Adjusted net income excluding selected items(1)
Q4 2007:
euro 1,429 million (up 4.5%), i.e. euro 1.07 per share (up 5.9%, or up
18.3% in U.S. dollars(2))
FY 2007:
euro 6,961 million (up 5.9%), i.e. euro 5.17 per share (up 5.9%, or up
15.7% in U.S. dollars(2))
BRIDGEWATER, N.J., Feb. 12 /PRNewswire-FirstCall/ -- In order to give a
representation of our underlying economic performance, we present and
explain an adjusted(1) income statement. We also report adjusted net income
and adjusted EPS (excluding selected items) in U.S. dollars(2) in order to
facilitate comparisons with the majority of major pharmaceutical groups.
The 2007 consolidated income statement is provided in the Appendices.
Full-year consolidated net income for 2007 was euro 5,263 million, against
euro 4,006 million for 2006.
Fourth quarter
-- Net sales down 2.2% on a comparable basis (or 6.0% on a reported basis)
at euro 6,911 million
-- Growth of 5.7% in pharmaceuticals net sales after excluding the impact
of generics of Ambien(R) IR in the United States and Eloxatin(R) in
Europe(3)
-- Growth in earnings despite the negative effects of the euro/dollar
exchange rate and of earlier shipments of influenza vaccines than in
2006
2007 full year: euro 5.28 adjusted EPS with selected items; euro 5.17
excluding selected items
-- Net sales up 2.8% on a comparable basis (down 1.1% on a reported basis)
at euro 28,052 million
-- Growth of 6.4% in Pharmaceuticals net sales after excluding the impact
of generics of Ambien(R) IR in the United States and Eloxatin(R) in
Europe(3); 14.5% growth in Vaccines net sales
-- Lantus(R): First insulin brand to exceed euro 2 billion of sales
-- Marked decline in selling and general expenses, with the ratio of
selling and general expenses down 1.4 points at 26.9%
-- Earnings ahead of full-year guidance(4):
-- Business development highlights: signature of alliance agreements with
Regeneron, Acambis, Crucell and Oxford Biomedica, and buyout of rights
to several of our products in Japan
Share repurchase program and dividend
-- 29.4 million shares repurchased in 2007 for a total of euro 1.8 billion
-- A dividend increase of 18.3% to euro 2.07 per share proposed to the
Shareholders' Annual General Meeting
2008 guidance
Barring major adverse events, sanofi-aventis expects 2008 adjusted EPS
excluding selected items(5) to grow around 7%, calculated at constant 2007
euro/dollar parity (1,371). Sensitivity to the euro/dollar exchange rate is
estimated at 0.5% of growth for a 1-cent movement in the exchange rate.
(see page 11)
(1) See Appendix 1 for a definition of financial indicators, and Appendix
6 for a description of selected items
(2) U.S. dollar figures obtained by translating euro-denominated figures
at the average exchange rate for the period: 1.449 for Q4 2007 (1.290
for Q4 2006) and 1.371 for FY 2007 (1.256 for FY 2006)
(3) Excluding net sales of Ambien(R) IR in the United States (from April)
and net sales of Eloxatin(R) in Europe
(4) Adjusted EPS excluding selected items up 13% at a constant 2006
euro/dollar rate (1.25) against guidance of 10% growth
(5) Adjusted EPS excluding selected items for 2007 was euro 5.17.
2007 fourth-quarter and full-year net sales
Unless otherwise indicated, all sales growth figures in this press release are
stated on a comparable basis(1). Sanofi-aventis generated fourth-quarter net sales of euro 6,911
million, down 2.2%. Exchange rate movements had an unfavorable effect of
4.2 points, mainly due to the U.S. dollar. Changes in Group structure had a
favorable effect of 0.4 of a point, reflecting the consolidation of net
sales of Ticlid in Japan from October 1. On a reported basis, net sales
fell by 6.0%.
2007 full-year net sales rose by 2.8% to euro 28,052 million. Exchange
rate movements had an unfavorable effect of 3.8 points. Changes in Group
structure had an unfavorable effect of 0.1 of a point over the year as a
whole. After taking account of these effects, net sales fell by 1.1% on a
reported basis.
The group net sales consist of sales of pharmaceuticals division
(90.1%) and sales of vaccines division (9.9% versus 8.9% in 2006)
Net sales by division - Pharmaceuticals
Fourth-quarter net sales for the pharmaceuticals business were euro
6,262 million, down 0.6%. Net sales of the top 15 products were down 0.3%
at euro 4,174 million, representing 66.7% of pharmaceuticals net sales
against 66.5% for the comparable period of 2006.
Excluding the impact of the introduction of generics(4) of Ambien(R) IR
in the United States and Eloxatin(R) in Europe, the top 15 products would
have recorded growth of 9.5%.
Over 2007 as a whole, net sales for the pharmaceuticals business were
up 1.7% at euro 25,274 million. Net sales of the top 15 products rose by
3.2% to euro 17,071 million, representing 67.5% of pharmaceuticals net
sales against 66.5% in 2006. Excluding the impact of the introduction of
generics(4) of Ambien(R) IR in the United States and Eloxatin(R) in Europe,
the top 15 products would have recorded growth of 10.7% in 2007.
Change on a Change on a
Q4 2007 comparable FY 2007 comparable
euro million net sales basis net sales basis
Lovenox(R) 674 +17.4% 2,612 +13.4%
Plavix(R) 609 +14.0% 2,424 +9.5%
Lantus(R) 552 +31.4% 2,031 +29.0%
Taxotere(R) 476 +14.7% 1,874 +11.9%
Eloxatin(R) 365 -2.9% 1,521 -5.3%
Stilnox(R)/Ambien(R)/
Ambien CR(TM)/Myslee(R) 185 -64.6% 1,250 -33.1%
Copaxone(R) 280 +10.7% 1,177 +17.1%
Aprovel(R) 277 +5.3% 1,080 +7.2%
Tritace(R) 195 -28.3% 741 -23.1%
Allegra(R) 148 -1.3% 706 +10.8%
Amaryl(R) 101 0.0% 392 -9.5%
Actonel(R) 81 -4.7% 320 -8.0%
Depakine(R) 80 +9.6% 316 +5.7%
Xatral(R) 84 +3.7% 333 -2.9%
Nasacort(R) 67 -1.5% 294 +11.8%
TOTAL TOP 15 4,174 -0.3% 17,071 +3.2%
TOTAL TOP 15 excluding
Eloxatin(R) in Europe and
Ambien(R) IR in the USA
(from April) 4,065 +9.5% 16,565 +10.7%
Fourth-quarter net sales of other pharmaceutical products were down
1.0% at euro 2,088 million. 2007 full-year net sales of other
pharmaceutical products were down 1.5% at euro 8,203 million. In the "Other
Countries" region, these products reported growth of 4.1% to euro 2,564
million; in Latin America, growth was even stronger at 10.2% (euro 918
million).
