5.4%  
Myslee /
  Ambien /
  Stilnox
78 5.4% 5.4%   11 0.0%   24 47.1%   30 -15.6%   13 7.1%   78 5.4% 5.4%  
Synvisc /
  Synvisc
  One
109 -3.4% -6.0%   9 0.0%   84 -3.3%   5 0.0%   11 -7.7%   109 -3.4% -6.0%  
Depakine 104 2.8% -3.7%   41 0.0%   0 -   3 0.0%   60 4.8%   104 2.8% -3.7%  
Tritace 63 -7.1% -10.0%   39 -4.8%   0 -   2 0.0%   22 -11.1%   63 -7.1% -10.0%  
Lasix 43 -6.4% -8.5%   19 -5.0%   0 -100.0%   10 -9.1%   14 0.0%   43 -6.4% -8.5%  
Targocid 38 -4.8% -9.5%   19 -14.3%   0 -   1 50.0%   18 0.0%   38 -4.8% -9.5%  
Orudis 24 -37.2% -44.2%   5 25.0%   0 -   0 -66.7%   19 -41.7%   24 -37.2% -44.2%  
Cordarone 32 3.0% -3.0%   7 14.3%   0 -   8 -12.5%   17 5.6%   32 3.0% -3.0%  
Xatral 27 26.1% 17.4%   10 0.0%   0 -   1 0.0%   16 50.0%   27 26.1% 17.4%  
Other Rx
  Drugs
871 -8.6% -12.2%   420 -0.7%   80 -28.4%   90 -15.8%   281 -9.5%   871 -8.6% -12.2%  
Total
Established
Rx
Products
2,617 -9.7% -13.3%   942 -3.0%   374 -8.3%   360 -29.0%   941 -7.7%   2,617 -9.7% -13.3%  
Consumer
Healthcare
800 -4.3% -10.1%   213 0.9%   229 -0.8%   69 18.0%   289 -13.0%   800 -4.3% -10.1%  
Generics 474 -1.9% -8.8%   206 -0.5%   45 -10.0%   20 -34.5%   203 2.6%   474 -1.9% -8.8%  
Total
Emerging
Markets
Specialty
Care
248 16.8% 1.6%   0 -   0 -   0 -   248 16.8%          
Total
Emerging
Markets
Diabetes &
Cardio-
vascular
359 4.7% -6.5%   0 -   0 -   0 -   359 4.7%          
General
Medicines &
Emerging
Markets
4,498 -5.6% -11.0%   1,361 -2.0%   648 -5.9%   449 -24.3%   2,040 -3.0%   3,891 -7.7% -12.1%  
                                         
Total
Pharma-
ceuticals
7,346 -1.7% -5.8%   2,155 2.5%   2,432 1.3%   719 -16.9%   2,040 -3.0%   7,346 -1.7% -5.8%  
                                         
Polio /
  Pertussis
  / Hib
339 28.6% 24.2%   35 45.8%   88 -1.1%   38 37.0%   178 43.6%   339 28.6% 24.2%  
Adult
  Booster
  Vaccines
104 -9.3% -11.9%   12 20.0%   76 -10.5%   6 16.7%   10 -31.3%   104 -9.3% -11.9%  
Meningitis/
  Pneumonia
139 -1.4% -4.1%   3 -   105 -5.3%   5 100.0%   26 -3.3%   139 -1.4% -4.1%  
Influenza
  Vaccines
96 -10.5% -15.8%   0 -100.0%   0 -   15 36.4%   81 -14.7%   96 -10.5% -15.8%  
Travel And
  Other
  Endemics
  Vaccines
101 7.2% 4.1%   8 14.3%   45 48.4%   12 -31.3%   36 -9.3%   101 7.2% 4.1%  
Dengue 1 - -   0 -   0 -   0 -   1 -   1 - -  
Vaccines 797 6.3% 2.6%   57 34.9%   331 -2.3%   75 15.4%   334 9.8%   797 6.3% 2.6%  
Total
Company
8,143 -0.9% -5.1%   2,212 3.2%   2,763 0.9%   794 -14.6%   2,374 -1.4%   8,143 -0.9% -5.1%  
Animal
Health
725 9.1% 4.9%   148 4.9%   355 4.6%   62 33.3%   160 15.6%   725 9.1% 4.9%  
Total
Aggregate
Company
Sales
8,868 -0.2% -4.3%   2,360 3.3%   3,118 1.3%   856 -12.3%   2,534 -0.5%   8,868 -0.2% -4.3%  
  1. Including Animal Health business (See Appendix 8 for the definition of Aggregate Company sales) which is reported on a single line in the consolidated income statements in accordance with IFRS 5 (Non-current assets held for sale and discontinued operations); (2) See definition page 7

Appendix 1: 2016 first-half net sales and Aggregate Company sales by GBU, by franchise by geographic region and product