Geographical split of consolidated net sales by product (Top 15)
Change Change Change
on a on a on a
Q4 2007 net sales comparable United comparable Other comparable
(euro million) Europe basis States basis Countries basis
Lovenox(R) 201 +15.5% 395 +16.5% 78 +27.9%
Plavix(R) 422 +1.7% 37 +640.0% 150 +31.6%
Lantus(R) 168 +26.3% 321 +29.4% 63 +61.5%
Taxotere(R) 209 +16.8% 169 +8.3% 98 +22.5%
Eloxatin(R) 79 -36.3% 236 +12.4% 50 +19.0%
Stilnox(R)/Ambien(R)/
Ambien CR(TM)/
Myslee(R) 20 -16.7% 163 -65.8% 2 -91.3%
Copaxone(R) 84 +16.7% 188 +13.3% 8 -46.7%
Aprovel(R) 211 -0.5% - - 66 +29.4%
Tritace(R) 111 -9.8% 0 ns 84 -42.9%
Allegra(R) 8 -11.1% 74 -10.8% 66 +13.8%
Amaryl(R) 26 -23.5% 3 0.0% 72 +12.5%
Actonel(R) 51 -12.1% - - 30 +11.1%
Depakine(R) 55 +5.8% - - 25 +19.0%
Xatral(R) 41 -8.9% 28 +21.7% 15 +15.4%
Nasacort(R) 10 +11.1% 50 -3.8% 7 0.0%
Change Change Change
on a on a on a
FY 2007 comparable United comparable Other comparable
(euro million) Europe basis States basis Countries basis
Lovenox(R) 756 +9.4% 1,579 +14.8% 277 +16.9%
Plavix(R) 1,704 +5.3% 167 7.7% 553 +25.7%
Lantus(R) 627 +20.6% 1,200 +30.3% 204 +52.2%
Taxotere(R) 819 +14.5% 691 +6.5% 364 +17.0%
Eloxatin(R) 374 -33.7% 971 +9.8% 176 +11.4%
Stilnox(R)/Ambien(R)/
Ambien CR(TM)/
Myslee(R) 85 -11.5% 1,093 -35.0% 72 -20.0%
Copaxone(R) 324 +16.1% 801 +19.4% 52 -5.5%
Aprovel(R) 838 +3.8% - - 242 +21.0%
Tritace(R) 466 -8.8% 1 -92.9% 274 -37.4%
Allegra(R) 54 +3.8% 369 +4.8% 283 +21.5%
Amaryl(R) 116 -33.7% 9 -35.7% 267 +9.4%
Actonel(R) 204 -16.0% - - 116 +10.5%
Depakine(R) 216 +2.4% - - 100 +13.6%
Xatral(R) 167 -20.5% 107 +25.9% 59 +22.9%
Nasacort(R) 44 +10.0% 222 +13.3% 28 +3.7%
Comments by product
Net sales of Lovenox(R), the leading low molecular weight heparin on
the market, rose by 17.4% in the quarter to euro 674 million. The product
reported strong growth across all three regions: 16.5% in the United
States, 15.5% in Europe, and 27.9% in the "Other Countries" region. In the
United States, increased use in medical prophylaxis remains the main growth
driver.
In January 2008, Lovenox(R) was approved in Japan for the prevention of
venous thromboembolism (VTE) in patients undergoing orthopedic surgery of
the lower limbs such as total hip replacement, total knee replacement and
hip fracture surgery. Further clinical trials are ongoing to extend the
product's indication in Japan to patients undergoing abdominal surgery who
are at risk of venous thromboembolism.
Lantus(R) is the first insulin brand in the world to exceed euro 2
billion of sales (euro 2,031 million). In the fourth quarter, the product
enjoyed strong growth across all three regions. The new SoloSTAR(R)
disposable pen used to administer Lantus(R) is now available in most
European countries and in the United States.
Findings presented at the American Heart Association's 2007 Scientific
Sessions from a retrospective analysis of healthcare claims in more than
20,000 patients with type 2 diabetes found that the initiation of insulin
therapy with insulin glargine (Lantus(R)) was associated with a lower
incidence rate of subsequent myocardial infarction (MI), as compared with
NPH insulin.
Taxotere(R) recorded further strong growth during the quarter in Europe
(up 16.8%) and in the "Other Countries" region (up 22.5%). In the United
States, net sales of the product were up 8.3%, in line with the growth rate
achieved in the previous quarter.
In December, sanofi-aventis filed an application with the European
Medicines Evaluation Agency (EMEA) to include Taxotere(R) in combination
with Herceptin(R) as an adjuvant treatment for breast cancer, on the basis
of the BCIRG-006 study.
In December, results presented to the 30th annual San Antonio Breast
Cancer Symposium (SABCS) showed that for women with early stage breast
cancer who have had surgery, experimental treatment with a combination of
Taxotere(R) and cyclophosphamide significantly improved overall survival
compared to standard anthracyclin-based chemotherapy. These results were
based on a median follow-up of 7 years.
Ambien CR(TM) posted net sales of $190 million in the United States
during the quarter and $751 million over the full year. Net sales of
Ambien(R) IR, which went off patent in the United States on April 20, 2007,
totaled euro 30 million in the fourth quarter, against euro 352 million in
the comparable period of 2006. Full-year net sales of Ambien(R) IR were
euro 538 million.
In Japan, sales of Myslee(R) (not consolidated by sanofi-aventis) rose
by 6.4% in the fourth quarter to euro 34 million. Over 2007 as a whole, the
product achieved growth of 9.8% to euro 118 million.
Under the terms of the agreement between sanofi-aventis and Astellas,
sanofi-aventis will consolidate net sales generated by Myslee(R) in Japan
with effect from January 1, 2008.
In the United States, Eloxatin(R), the market-leading colorectal cancer
treatment as adjuvant and in the metastatic phase, recorded fourth-quarter
net sales growth of 12.4% to euro 236 million. In Europe, where the
introduction of generics is ongoing, fourth-quarter sales were down 36.3%
at euro 79 million. In the "Other Countries" region, net sales of
Eloxatin(R) rose by 19.0% to euro 50 million.
Net sales of Tritace(R), adversely impacted by generic competition in
Canada, fell by 28.3% in the fourth quarter to euro 195 million.
Acomplia(R) posted net sales of euro 21 million in the fourth quarter
and euro 79 million over the full year.
In November, the European Commission endorsed the positive opinion of
the European Medicines Evaluation Agency (EMEA) for Acomplia(R), to include
type 2 diabetes trial results into the European label (section 5.1). This
decision was based on the results of the SERENADE study, the first clinical
trial to assess Acomplia(R) in glycemic control for type 2 diabetic
patients not already taking medication for their condition.
Xyzal(R), a new prescription oral antihistamine, was launched by
sanofi- aventis and UCB in the United States at the start of October 2007.
Fourth- quarter net sales were euro 8 million. At end December, Xyzal(R)
accounted for 5.2% of new prescriptions (NRX IMS NPA weekly).
Worldwide presence(1) of Plavix(R) / Iscover(R)
Change Change
on a on a
comparable comparable
euro million Q4 2007 basis FY 2007 basis
Europe 458 +5.0% 1,808 +5.3%
United States 829 +239.8% 2,988 +50.4%
Other Countries 225 +27.8% 826 +22.9%
TOTAL 1,512 +76.6% 5,622 +28.5%
On June 19, 2007, the U.S. District Court for the Southern District of
New York upheld the validity and enforceability of the U.S. patent covering
clopidogrel bisulfate, the active ingredient of Plavix(R), and issued a
permanent injunction enjoining Apotex from marketing its generic
clopidogrel bisulfate in the United States prior to the expiration of the
patent. Apotex had launched a generic clopidogrel bisulfate in August 2006,
following which the U.S. District Court for the Southern District of New
York awarded sanofi- aventis a temporary injunction on August 31, 2006
ordering Apotex to halt further sales of its generic clopidogrel bisulfate,
without however ordering a recall of products already shipped. The main
patent protection for this product has now been maintained in the United
States until November 2011.
In the United States, sales of Plavix(R) (consolidated by BMS) reached
$1,180 million in the fourth quarter, compared with $348 million in the
fourth quarter of 2006 when the product was affected by the availability of
a generic version. Full-year sales of Plavix(R) totaled $4,072 million,
compared with $2,672 in 2006.
In Europe, fourth-quarter net sales of Plavix(R) were 5.0% higher at
euro 458 million, though sales are still affected by parallel imports in
Germany.
In the "Other Countries" region, sales growth is accelerating, reaching
27.8% in the fourth quarter (to euro 225 million), driven by the product's
success in Japan where the pace of sales growth was boosted in May by the
decision of the authorities to lift the two-week limit on prescriptions.
Fourth quarter sales in Japan were euro 27 million, against euro 4 million
in the comparable period of 2006. Over the full year, Plavix(R) recorded
Japanese sales of euro 61 million, compared with euro 11 million in 2006.
(1) See Appendix 1 for a definition of financial indicators, and
Appendix 6 for a description of selected items
Worldwide presence(1) of Aprovel(R)/ Avapro(R)/ Karvea(R)
Change Change
on a on a
comparable comparable
euro million Q4 2007 basis FY 2007 basis
Europe 233 +1.7% 922 +5.1%
United States 129 +4.0% 507 +7.2%
Other Countries 118 +26.9% 422 +19.9%
TOTAL 480 +7.6% 1,851 +8.8%
Fourth-quarter worldwide sales of Aprovel(R)/Avapro(R)/Karvea(R) were
euro 480 million, an increase of 7.6%.
In November, the United States Food and Drug Administration (FDA),
based on efficacy data from two clinical trials involving over 1,200
patients with moderate or severe high blood pressure, approved Avalide(R)
(irbesartan, hydrochlorothiazide) as the first combination therapy for
initial use in patients likely to need multiple drugs to achieve blood
pressure goals.
Net sales by division - Human Vaccines
Fourth-quarter consolidated net sales for the Human Vaccines business
were down 15.3% at euro 649 million. This decrease reflects earlier
shipments of influenza vaccines than in 2006, when a substantial proportion
of shipments were delayed to the fourth quarter. As a result, net sales of
influenza vaccines were down 40.4% at euro 245 million. Excluding influenza
vaccines, net sales for the Human Vaccines business rose by 13.8% in the
quarter.
Adacel(TM) (adult and adolescent tetanus-diphtheria-pertussis booster)
and Menactra(R) performed very strongly in the fourth quarter, with net
sales up 44.0% to euro 38 million and up 73.5% to euro 71 million
respectively due to improved supply. An extension to the license for
Menactra(R), covering children aged 2 to 10, was obtained in the United
States in October 2007.
Over the full year, consolidated net sales for the Human Vaccines
business rose by 14.5% to euro 2,778 million. Net sales of Menactra(R)
advanced by 86.1% to euro 415 million, and net sales of Adacel(TM)
increased by 64.5% to euro 234 million. Sanofi pasteur produced over 180
million doses of seasonal influenza vaccines in 2007, reinforcing its
position as world leader: the number of doses shipped represented an
estimated 40% of the world market(5). Excluding sales of H5N1 vaccines,
sales of seasonal influenza vaccines rose by 2.6%.
Change Change
on a on a
Q4 2007 comparable FY 2007 comparable
euro million net sales basis net sales basis
Influenza Vaccines* 245 -40.4% 766 -3.0%
Polio/Pertussis/Hib Vaccines 142 0.0% 660 +5.1%
Meningitis/Pneumonia Vaccines 85 +57.4% 482 +65.1%
Adult Booster Vaccines 70 -2.8% 402 +26.8%
Travel & Other Endemics Vaccines 76 +20.6% 327 +14.7%
Other Vaccines 31 +29.2% 141 +23.7%
TOTAL 649 -15.3% 2,778 +14.5%
* seasonal and pandemic influenza vaccines
Fourth-quarter sales at Sanofi Pasteur MSD, the joint venture with
Merck & Co in Europe, rose by 44.4% on a reported basis to euro 371
million, buoyed by the success of Gardasil(R) (net sales of euro 160
million).
Sanofi Pasteur MSD began marketing Gardasil(R) in Europe at the end of
2006. This product, the first vaccine against papillomavirus infections
(which cause cervical cancer), is now sold in all 19 European countries
covered by the joint venture.
Sanofi Pasteur MSD achieved 2007 full-year sales of euro 1,040 million,
up 43.6% on a reported basis. Net sales of Gardasil(R) for the year totaled
euro 341 million. Sanofi Pasteur MSD sales are not consolidated by
sanofi-aventis.
(5) Internal estimate
Net sales by geographic region
Change on a Change on a
Q4 2007 comparable FY 2007 comparable
euro million net sales basis net sales basis
Europe 3,056 -0.4% 12,184 -0.4%
United States 2,181 -8.5% 9,474 +3.8%
Other Countries 1,674 +3.8% 6,394 +7.8%
TOTAL 6,911 -2.2% 28,052 +2.8%
Net sales fell slightly in Europe in the fourth quarter, mainly as a
result of the continuing decline in net sales in Germany. Over 2007 as a
whole, net sales were down by 0.4%, with the introduction of generics of
Eloxatin(R) paring approximately 1.6% off growth for the period.