                                 
H1
2016

million)
Total
GBUs
%
CER
%
re-
ported
Eu-
rope
%
CER
Uni-
ted
Sta-
tes
%
CER
Rest
of
the
World
%
CER
  Emer-
ging
Mar-
kets
%
CER
  Total
Fran-
chi-
ses
%
CER
%
re-
ported
Aubagio 578 60.3% 59.2% 154 84.5% 404 52.8% 20 57.1%   16 81.8%   594 61.0% 58.8%
Lemtrada 188 112.2% 108.9% 75 92.5% 102 126.7% 11 140.0%   8 150.0%   196 113.8% 108.5%
Total
MS
766 70.6% 69.1% 229 87.1% 506 63.5% 31 78.9%   24 100.0%   790 71.6% 68.8%
Cerezyme 255 -2.7% -3.4% 142 1.4% 89 -9.1% 24 0.0%   126 24.2%   381 5.9% -1.8%
Cerdelga 49 88.5% 88.5% 8 700.0% 39 56.0% 2 -   0 -   49 88.5% 88.5%
Myozyme 302 12.6% 11.9% 163 10.0% 113 14.1% 26 23.8%   46 3.9%   348 11.2% 8.4%
Fabra-
zyme
289 13.8% 14.2% 77 14.7% 164 11.6% 48 21.1%   27 0.0%   316 12.2% 10.1%
Aldura-
zyme
71 5.9% 4.4% 38 2.6% 21 5.0% 12 20.0%   27 3.3%   98 5.1% 0.0%
Total
Rare
Disease
1,108 10.5% 10.2% 464 10.9% 486 9.7% 158 12.3%   245 14.9%   1,353 11.4% 7.4%
Taxotere 28 -39.1% -39.1% 2 -25.0% 2 -33.3% 24 -41.0%   64 -1.4%   92 -16.5% -20.0%
Jevtana 167 13.8% 15.2% 71 -5.3% 75 25.0% 21 90.0%   11 0.0%   178 12.6% 11.9%
Eloxatine 20 -54.3% -56.5% 2 0.0% 0 -100.0% 18 -54.8%   66 9.2%   86 -17.1% -22.5%
Thymo-
globulin
107 9.1% 8.1% 20 0.0% 76 10.0% 11 22.2%   27 16.0%   134 10.5% 8.1%
Mozobil 68 9.5% 7.9% 21 5.0% 44 12.8% 3 0.0%   4 -16.7%   72 7.2% 4.3%
Zaltrap 32 -17.9% -17.9% 24 -7.7% 7 -41.7% 1 0.0%   2 100.0%   34 -15.0% -15.0%
Total
Oncology
540 -3.0% -3.2% 166 -5.1% 285 7.9% 89 -25.0%   181 4.2%   721 -1.2% -3.5%
Sanofi
Gen-
zyme
(Specialty
Care)
2,414 20.3% 19.7% 859 20.1% 1,277 25.6% 278 1.1%   450 13.3%   2,864 19.0% 15.7%
Lantus 2,382 -14.2% -14.6% 464 -6.4% 1,739 -16.7% 179 -6.6%   478 5.8%   2,860 -11.1% -13.1%
Apidra 138 -7.4% -7.4% 63 3.3% 55 -20.3% 20 5.3%   40 31.4%   178 0.0% -3.3%
Amaryl 36 -18.6% -16.3% 16 23.1% 1 0.0% 19 -37.9%   145 -4.3%   181 -7.3% -12.1%
Insuman 44 -8.2% -10.2% 43 -10.4% 1 0.0% 0 -   22 38.9%   66 4.5% -1.5%
Toujeo 243 1120.0% 1115.0% 46 4500.0% 184 927.8% 13 1200.0%   1 -   244 1125.0% 1120.0%
Total
Diabetes
2,902 -6.0% -6.4% 676 2.4% 1,983 -9.0% 243 -2.0%   689 5.7%   3,591 -3.8% -6.1%
Multaq 167 0.6% 0.0% 23 9.5% 143 -0.7% 1 0.0%   3 0.0%   170 0.6% 0.0%
Praluent 33 - - 6 - 27 - 0 -   0 -   33 - -
Total
Cardio-
vascular
200 21.0% 19.8% 29 38.1% 170 18.1% 1 50.0%   3 0.0%   203 20.6% 19.4%
Diabetes
&
Cardio-
vascular
3,102 -4.6% -5.1% 705 3.5% 2,153 -7.3% 244 -1.6%   692 5.6%   3,794 -2.8% -5.0%
Plavix 780 -22.2% -24.1% 85 -10.5% 1 - 211 -53.9%   483 3.2%   780 -22.2% -24.1%
Lovenox 818 -1.7% -6.1% 524 -0.4% 29 -32.6% 47 6.3%   218 -0.8%   818 -1.7% -6.1%
Renagel /
Renvela
442 -2.4% -3.3% 43 -35.8% 364 7.4% 15 21.4%   20 -40.5%   442 -2.4% -3.3%
Aprovel 344 -14.6% -19.1% 66 -13.0% 6 -25.0% 61 -12.2%   211 -15.4%   344 -14.6% -19.1%
Allegra 114 -7.7% -2.6% 5 -14.3% 0 - 109 -7.3%   0 -   114 -7.7% -2.6%
Myslee /
Ambien
 / Stilnox
148 0.0% -0.7% 22 -4.3% 39 14.3% 60 -11.1%   27 10.7%   148 0.0% -0.7%
Synvisc /
Synvisc
One
197 0.0% -2.0% 17 0.0% 151 -1.9% 7 0.0%   22 13.6%   197 0.0% -2.0%
Depakine 206 2.8% -2.8% 81 -1.2% 0 - 7 14.3%   118 4.9%   206 2.8% -2.8%
Tritace 125 -11.0% -13.8% 79 -4.8% 0 - 2 -50.0%   44 -18.6%   125 -11.0% -13.8%
Lasix 77 -11.2% -13.5% 38 -2.6% 0 -100.0% 12 -42.1%   27 3.4%   77 -11.2% -13.5%
Targocid 75 -3.7% -8.5% 39 -7.1% 0 - 3 0.0%   33 0.0%   75 -3.7% -8.5%
Orudis 50 -38.7% -46.2% 9 0.0% 0 - 2 0.0%   39 -44.4%   50 -38.7% -46.2%
Cordarone 63 -1.5% -6.0% 14 0.0% 0 - 15 -12.5%   34 2.8%   63 -1.5% -6.0%
Xatral 54 18.8% 12.5% 19 0.0% 0 - 2 0.0%   33 34.6%   54 18.8% 12.5%
Other Rx
Drugs
1,715 -8.0% -11.3% 834 -3.1% 154 -26.8% 171 -14.9%   556 -6.5%   1,715 -8.0% -11.3%
Total
Estab-
lished
Rx
Products
5,208 -9.0% -12.0% 1,875 -4.3% 744 -5.8% 724 -29.2%   1,865 -5.1%   5,208 -9.0% -12.0%
Consumer
Health-
care
1,705 -3.6% -8.8% 455 -3.6% 513 3.6% 137 15.3%   600 -11.4%   1,705 -3.6% -8.8%
Generics 933 0.6% -6.5% 413 1.0% 94 3.3% 46 -13.7%   380 1.4%   933 0.6% -6.5%
Total
Emerging
Markets
Specialty
Care
450 13.3% -2.0%               450 13.3%        
Total
Emerging
Markets
Diabetes &
Cardio-
vascular
692 5.6% -4.8%               692 5.6%        
General
Medicines
&
Emerging
Markets
8,988 -4.9% -9.9% 2,743 -3.4% 1,351 -1.8% 907 -23.8%   3,987 -2.0%   7,846 -6.8% -10.7%
                                 