In the United States, fourth-quarter net sales were down 8.5%, affected
by generics of Ambien(R) IR (which went off patent on April 20) and lower
influenza vaccine sales (a substantial proportion of shipments having been
postponed to the fourth quarter in 2006, making for a tough comparative).
Excluding the effect of generics of Ambien(R) IR and of timing differences
in shipments of vaccines, net sales growth in the United States would have
been 14.4%. Over 2007 as a whole, net sales rose by 3.8%. After excluding
the effect of generics of Ambien(R) IR from April 2007, net sales in the
United States rose by 15.1%.
Fourth-quarter net sales in "Other Countries" increased by 3.8%, below
the full-year growth rate. Excluding the effect of the repurchase of
inventories from Astellas and Chugai following the signature of agreements
with these two companies on the buyout of several products and the effect
of timing differences in shipments of vaccines, fourth-quarter sales growth
in this region would have been 7.0%.
Adjusted consolidated income statement
The adjusted consolidated income statement is presented in Appendix 3.
Refer to Appendix 1 for a definition of "adjusted net income", and to
appendix 4 for a reconciliation of the consolidated income statement to the
adjusted consolidated income statement.
Fourth quarter of 2007
The fourth quarter saw a marked fall in the dollar against the euro of
12.4%, compared with an average fall of 8% over the first nine months of
the year.
Sanofi-aventis net sales for the fourth quarter of 2007 fell by 6.0% on
a reported basis to euro 6,911 million.
Gross profit was euro 5,257 million. The gross margin ratio was 76.1%,
against 76.5% for the fourth quarter of 2006. Royalty income rose by 36.0%,
mainly due to a sharp rise in sales of Plavix(R) in the United States
versus the fourth quarter of 2006 (when the product faced competition from
a generic version), and despite the discontinuation of royalties on
fipronil. The ratio of cost of sales to net sales was 28.4% (compared with
26.6% in the fourth quarter 2006), largely as a result of the introduction
of generics of Ambien(R) IR in the United States and timing differences in
sales of influenza vaccines between 2006 and 2007.
Research and development expenses rose by 5.0%. This includes the
effect of discontinuing development of the ciclesonide/formoterol
combination, the rights for which were returned to Nycomed.
Selling and general expenses totaled euro 1,996 million, representing a
marked reduction of 7.3% relative to the fourth quarter of 2006. The ratio
of selling and general expenses to net sales was 28.9%, against 29.3% in
2006.
Operating income - current(1) fell by 13.7%, and represented 28.4% of
net sales versus 30.9% in 2006. This fall was due entirely to the
euro/dollar exchange rate and to timing differences in sales of influenza
vaccines.
A restructuring charge of euro 87 million (euro 60 million after tax)
was recognized to cover a new program of cost adaptation measures in
Germany.
Net financial expenses came to euro 28 million, against net financial
income of euro 66 million in the comparable period of 2006 (the fourth
quarter of 2006 included a gain of euro 101 million on the sale of the
interest in Rhodia). Interest expense on debt was euro 47 million, compared
with euro 36 million for the fourth quarter of 2006, with the positive
effect of debt reduction more than canceled out by the impact of higher
interest rates.
Income tax expense was euro 464 million, compared with euro 534 million
in the fourth quarter of 2006. The reported tax rate was 25.1%, against
27.2% for the comparable period of 2006. The settlement of various tax
disputes resulted in the release of euro 93 million of provisions (treated
as a selected item).
The share of profits from associates was euro 178 million, versus euro
50 million for the fourth quarter of 2006, thanks to the sharp rise in
sales of Plavix(R) in the United States. The share of after-tax profits
from territories managed by BMS (primarily the United States) under the
Plavix(R) and Avapro(R) alliance was euro 149 million, versus euro 12
million in the fourth quarter of 2006.
Minority interests totaled euro 97 million, compared with euro 103
million in the fourth quarter of 2006. This line includes the share of
pre-tax profits paid to BMS from territories managed by sanofi-aventis
(euro 96 million, compared with euro 98 million in the fourth quarter of
2006).
Adjusted net income was up 6.2% at euro 1,462 million, and adjusted
earnings per share (adjusted EPS) was euro 1.09 (6.9% up on the 2006
fourth- quarter figure of euro 1.02), based on an average number of shares
outstanding of 1,335.3 million in the fourth quarter of 2007 and 1,348.8
million in the fourth quarter of 2006.
Excluding selected items (see Appendix 5), adjusted net income was euro
1,429 million, 4.5% up on the fourth quarter of 2006 (euro 1,368 million),
and adjusted EPS was euro 1.07, 5.9% up on the fourth quarter of 2006 (euro
1.01).
Expressed in U.S. dollars(2) and excluding selected items, adjusted net
income was $2,071 million (up 17.3% on the 2006 fourth-quarter figure) and
adjusted EPS was $1.55 (up 18.3% on the 2006 fourth-quarter figure).
(2) U.S. dollar figures obtained by translating euro-denominated
figures at the average exchange rate for the period: 1.449 for Q4 2007
(1.290 for Q4 2006) and 1.371 for FY 2007 (1.256 for FY 2006)
2007 full year
Sanofi-aventis generated 2007 full-year net sales of euro 28,052
million, down 1.1% on a reported basis.
Gross profit was down 1.4% at euro 21,636 million. The gross margin
ratio was 77.1%, versus 77.3% in 2006. The availability of generics of
Ambien(R) IR from April 2007 adversely affected the ratio of cost of sales
to net sales, which rose from 26.6% to 27.0%. The weakening dollar and the
discontinuation of royalties on fipronil restricted growth in other
revenues to 3.5% (to euro 1,155 million), despite strong growth for
Plavix(R) in the United States.
Research and development expenses rose by 2.4% (5.5% excluding the
effect of exchange rates).
The cost adaptation measures initiated in 2006 and 2007, combined with
tight cost control, helped to reduce the ratio of selling and general
expenses to net sales by additional 1.4 points compared with 2006, to
26.9%. Overall, selling and general expenses fell by 5.8% year on year, to
euro 7,554 million. Excluding the effect of exchange rates, selling and
general expenses decreased by 2.1%.
Other current operating income (net of expenses) totaled euro 215
million, against euro 275 million in 2006. In 2007, this line includes an
expense of euro 61 million (euro 42 million after tax, treated as a
selected item) on the harmonization of welfare and healthcare plans for the
Group's retirees.
Operating income - current(1) was virtually unchanged at euro 9,617
million. The operating margin ratio improved by 0.4 of a point to 34.3%.
Excluding the effect of exchange rates, operating income - current advanced
by 6.5%.
The financial statements include a restructuring charge of euro 137
million (euro 95 million after tax) for the ongoing cost adaptation program
launched in France in 2006 and for a new program initiated in Germany.