Total
Pharma-
ceuti-
cals
14,504 -1.5% -4.9% 4,307 1.7% 4,781 1.4% 1,429 -16.5%   3,987 -2.0%   14,504 -1.5% -4.9%
                                 
Polio /
Pertussis
  / Hib
627 17.1% 13.0% 58 56.8% 148 -28.5% 63 19.2%   358 47.5%   627 17.1% 13.0%
Adult
Booster
Vaccines
184 -12.2% -13.6% 26 44.4% 127 -19.5% 13 18.2%   18 -20.0%   184 -12.2% -13.6%
Meningitis
 /
Pneumonia
261 10.3% 7.9% 3 200.0% 204 10.2% 8 100.0%   46 0.0%   261 10.3% 7.9%
Influenza
Vaccines
116 -8.1% -14.7% 1 0.0% 3 -250.0% 20 40.0%   92 -18.0%   116 -8.1% -14.7%
Travel
And
Other
Endemics
Vaccines
184 6.1% 2.8% 16 -11.1% 69 38.0% 23 -19.4%   76 0.0%   184 6.1% 2.8%
Dengue 20 - - 0 - 0 - 0 -   20 -   20 - -
Vaccines 1,422 7.1% 3.5% 105 39.5% 575 -9.2% 130 12.7%   612 20.7%   1,422 7.1% 3.5%
Total
Company
15,926 -0.8% -4.2% 4,412 2.3% 5,356 0.1% 1,559 -14.6%   4,599 0.5%   15,926 -0.8% -4.2%
Animal
Health
1,485 13.2% 10.1% 320 4.2% 728 11.8% 129 16.8%   308 25.2%   1,485 13.2% 10.1%
Total
Aggre-
gate
Company
Sales
17,411 0.2% -3.2% 4,732 2.5% 6,084 1.4% 1,688 -12.8%   4,907 1.7%   17,411 0.2% -3.2%
                                 
  1. Including Animal Health business (See Appendix 8 for the definition of Aggregate Company sales) which is reported on a single line in the consolidated income statements in accordance with IFRS 5 (Non-current assets held for sale and discontinued operations); (2) See definition page 7

Appendix 2: 2016 Second-quarter and first-half Business net income statement

Second
quarter
2016
Pharma-
ceuticals
Vaccines Others Total
Company
Animal
Health
(1)
Total:
aggre-
gate
basis
(2)
€
million
Q2
2016
Q2
2015
% Q2
2016
Q2
2015
% Q2
2016
Q2
2015
Q2
2016
Q2
2015
Q2
2016
Q2
2015
% Q2
2016
Q2
2015
%
Net
sales
7,
346
7,800 (5.8
%)
797 777 2.6
%
- - 8,143 8,577 725 691 4.9
%
8,868 9,268 (4.3
%)
Other
reve-
nues
(3)
68 67 1.5
%
97 118 (17.8
%)
- - 165 185 8 8   173 193 (10.4
%)
Cost
of
sales
(2,
046)
(2,252) (9.1
%)
(477) (450) (6.0
%)
- - (2,523) (2,702) (242) (236) 2.5
%
(2,765) (2,938) (5.9
%)
As %
of net
sales
(27.
9%)
(28.9%)   (59.8%) (57.9%)   - - (31.0%) (31.5%) (33.4%) (34.2%)   (31.2%) (31.7%)  
Gross
profit
5,
368
5,615 (4.4
%)
417 445 (6.3
%)
- - 5,785 6,060 491 463 6.0
%
6,276 6,523 (3.8
%)
As %
of net
sales
73.
1%
72.0%   52.3% 57.3%   - - 71.0% 70.7% 67.7% 67.0%   70.8% 70.4%  
Re-
search
and
de-
velop-
ment
ex-
penses
(1,
138)
(1,104) 3.1
%
(141) (142) (0.7
%)
- - (1,279) (1,246) (46) (44) 4.5
%
(1,325) (1,290) 2.7
%
As % of
net
sales
(15.
5%)
(14.2%)   (17.7%) (18.3%)   - - (15.7%) (14.5%) (6.3%) (6.4%)   (14.9%) (13.9%)  
Selling
and
general
ex-
penses
(2,
215
)
(2,216) (0.0
%)
(182) (188) (3.2
%)
- - (2,397) (2,404) (253) (244) 3.7
%
(2,650) (2,648) 0.1
%
As %
of net
sales
(30.
2%)
(28.4%)   (22.8%) (24.2%)   - - (29.4%) (28.0%) (34.9%) (35.3%)   (29.9%) (28.6%)  
Other
current
ope-
rating
income
/ex-
penses
3 (11)   (1) 1   (25) (15) (23) (25) - 5   (23) (20)  
Share
of
profit/
loss of
asso-
ciates*
and
joint
ven-
tures
28 29   2 1   - - 30 30 - -   30 30  
Net
income
attri-
butable
to non-
con-
trolling
interests
(23) (29)   - -   - - (23) (29) - -   (23) (29)  
Busi-
ness
opera-
ting
in-
come
2,
023
2,284 (11.4
%)
95 117 (18.8
%)
(25) (15) 2,093 2,386 192 180 6.7
%
2,285 2,566 (11.0
%)
As %
of
net
sales
27.
5%
29.3%   11.9% 15.1
%
      25.7% 27.8% 26.5% 26.0%   25.8% 27.7%  
                      Finan-
cial
income
and
ex-
penses
(4)
(76) (112)  
                      In-
come
tax
ex-
pense(4)
(529) (614)  
                      Tax rate** 24.0% 25.0%  
                      Busi-
ness
net
in-
come
1,680 1,840 (8.7
%)
                      As % of
net sales
18.9% 19.9%  
                      Busi-
ness
earnings
per
share***
(in
euros)
1.31 1.41 (7.1
%)

*   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 1,286.8 million in the second quarter of 2016 and 1,305.9 million in the second quarter of 2015.