In 2006, the financial statements included:
-- gains on disposal of euro 553 million, mainly on the sale of the
Exubera(R) rights (euro 460 million, or euro 384 million after tax) and
the sale of the residual stake in the Animal Nutrition business (euro
45 million, or euro 31 million after tax);
-- impairment losses of euro 217 million taken against property, plant and
equipment and intangible assets, including euro 114 million for the
impairment of industrial assets associated with Ketek(R).
Net financial expense was euro 139 million, compared with euro 80
million in 2006. Interest expense on debt amounted to euro 223 million,
compared with euro 286 million in 2006.
Income tax expense totaled euro 2,572 million, versus euro 2,816
million in 2006. The 2007 figure includes a net gain of euro 337 million
relating to movements in provisions for tax risks and settlements of tax
disputes, and a deferred tax expense of euro 51 million related to cuts in
tax rates in Germany, Spain and the United Kingdom. The 2006 figure was
influenced by the low income tax charge arising on the Exubera(R) gain. The
effective tax rate for 2007 was 30.6%, unchanged from the 2006 figure.
The share of profits of associates was euro 760 million, against euro
559 million for 2006. The share of after-tax profits from territories
managed by BMS under the Plavix(R) and Avapro(R) alliance was euro 525
million, versus euro 320 million in 2006. There was an increase in the
contribution from Merial.
Minority interests came to euro 419 million, compared with euro 393
million in 2006. This line includes the share of pre-tax profits paid to
BMS from territories managed by sanofi-aventis (euro 403 million, versus
euro 375 million in 2006).
Adjusted net income rose by 1.0% to euro 7,110 million, while adjusted
earnings per share (adjusted EPS) was euro 5.28 (1.0% higher than the 2006
figure of euro 5.23), based on an average number of shares outstanding of
1,346.9 million in 2007 and 1,346.8 million in 2006.
Excluding selected items (see Appendix 5), adjusted net income was euro
6,961 million (up 5.9% on the 2006 figure of euro 6,571 million), and
adjusted EPS was euro 5.17 (up 5.9% on the 2006 figure of euro 4.88).
Expressed in U.S. dollars(2) and excluding selected items, adjusted net
income was $9,544 million (up 15.6% on the 2006 figure) and adjusted EPS
was $7.09 (up 15.7% on the 2006 figure).
(2) U.S. dollar figures obtained by translating euro-denominated
figures at the average exchange rate for the period: 1.449 for Q4 2007
(1.290 for Q4 2006) and 1.371 for FY 2007 (1.256 for FY 2006)
2007 consolidated statement of cash flow and balance sheet at December
31, 2007
Operating cash flow before changes in working capital was euro 7,917
million, compared with euro 7,610 million in 2006.
Working capital needs increased by euro 811 million, compared with euro
1,006 million in 2006.
Investing activities generated a net cash outflow of euro 1,716 million
over the period.
Acquisitions of property, plant and equipment and intangibles amounted
to euro 1,610 million, essentially comprising investment in industrial
plant and equipment and contractual payments for intangible rights. These
acquisitions of intangible rights (euro 231 million in 2007) mainly
comprise the buyout of commercial rights over products (including
Panaldine(R) in Japan) and payments made under collaboration and marketing
agreements with partners including Regeneron, Oxford BioMedica (TroVax(R)),
UCB (Xyzal(R)), Crucell N.V. and Acambis.
Acquisitions of investments (euro 435 million) mainly comprised euro
186 million on the buyout of preferred shares issued by Carderm Capital LP
(a subsidiary of sanofi-aventis) and euro 218 million on the purchase of 12
million shares in Regeneron, taking the interest held by sanofi-aventis to
approximately 19% of the capital.
After-tax proceeds from disposals (euro 329 million) included receipt
of the contingent CSL purchase consideration of $250 million.
After a dividend payout of euro 2,373 million and the acquisition of
29.4 million treasury shares for euro 1,806 million, net cash generated
during 2007 was euro 1,561 million, enabling sanofi-aventis to reduce net
debt from euro 5.8 billion at December 31, 2006 to euro 4.2 billion at
December 31, 2007. Gearing stood at 9.5% at December 31, 2007, compared
with 12.6% at December 31, 2006.
2008 Guidance(5)
Barring major adverse events, sanofi-aventis expects 2008 full-year
adjusted EPS excluding selected items(1) to grow around 7%, calculated at
constant euro/dollar parity (1,371). Sensitivity to the euro/dollar
exchange rate is estimated at 0.5% of growth for a 1-cent movement in the
exchange rate.
Dividend
At its February 11, 2008 meeting, sanofi-aventis Board of Directors
established the agenda and the draft resolutions to be submitted to the
Shareholders' Ordinary Annual General Meeting of May 14, 2008. It notably
decided to propose to the General Meeting to approve a dividend of euro
2.07 per share. This would represent an increase of 18.3% on the previous
year (euro 1.75). The dividend payment date will be May 21, 2008.
(1) Refer to Appendix 1 for a definition of financial indicators, and
to Appendix 6 for details of selected items.
(5) Adjusted EPS excluding selected items for 2007 was euro 5.17.
Research and Development
Our R&D teams have made progress on the key objectives announced at the
R&D Day in September 2007.
During 2007, 21 compounds moved into the development phase of which 16
in pharma. In 2007, sanofi-aventis filed submissions for the first-ever
intradermic influenza vaccine and for Aquilda(R) (Satavaptan), a treatment
for hyponatremia. The ongoing efforts to broaden access to Menactra(R) led
to the granting of FDA approval in 2007 for the 2-10 age bracket.
A major collaboration agreement was signed with Regeneron, covering the
discovery and development of human monoclonal antibodies, with the
objective of bringing at least two compounds into development every year.
Under this agreement, an antibody against the Interleukin-6 receptor
(IL-6R) has already started clinical trials in rheumatoid arthritis. It is
due to be followed by an antibody against Delta-like ligand-4 (Dll4),
scheduled to start clinical development in 2008 in oncology.
A number of other collaboration agreements have been signed in the
field of vaccines, including those with Acambis (to develop vaccines
against Japanese encephalitis and West Nile virus), with SSI (to develop a
new tuberculosis vaccine) and with Crucell (in monoclonal rabies
antibodies), plus an alliance with the Institut Pasteur in malaria.
Progress to date on our ongoing clinical development suggests that we
remain on track for our forecast of around 30 potential filings by end
2010.
The main developments in our R&D portfolio are described below:
Metabolic disorders
Results from phase IIb trials on AVE5530, a cholesterol absorption
inhibitor, showed a significant reduction in LDL at different doses,
confirming the potential benefits of this product. Its non-systemic mode of
action opens up the possibility of avoiding drug interaction. AVE5530 has
the potential to be used as monotherapy or in combination with statins. A
phase III program comprising a number of trials, including an evaluation
over a 12- month treatment period, will start in the second half of 2008.
Filing for approval is scheduled for the second half of 2010, both as
monotherapy and in fixed combination with a statin.