  1. Pursuant to IFRS 5 presentation requirement as "discontinued operations", Animal Health business net result is reported on the single income statement line Net income from the held-for-exchange Animal Health business for 2016 and prior years. Until the closing of the transaction, Animal Health remains an operating segment of the Company.
  2. Including Animal Health Business which is reported on a single line in the consolidated income statements in accordance with IFRS 5 (Non-current held for sale and discontinued operations). Additionally, Sanofi comments include Animal Health Business for every income statement line using "aggregate" wording.  
  3. As per a change in accounting presentation, VaxServe sales of non-Group products are reported in Other revenues from 2016 onwards. Prior period Net sales and Other revenues have been represented accordingly.
  4. Aggregate amount including Animal Health business.
First
half
2016
Pharma-
ceuticals
Vaccines Others Total
Company
Animal
Health(1)
Total:
aggre-
gate
basis(2)
€
million
H1
2016
H1
2015
% H1
2016
H1
2015
% H1
2016
H1 2015 H1
2016
H1
2015
H1
2016
H1
2015
% H1
2016
H1
2015
%
Net
sales
14,
504
15,255 (4.9
%)
1,422 1,374 3.5
%
- - 15,926 16,629 1,485 1,349 10.1
%
17,411 17,978 (3.2
%)
Other
reve-
nues
(3)
122 129 (5.4
%)
188 224 (16.1
%)
- - 310 353 18 20 (10.0
%)
328 373 (12.1
%)
Cost of
sales
(4,
143)
(4,442) (6.7
%)
(827) (826) 0.1
%
- - (4,970) (5,268) (488) (456) 7.0
%
(5,458) (5,724) (4.6
%)
As %
of net
sales
(28.
6%)
(29.1%)   (58.2%) (60.1%)   - - (31.2%) (31.7%) (32.9%) (33.8%)   (31.3%) (31.8%)  
Gross
profit
10,
483
10,942 (4.2
%)
783 772 1.4
%
- - 11,266 11,714 1,015 913 11.2
%
12,281 12,627 (2.7
%)
As %
of net
sale
72.
3%
71.7%   55.1% 56.2%   - - 70.7% 70.4% 68.4% 67.7%   70.5% 70.2%  
Re-
search
and
de-
velop-
ment
ex-
penses
(2,
246)
(2,143) 4.8
%
(268) (262) 2.3
%
- - (2,514) (2,405) (89) (84) 6.0
%
(2,603) (2,489) 4.6
%
As % o
net
sales
(15.
5%)
(14.0%)   (18.8%) (19.1%)   - - (15.8%) (14.5%) (6.0%) (6.2%)   (15.0%) (13.8%)  
Selling
and
general
ex-
penses
(4,
261)
(4,310) (1.1
%)
(348) (344) 1.2
%
- - (4,609) (4,654) (459) (432) 6.3
%
(5,068) (5,086) (0.4
%)
As %
of net
sales
(29.
4%)
(28.3%)   (24.5%) (25.0%)   - - (28.9%) (28.0%) (30.9%) (32.0%)   (29.1%) (28.3%)  
Other
current
ope-
rating
income
/ex-
penses
110 (39)   (1) 2   (39) (55) 70 (92) (14) 5   56 (87)  
Share
of profit/
loss of
asso-
ciates*
and
joint
ven-
tures
44 61   9 -   - - 53 61 - -   53 61  
Net
in-
come
attri-
butable
to non-
con-
trolling interests
(50) (62)   - -   - - (50) (62) - -   (50) (62)  
Busi-
ness
opera-
ting
in-
come
4,
080
4,449 (8.3
%)
175 168 4.2
%
(39) (55) 4,216 4,562 453 402 12.7
%
4,669 4,964 (5.9
%)
As %
of net
sales
28.
1%
29.2%   12.3% 12.2%       26.5% 27.4% 30.5% 29.8%   26.8% 27.6%  
                      Finan-
cial
income
and
expenses
(4)
(194) (209)  
                      In-
come
tax
expense
(4)
(1,073) (1,189)  
                      Tax
rate**
24.0% 25.0%  
                      Busi-
ness
net
in-
come
3,402 3,566 (4.6
%)
                      As %
of net
sales
19.5% 19.8%  
                      Busi-
ness
earnings
per
share***
(in
euros)
2.64 2.73 (3.3
%)

*   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 1,287.6 million in the first semester of 2016 and 1,307.2 million in the first semester of 2015.

  1. Pursuant to IFRS 5 presentation requirement as "discontinued operations", Animal Health business net result is reported on the single income statement line Net income from the held-for-exchange Animal Health business for 2016 and prior years. Until the closing of the transaction, Animal Health remains an operating segment of the Company.
  2. Including Animal Health Business which is reported on a single line in the consolidated income statements in accordance with IFRS 5 (Non-current held for sale and discontinued operations). Additionally, Sanofi comments include Animal Health Business for every income statement line using "aggregate" wording.  
  3. As per a change in accounting presentation, VaxServe sales of non-Group products are reported in Other revenues from 2016 onwards. Prior period Net sales and Other revenues have been represented accordingly.
  4. Aggregate amount including Animal Health business.

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

€ million Q2 2016(1) Q2 2015(1) Change
Business net income 1,680 1,840 (8.7%)
Amortization of intangible assets(2) (433) (489)  
Impairment of intangible assets (52) (1)  
Fair value remeasurement of contingent
consideration liabilities
(38) 70  
Restructuring costs and similar items (127) (27)  
Other gains and losses, and litigation - -  
Tax effect of items listed above: 210 161  
  Amortization of intangible assets 151 169  
Impairment of intangible assets 16 -  
Fair value remeasurement of contingent consideration liabilities 4 (21)  
Other gains and losses, and litigation - -  
Restructuring costs and similar items 39 13  
 

Other tax items
(113) (111)  
 

Share of items listed above attributable to non-controlling interests
8 2  
 

Restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures
(16) (65)  
Animal Health items(3) 58 (78)  
Other Sanofi Pasteur MSD items(4) (19) -  
Net income attributable to equity holders of Sanofi 1,158 1,302 (11.1%)
IFRS earnings per share(5) (in euros) 0.90 1.00  

(1)      Animal Health reported separately in accordance with IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations).
(2)      Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations: €399 million in the second quarter of 2016 and €460 million in the second quarter of 2015.
(3)      Includes the following items: Impact of the discontinuation of depreciation and impairment of Property, Plant & Equipment starting at IFRS 5 application (Non-current held for sale and discontinued operations), impact of the amortization and impairment of intangible assets until IFRS 5 application, costs incurred as a result of the divestment as well as tax effect of these items, and outside basis deferred tax impact.
(4)      Includes the following items: Impact of the discontinuation of the equity accounting of the Sanofi Pasteur MSD business net income since the announcement by Sanofi and Merck of their intent to end their joint vaccins operations in Europe, as well as outside basis deferred tax impact.
(5)      Based on an average number of shares outstanding of 1,286.8 million in the second quarter of 2016 and 1,305.9 million in the second quarter of 2015.

€ million H1 2016(1) H1 2015(1) Change
Business net income 3,402 3,566 (4.6%)
Amortization of intangible assets(2) (877) (988)  
Impairment of intangible assets (52) (28)  
Fair value remeasurement of contingent
consideration liabilities
(67) 71  
Restructuring costs and similar items (627) (380)  
Other gains and losses, and litigation - -  
Tax effect of items listed above: 548 473  
  Amortization of intangible assets 307 343  
Impairment of intangible assets 16 10  
Fair value remeasurement of contingent consideration liabilities 15 (14)  
Other gains and losses, and litigation - -  
Restructuring costs and similar items 210 134  
 

Other tax items
(113) (111)  
 

Share of items listed above attributable to non-controlling interests
9 3  
 

Restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures
54 (127)  
Animal Health items(3) (13) (154)  
Other Sanofi Pasteur MSD items(4) (19) -  
Net income attributable to equity holders of Sanofi 2,245 2,325 (3.4%)
IFRS earnings per share(5) (in euros) 1.74 1.78  

(1)      Animal Health reported separately in accordance with IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations).
(2)      Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations: €809 million in the first semester of 2016 and €931 million in the first semester of 2015.
(3)      Includes the following items: Impact of the discontinuation of depreciation and impairment of Property, Plant & Equipment starting at IFRS 5 application (Non-current held for sale and discontinued operations), impact of the amortization and impairment of intangible assets until IFRS 5 application, and costs incurred as a result of the divestment as well as tax effect of these items.
(4)      Includes the following items: Impact of the discontinuation of the equity accounting of the Sanofi Pasteur MSD business net income since the announcement by Sanofi and Merck of their intent to end their joint vaccins operations in Europe, as well as outside basis deferred tax impact.
(5)      Based on an average number of shares outstanding of 1,287.6 million in the first semester of 2016 and 1,307.2 million in the first semester of 2015.

Appendix 4: Consolidated income statements

€ million Q2 2016(1) Q2 2015(1)(2) H1 2016(1) H1 2015(1)(2)
Net sales 8,143   8,577  15,926 16,629
Other revenues 165 185 310 353
Cost of sales (2,523) (2,702) (4,970) (5,268)
Gross profit 5,785 6,060 11,266 11,714
Research and development expenses (1,279) (1,246) (2,514) (2,405)
Selling and general expenses (2,397) (2,404) (4,609) (4,654)
Other operating income 48 40 265 74
Other operating expenses (71) (65) (195) (166)
Amortization of intangible assets (433) (489) (877) (988)
Impairment of intangible assets (52) (1) (52) (28)
Fair value remeasurement of contingent consideration liabilities (38) 70 (67) 71
Restructuring costs and similar items (127) (27) (627) (380)
Operating income 1,436 1,938 2,590 3,238
Financial expenses (112) (131) (241) (262)
Financial income 38 21 50 57
Income before tax and associates and joint ventures 1,362 1,828 2,399 3,033
Income tax expense (380) (508) (497) (692)
Share of profit/loss of associates and joint ventures 5 (35) 98 (66)
Net income excluding the held for exchange Animal Health business 987 1,285 2,000 2,275
Net income from the held for exchange Animal Health Business 186 44 286 109
Net income 1,173 1,329 2,286 2,384
Net income attributable to non-controlling interests 15 27 41 59
Net income attributable to equity holders of Sanofi 1,158 1,302 2,245 2,325
Average number of shares outstanding (million) 1,286.8 1,305.9 1,287.6 1,307.2
Earnings per share (in euros) excluding the held for exchange Animal Health Business 0.76 0.96 1.52 1.70
IFRS earnings per share (in euros) 0.90 1.00 1.74 1.78
  1. Including Animal Health Business which is reported on a single line in the consolidated income statements in accordance with

IFRS 5 (Non-current held for sale and discontinued operations).

  1. As per a change in accounting presentation, VaxServe sales of non-Group products are reported in Other revenues from 2016 onwards. Prior period Net sales and Other revenues have been represented accordingly.

Appendix 5: Change in net debt

€ million H1 2016 H1 2015
Business net income 3,402 3,566
Depreciation amortization and impairment of property, plant and equipment and software 638 628
Net gains and losses on disposals of non-current assets, net of tax (27) (44)
Other non-cash items (19) (218)
Operating cash flow before changes in working capital(1) 3,994 3,932
Changes in working capital(1) (753) (181)
Acquisitions of property, plant and equipment and software (700) (667)
Free cash flow(1) 2,541 3,084
Acquisitions of intangibles, excluding software (556) (280)
Acquisitions of investments, including assumed debt(1) (369) (169)
Restructuring costs and similar items paid (347) (345)
Proceeds from disposals of property, plant and equipment, intangibles, and other non-current assets, net of tax 262 86
Issuance of Sanofi shares 17 462
Dividends paid to shareholders of Sanofi (3,759) (3,694)
Acquisition of treasury shares (1,403) (1,243)
Disposals of treasury shares, net of tax - 1
Transactions with non-controlling interests including dividends (9) (16)
Foreign exchange impact 107 (391)
Other items (231) (50)
Change in net debt (3,747) (2,555)