After consultation with the healthcare authorities, the phase III
program for the GLP-1 agonist AVE0010 will begin in the first quarter of
2008. The program will include over 3,000 diabetic patients and will
evaluate a once-a- day injection of AVE0010 in combination with the
principal existing treatments (metformin, sulfonylurea insulin), as well as
a comparison with exenatide and a monotherapy study. Filing for approval is
expected in 2010. A prolonged release formulation is currently being
evaluated in phase I.
Results from phase IIb trials of AVE2268, a new renal SGLT2 inhibitor,
are due in the first half of 2008, with phase III scheduled to start in the
second half of 2008. This product has a novel action, and is expected to
improve glycemic control at all stages of diabetes.
The program to develop rimonabant in diabetes already includes 3,400
out of the planned total of 5,700 patients. Results of the ARPEGGIO study,
evaluating rimonabant in combination with insulin, will be presented to the
American Diabetes Association in June 2008. Filing for approval in type II
diabetes is expected in 2009, followed by filing for a fixed
rimonabant/metformin combination in 2010.
Results from the STRADIVARIUS study, evaluating rimonabant in
atherosclerosis, will be presented to the American College of Cardiology in
March 2008, and the results of the ADAGIO trial, evaluating rimonabant in
patients with dyslipidemia, will be presented to the European
Atherosclerosis Society in April 2008..
Enrolment of patients to the CRESCENDO morbidity/mortality study is
ongoing. Over 14,000 out of the planned 17,000 have been enrolled to date.
Thrombosis
After consultation with the healthcare authorities, the large-scale
phase III program for the ultra low molecular weight heparin AVE5026,
involving over 10,000 patients, is being put into place. Positive results
from phase IIb point to AVE5026 as a potential successor to Lovenox.
AVE5026 is a powerful anti-coagulant with pharmaco-dynamic properties that
go beyond anti-Xa factor activity. It is not associated with food
interaction due to the subcutaneous mode of administration, giving total
bioavailability. AVE5026 has the potential to offer better tolerance
(reduced bleeding, no drug interaction, antiXa/IIa ratio of over 30).
Filing for approval is scheduled for 2010 in the prevention of venous
thromboembolic events in patients requiring hip or knee replacement,
receiving chemotherapy or undergoing abdominal surgery.
Filing for approval in the prevention of venous thromboembolic events
in medical patients is scheduled for 2011.
Idrabiotaparinux (biotinylated idraparinux) is a long-acting selective
neutralizable factor Xa coagulation inhibitor, administered by weekly
subcutaneous injection. Enrolment of patients to the EQUINOX bioequipotency
study in deep vein thrombosis is now complete, and one-third of the patient
population for the CASSIOPEA study in pulmonary embolism has been recruited
to date. Filing for approval in the treatment of deep vein thrombosis and
pulmonary embolism is scheduled for 2009.
Enrolment to the BOREALIS-AF comparative study, designed to assess the
efficacy of biotinylated idraparinux versus anti vitamin K in the
prevention of stroke and systemic embolism in patients with atrial
fibrillation, has now begun. Filing for approval in this indication is
scheduled for 2011.
Given the results from AVE5026, and as part of the portfolio
rationalization process, sanofi-aventis has decided to discontinue the
development of hexadecasaccharide.
Cardiovascular
Results from the ATHENA study, assessing the potential
morbidity/mortality benefits of Multaq(R) /Dronedarone, will be presented
to the American Heart Rate Society at San Francisco in May 2008. A
submission for approval by the healthcare authorities could be filed in
mid-2008.
Phase IIb is ongoing for ilepatril, a novel anti-hypertensive for
uncontrolled hypertension that inhibits ACE/NEP receptors. The final
results will be presented to the American Heart Association at New Orleans
in November 2008. The preliminary results are being used as the basis for
ongoing discussions with the healthcare authorities on the phase III
program.
The TAMARIS phase III program, a 1-year evaluation of the effectiveness
of NV1FGF (a highly innovative gene therapy) in reducing the number of
amputations in patients with critical lower limb ischemia, is under way.
Filing for approval in this indication is scheduled for 2010.
Central Nervous System
Results from the EPLILONG phase III study demonstrate that
eplivanserin, a 5-HT2A antagonist, significantly reduces WASO (Wake After
Sleep Onset) and the number of nocturnal wakings reported by the patient at
6 to 12 weeks, compared with placebo.
This beneficial effect on sleep has also been confirmed by
polysomnography in the results from the EPOCH phase III study, which showed
that eplivanserin reduces WASO at 3 weeks (significant difference) and 6
weeks and nocturnal waking (significant difference at 3 to 6 weeks), versus
placebo.
In both studies, eplivanserin demonstrated a good tolerance profile
versus placebo with no residual effect on waking as measured by
psychometric tests, and with no rebound phenomenon or withdrawal symptoms.
The GEMS phase III study, evaluating WASO at 12 weeks as reported by
the patient, is ongoing. Filing for approval of Eplivanserin is scheduled
for the second half of 2008.
The decision to file for approval of amibegron, a selective beta 3
receptor agonist for major depressive disorders, will be made on the basis
of the results from three studies, SIRIUS -short-term efficacy-, CALYPSO
-maintenance of efficacy-, ALBERIO -in combination with another
anti-depressant-.
Results from two phase III studies evaluating the NK2 receptor
antagonist saredutant in major depressive disorders are expected in the
second quarter of 2008. The INDIGO study is assessing saredutant in elderly
patients, while the MAGENTA study is evaluating maintenance of efficacy.
Filing for approval in the treatment of major depressive disorders is
scheduled for the third quarter of 2008.
Results from studies involving saredutant in association with SSRI
anti- depressants are expected in 2009. This program aims to address the
acknowledged inadequacies in monotherapy anti-depressant regimens by
showing the benefits of a strategy of treating major depressive disorders
directly with saredutant in association with another anti-depressant.
A decision has been taken to discontinue the development of Dianicline.
Oncology
The database lock for the FLAGS phase III study, evaluating S-1
(alliance with Taiho) plus cisplatin as a first-line treatment for patients
with advanced gastric cancer, is due to be completed in the first half of
2008. S-1 is a new oral anti-cancer agent derived from 5-FU which combines
3 pharmacological agents.
Two new phase III studies are in the initial phase:
-- A study evaluating S-1 versus 5-FU as a second-line treatment for
pancreatic cancer. Filing for approval in this indication is scheduled
in 2010.
-- A study evaluating S-1 as a first-line treatment in association with
Eloxatin(R) in 2,000 patients with metastatic colorectal cancer. Filing
for approval in this indication is scheduled in 2011.
The database lock for the phase III study evaluating aflibercept (VEGF
Trap, alliance with Regeneron) as a third-line treatment for advanced
ovarian cancer is due to be completed in the second quarter of 2008.
Aflibercept has a novel mechanism of action and its properties, as compared
with monoclonal antibodies, give it the potential to be a more powerful
anti-angiogenesis agent with a broader spectrum of activity.
Enrolment has started in 4 pivotal phase III studies:
-- first-line treatment of hormone refractory prostate cancer (in
association with Taxotere(R)/prednisone);
-- second-line treatment of colorectal cancer (in association with the
FOLFIRI regimen);
-- second-line treatment of non small cell lung cancer (in association
with Taxotere(R));
-- first-line treatment of pancreatic cancer (in association with
gemcitabine).
The TRIST study, evaluating the therapeutic vaccine TroVax(R)
(collaboration with Oxford Biomedica) as a first-line treatment for
metastatic renal cancer in association with interleukin-2, interferon or
sunitinib, has enrolled 577 patients out of a target population of 700. In
the second quarter of 2008, enrolment will begin as planned for a study
evaluating TroVax(R) as a first-line treatment in association with FOLFOX
or FOLFIRI (+/- bevacizumab) in 1,300 metastatic colorectal cancer
patients. Submission in metastatic renal cancer is scheduled for 2009, and
in metastatic colorectal cancer for 2013.
The phase III study evaluating the second-generation taxoid larotaxel
as a second-line treatment for pancreatic cancer is under way, with 104
patients out of 430 enrolled to date. Filing for approval is scheduled for
2009.
Vaccines
At the end of 2007, sanofi-aventis filed for approval in Europe of the
first influenza vaccine to use a new delivery system (intradermic micro-
injection). Filing in the United States is scheduled for 2009.
A number of other influenza vaccine R&D programs made significant
progress during 2007:
-- The improved formulation intramuscular vaccine program, designed to
vaccinate the elderly against seasonal influenza. Filing for approval
in the United States is scheduled for the second quarter of 2008.
-- The phase II cell culture based vaccine program. A long-term alliance
agreement has been signed with Lonza for industrial-scale production.
-- In the field of preparedness for pandemic influenza, sanofi pasteur
received FDA approval in 2007 for the first H5N1 vaccine to be
registered in the United States, and has also filed for approval of a
vaccine of the same type in Europe. Encouraging results have also been
obtained for an optimized low-dose H5NI vaccine using a new adjuvant.
The Menactra(R) Toddler program to develop a meningococcal meningitis
vaccine for very young children is ongoing, with 2009 the target date for
filing. The most recent information request by the FDA on Pentacel, was
provided at the end of 2007.
About sanofi-aventis
Sanofi-aventis, a leading global pharmaceutical company, discovers,
develops and distributes therapeutic solutions to improve the lives of
everyone. Sanofi-aventis is listed in Paris (EURONEXT : SAN) and in New
York (NYSE: SNY).
Contacts: Jean-Marc Podvin, jean-marc.podvin@sanofi-aventis.com, Phone:
33 1 53 77 42 23
Forward-Looking Statements
This presentation contains forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995, as amended.
Forward-looking statements are statements that are not historical facts.
These statements include product development, product potential projections
and estimates and their underlying assumptions, statements regarding plans,
objectives, intentions and expectations with respect to future events,
operations, products and services, and statements regarding future
performance. Forward- looking statements are generally identified by the
words "expects," "anticipates," "believes," "intends," "estimates," "plans"
and similar expressions. Although sanofi-aventis' management believes that
the expectations reflected in such forward-looking statements are
reasonable, investors are cautioned that forward-looking information and
statements are subject to various risks and uncertainties, many of which
are difficult to predict and generally beyond the control of
sanofi-aventis, that could cause actual results and developments to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements. These risks and uncertainties
include among other things, the uncertainties inherent in research and
development, future clinical data and analysis, including post marketing,
decisions by regulatory authorities, such as the FDA or the EMEA, regarding
whether and when to approve any drug, device or biological application that
may be filed for any such product candidates as well as their decisions
regarding labeling and other matters that could affect the availability or
commercial potential of such products candidates, the absence of guarantee
that the products candidates if approved will be commercially successful,
the future approval and commercial success of therapeutic alternatives as
well as those discussed or identified in the public filings with the SEC
and the AMF made by sanofi-aventis, including those listed under "Risk
Factors" and "Cautionary Statement Regarding Forward- Looking Statements"
in sanofi-aventis' annual report on Form 20-F for the year ended December
31, 2006. Other than as required by applicable law, sanofi- aventis does
not undertake any obligation to update or revise any forward- looking
information or statements.
Recent Events
November 7, 2007 Presentation at the Scientific Sessions of
the American Heart Association (AHA) of a
retrospective analysis which found that
initiation of insulin glargine in patients
with type 2 diabetes was associated with a
lower incidence rate of myocardial
infarction as compared with NPH Insulin
November 7, 2007 Announcement of the start of phase II
testing of sanofi pasteur's cell culture-
based seasonal influenza vaccine
November 6, 2007 Presentation by sanofi pasteur to the
American Society of Tropical Medicine and
Hygiene (ASTMH) of positive results in the
development of a vaccine for the worldwide
prevention of dengue fever
November 10, 2007 Presentation at the Congress of the American
College of Allergy, Asthma & Immunology
(ACAAI) of new data giving further
information on the safety and efficacy of
Nasacort(R) AQ in children aged 2-5 years
old with year-round allergic rhinitis
November 13, 2007 Announcement of the signature of an
exclusive global collaboration agreement
between sanofi pasteur and Acambis plc for
the development and marketing of a West Nile
virus vaccine
November 13, 2007 Announcement that the European Commission
had endorsed the positive opinion of the
EMEA on Acomplia(R), to include the results
of the SERENADE study in the European label
November 19, 2007 Announcement of FDA approval for Avalide(R)
(irbesartan, hydrochlorothiazide) as the
first combination therapy for initial use in
patients likely to need multiple drugs to
achieve blood pressure goals
November 26, 2007 Announcement of the signature in Beijing of
an agreement between the Chinese authorities
and sanofi-aventis to build a facility to
manufacture influenza vaccine in China
November 29, 2007 Announcement of the signature of a global,
strategic collaboration agreement with
Regeneron to discover, develop, and
commercialize fully-human therapeutic
antibodies utilizing Regeneron's proprietary
VelociSuite of technologies
November 30, 2007 Announcement by sanofi-aventis and Astellas
of an agreement to restructure their joint
venture activities in Japan (Fujisawa
sanofi-aventis K.K.)