(1)  Excluding restructuring costs and similar items

Appendix 6: Simplified consolidated balance sheet

ASSETS
€ million
06/30/16 12/31/15 LIABILITIES
€ million
06/30/16 12/31/15
      Equity attributable to equity-holders of Sanofi 54,190 58,049
      Equity attributable to non-controlling interests 157 161
      Total equity 54,347 58,210
Property, plant and equipment 9,819 9,943 Long-term debt 14,850 13,118
Intangible assets (including goodwill) 50,514 51,583 Non-current liabilities related to business combinations and to non-controlling interests 1,027 1,121
Non-current financial assets, investments in associates, and deferred tax assets 10,435 10,115 Provisions and other non-current liabilities 9,895 9,169
      Deferred tax liabilities 2,774 2,895
Non-current assets 70,768 71,641 Non-current liabilities 28,546 26,303
      Accounts payable and other current liabilities 12,607 13,259
Inventories, accounts receivable and other current assets 16,259 15,780 Current liabilities related to business combinations and  to non-controlling interests 210 130
Cash and cash equivalents 6,076 9,148 Short-term debt and current portion of long-term debt 2,427 3,436
Current assets 22,335 24,928 Current liabilities 15,244 16,825
Assets held for sale or exchange 6,010 5,752 Liabilities related to assets held for sale or exchange 976 983
Total ASSETS 99,113 102,321 Total LIABILITIES & EQUITY 99,113 102,321

Appendix 7: 2016 currency sensitivity

2016 Business EPS currency sensitivity

Currency Variation Business EPS Sensitivity
U.S. Dollar -0.05 USD/EUR +EUR 0.13
Japanese Yen +5 JPY/EUR -EUR 0.02
Chinese Yuan +0.2 CNY/EUR -EUR 0.02
Brazilian Real +0.4 BRL/EUR -EUR 0.01
Russian Ruble +10 RUB/EUR -EUR 0.04

Currency exposure on Q2 2016 and 2015 sales

Currency Q2 2016 2015*
US $ 36.1% 36.3%
Euro € 24.5% 23.1%
Chinese Yuan 5.8% 5.7%
Japanese Yen 4.9% 5.4%
Brazilian Real 2.7% 2.8%
British Pound 1.9% 2.1%
Australian $ 1.6% 1.4%
Canadian $ 1.4% 1.5%
Russian Ruble 1.2% 1.6%
Mexican Peso 1.3% 1.8%
Others 18.6% 18.3%

*Excluding VaxServe

Currency average rates

  Q2 2015 Q2 2016 Change
€/$ 1.10 1.13 +2.2%
€/Yen 134.14 121.98 -9.1%
€/Yuan 6.85 7.38 +7.7%
€/Real 3.39 3.96 +16.8%
€/Ruble 58.12 74.35 +27.9%

Appendix 8: R&D Pipeline

: New Molecular Entity

Registration

N
LixiLan
Fixed-Ratio insulin glargine+lixisenatide  
Type 2 diabetes, U.S., EU
 

Dengvaxiaฎ(1)
Mild-to-severe
dengue fever vaccine

N
sarilumab
Anti-IL6R mAb
Rheumatoid arthritis, U.S, EU

PR5i
DTP-HepB-Polio-Hib
Pediatric hexavalent vaccine, U.S.
  VaxiGrip QIV IM
Quadrivalent inactivated
influenza vaccine (3 years+)

Phase III

N
SAR342434
insulin lispro
Type 1+2 diabetes


Clostridium difficile

Toxoid vaccine


N
sotagliflozin
Oral SGLT-1&2 inhibitor
Type 1 diabetes
VaxiGrip QIV IM
Quadrivalent inactivated
influenza vaccine (6-35 months)
N
dupilumab
Anti-IL4R alpha mAb
Atopic dermatitis, Asthma

Pediatric pentavalent vaccine
DTP-Polio-Hib
Japan
N
patisiran (ALN-TTR02)
siRNA inhibitor targeting TTR
Familial amyloidotic polyneuropathy

Men Quad TT
2nd generation meningococcal
ACYW conjugate vaccine 
N
revusiran (ALN-TTRsc)
siRNA inhibitor targeting TTR
Familial amyloidotic cardiomyopathy

 
 
   
  1. Approved in Brazil, Mexico, the Philippines El Salvador and Costa Rica

Phase II

 

dupilumab
Anti-IL4R alpha mAb
Nasal polyposis; Eosinophilic oesophagitis

N
isatuximab
Anti-CD38 naked mAb
Multiple myeloma

Rabies VRVg
Purified vero rabies vaccine

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

N
SAR439684
PD-1 inhibitor
Advanced CSCC (Skin cancer)

Tuberculosis
Recombinant subunit vaccine

N
SAR100842
LPA1 receptor antagonist
Systemic sclerosis

N
olipudase alfa
rhASM Deficiency
 Niemann-Pick type B


Fluzone
QIV HD
Quadrivalent inactivated
influenza vaccine - High dose
sotagliflozin
 Oral SGLT-1&2 inhibitor
Type 2 diabetes
N
GZ402671
Oral GCS inhibitor
Fabry Disease

 
N
efpeglenatide
Long-acting GLP-1 receptor agonist
Type 2 diabetes

N
SAR422459
ABCA4 gene therapy
Stargardt disease

 
sarilumab
Anti-IL6R mAb
Uveitis
N
Combination
ferroquine / OZ439
Antimalarial

 

Phase I

N
GZ402668
GLD52 (anti-CD52 mAb)
Relapsing multiple sclerosis

N
SAR566658
Maytansin-loaded anti-CA6 mAb
Solid tumors

N
SAR228810
Anti-protofibrillar AB mAb
Alzheimer's disease

 
N
GZ389988
TRKA antagonist
Osteoarthritis

N
SAR408701
Maytansin-loaded anti-CEACAM5 mAb
Solid tumors

 
N
SAR439152
Myosin inhibitor
Hypertrophic cardiomyopathy

N
SAR425899
GLP-1R/GCGR dual agonist
Type 2 diabetes

 
N
SAR428926
Maytansin-loaded anti-LAMP1 mAb
Cancer

N
SAR407899
rho kinase
Microvascular angina

N
SAR438335
GLP-1R/GIPR dual agonist
Type 2 diabetes

 
N
GZ402666
neo GAA
Pompe Disease

N
SAR366234
EP2 receptor agonist
Elevated intraocular pressure

 
N
SAR440067 (LAPS Insulin 115)
Long acting insulin analog
Type 1 & 2 diabetes
N
SAR339375
Anti-miR21 RNA
Alport syndrome
Streptococcus pneumonia
Meningitis & pneumonia vaccine


  N
fitusiran (ALN-AT3)
siRNA targeting Anti-Thrombin
Hemophilia

 
Herpes Simplex Virus Type 2
HSV-2 vaccine

  N
UshStat
Myosin 7A gene therapy
Usher syndrome 1B

 

Appendix 9: Expected R&D milestones

Product Event Timing
Dengvaxia Expected regulatory decision in endemic countries Throughout 2016
dupilumab Expected U.S. regulatory filing in Atopic Dermatitis Q3 2016
insulin lispro Expected SORELLA 2 Phase III top line results in Diabetes Q3 2016
NeoGAA (GZ402666) Expected start of Phase III trial in Pompe Disease Q3 2016
LixiLan Expected U.S. regulatory decision in Type 2 Diabetes Q3 2016
sarilumab Expected U.S. regulatory decision in Rheumatoid Arthritis Q4 2016
Praluent Expected results of ODYSSEY OUTCOMES 2nd interim analysis(1) Q4 2016
VaxiGrip QIV IM (3 years+) Expected EU regulatory decision Q4 2016
sotagliflozin Expected start of Phase III trial in Type 2 Diabetes Q4 2016
efpeglenatide Expected start of Phase III trial in Type 2 Diabetes Q4 2016
isatuximab (anti-CD38) Expected start of Phase III trial in Multiple Myeloma Q4 2016
dupilumab Expected start of Phase III trial in Nasal Polyposis Q1 2017
fitusiran Expected start of Phase III trial in Hemophilia Q1 2017
dupilumab Expected U.S. regulatory decision in Atopic Dermatitis H1 2017
  1. Second interim analysis for futility and overwhelming efficacy when 75% of the targeted number of primary events have occurred

Appendix 10: Definitions of non-GAAP financial indicators

Company
"Company" corresponds to Sanofi and its subsidiaries

Aggregate
Sanofi comments include Animal Health Business for every income statement line using "Aggregate" wording;

Aggregate Company sales at constant exchange rates (CER)
When we refer to changes in our Aggregate 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 Aggregate net sales for the relevant period at the exchange rates used for the previous period.

Reconciliation of net sales to Aggregate Company sales at constant exchange rates for the second quarter and the first half of 2016

€ million Q2 2016 H1 2016
Net sales 8,143 15,926
Animal Health net sales 725 1,485
Aggregate Company sales 8,868 17,411
Effect of exchange rates +382 +610
Aggregate Company sales at constant exchange rates 9,250 18,021

Business net income

Sanofi publishes a key non-GAAP indicator.
Business net income is defined as net income attributable to equity holders of Sanofi excluding:

  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.
  2. Impact of discontinuation of depreciation and impairment of Property, Plant and Equipment starting at IFRS 5 application (non-current assets held for sales and discontinued operations), amortization and impairment of intangible assets until IFRS 5 application and costs incurred as a result of the divestment as well as tax effect of these items.
  3.  Elimination of the Group's share of the business net income of Sanofi Pasteur MSD from the date when Sanofi and Merck announced their intention to end their joint venture, plus an income tax charge arising from the taxable temporary differences relating to the investment in the joint venture

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