December 3, 2007 Inauguration by sanofi-aventis of its first
Asian development centre for
pharmaceuticals, in Goa (India)
December 10, 2007 Presentation to the American Society of
Hematology (ASH) of the results of the TREK
dose-ranging study on AVE5026 (a new
injectable anticoagulant), demonstrating a
highly statistically significant dose
response
December 13, 2007 Oral Presentation of the US Oncology
Adjuvant Trial 9735 at the 2007 San Antonio
Breast Cancer Symposium, showing that
Taxotere(R) and cyclophosphamide improved
overall survival versus an anthracycline
combination
January 3, 2008 Announcement of the signature of an
agreement between sanofi pasteur and Crucell
for a next-generation rabies vaccine
January 28, 2008 Announcement of approval for marketing in
Japan of Lovenox(R) for the prevention of
venous thrombo-embolism in patients
undergoing orthopedic surgery of the lower
limbs such as total hip replacement, total
knee replacement and hip fracture surgery
Financial Timetable
April 30, 2008 2008 first-quarter net sales and results
May 14, 2008 Shareholders' Annual General Meeting
July 31, 2008 2008 second-quarter net sales and results
October 31, 2008 2008 third-quarter net sales and results
Appendices
List of appendices
Appendix 1: Explanatory Notes/Financial Indicators
Appendix 2: 2007 fourth-quarter, full-year, first-quarter, second-quarter
and third-quarter net sales by product
Appendix 3: 2007 fourth-quarter and full-year adjusted consolidated
income statements
Appendix 4: 2007 fourth-quarter and full-year reconciliation of
consolidated income statement to adjusted consolidated income
statement
Appendix 5: Simplified consolidated statement of cash flows and
consolidated balance sheet
Appendix 6: Trends in selected items in the adjusted income statement
Appendix 1: Explanatory Notes/Financial Indicators
Comparable net sales
When we refer to the change in our sales on a "comparable" basis, we
mean that we exclude the impact of exchange rate movements and changes in
Group structure (acquisitions and divestments of interests in entities and
rights to products, and changes in consolidation method for consolidated
entities).
We exclude the impact of exchange rates by recalculating sales for the
prior period on the basis of exchange rates used in the current period. We
exclude the impact of acquisitions by including sales from the acquired
entity or product rights for a portion of the prior period equal to the
portion of the current period during which we owned them, based on sales
information we receive from the party from whom we make the acquisition.
Similarly, we exclude sales in the relevant portion of the prior period
when we have sold an entity or rights to a product.
For a change in consolidation method, the prior period is recalculated
on the basis of the method used for the current period.
Reconciliation of 2006 fourth-quarter/full-year net sales to 2006
fourth- quarter/full-year comparable net sales:
euro million Q4 2006
2006 fourth-quarter net sales 7,356
Impact of changes in Group structure 29
Impact of exchange rates (321)
2006 fourth-quarter comparable net sales 7,064
euro million FY 2006
2006 full-year net sales 28,373
Impact of changes in Group structure (15)
Impact of exchange rates (1,069)
2006 full-year comparable net sales 27,289
Worldwide presence of a product
When we refer to the "worldwide presence" of a product, we mean our
consolidated net sales of that product, minus sales of the product to our
alliance partners plus non-consolidated sales made through our alliances
with Bristol-Myers Squibb on Plavix(R)/Iscover(R) (clopidogrel) and
Aprovel(R)/Avapro(R)/Karvea(R) (irbesartan), based on information provided
to us by our alliance partner.
Operating income - current
We define "operating income - current" as operating income before
restructuring, impairment of property, plant and equipment and intangibles,
gains/losses on disposals, and litigation.
Adjusted net income
We define "adjusted net income" as accounting net income after minority
interests adjusted to exclude (i) the material impacts of the application
of purchase accounting to acquisitions and (ii) acquisition-related
integration and restructuring costs. We believe that eliminating these
impacts from net income gives investors a better understanding of the
underlying economic performance of the combined Group.
The material impacts of the application of purchase accounting to
acquisitions, primarily the acquisition of Aventis, are as follows:
-- charges arising from the remeasurement of inventories at fair value,
net of tax;
-- amortization/impairment expense generated by the remeasurement of
intangible assets, net of tax;
-- any impairment of goodwill.
We also exclude from adjusted net income any integration and restructuring
costs (net of tax) that are specific to the acquisition of Aventis by sanofi-
aventis.
Q4 2007
Q4 2007 adjusted FY 2007
consolidated consolidated FY 2007 adjusted
financial financial consolidated consolidated
statements statements financial financial
euro million (unaudited) (unaudited) statements statements
Net sales 6,911 6,911 28,052 28,052
Net income (after
minority interests) 753 1,462 5,263 7,110
Basic EPS 0.56 1.09 3.91 5.28
Appendix 2: 2007 fourth-quarter and full-year net sales by product
2007 fourth-quarter net sales by product:
Q4 2006 Q4 2006
Q4 2007 comparable reported
euro million net sales net sales net sales
Lovenox(R) 674 574 614
Plavix(R) 609 534 541
Lantus(R) 552 420 451
Taxotere(R) 476 415 437
Eloxatin(R) 365 376 402
Stilnox(R)/Ambien(R)/Ambien CR(TM) 185 523 580
Copaxone(R) 280 253 273
Aprovel(R) 277 263 265
Tritace(R) 195 272 271
Allegra(R) 148 150 163
Amaryl(R) 101 101 105
Actonel(R) 81 85 87
Depakine(R) 80 73 74
Xatral(R) 84 81 84
Nasacort(R) 67 68 74
TOTAL 4,174 4,188 4,421
Other products 2,088 2,110 2,129
TOTAL Pharmaceuticals 6,262 6,298 6,550
Vaccines 649 766 806
TOTAL Net sales 6,911 7,064 7,356
2007 full-year net sales by product:
FY 2006 FY 2006
FY 2007 comparable reported
euro million net sales net sales net sales
Lovenox(R) 2,612 2,303 2,435
Plavix(R) 2,424 2,214 2,229
Lantus(R) 2,031 1,575 1,666
Taxotere(R) 1,874 1,675 1,752
Eloxatin(R) 1,521 1,606 1,693
Stilnox(R)/Ambien(R)/Ambien
CR(TM)/ Myslee(R) 1,250 1,868 2,026
Copaxone(R) 1,177 1,005 1,069
Aprovel(R) 1,080 1,007 1,015
Tritace(R) 741 963 977
Allegra(R) 706 637 688
Amaryl(R) 392 433 451
Actonel(R) 320 348 351
Depakine(R) 316 299 301
Xatral(R) 333 343 353
Nasacort(R) 294 263 283
TOTAL 17,071 16,539 17,289
Other products 8,203 8,324 8,551
TOTAL Pharmaceuticals 25,274 24,863 25,840
Vaccines 2,778 2,426 2,533
TOTAL Net sales 28,052 27,289 28,373
2007 third-quarter net sales by product:
Q3 2006 Q3 2006
Q3 2007 comparable reported
euro million net sales net sales net sales
Lovenox(R) 633 562 583
Plavix(R) 614 544 543
Lantus(R) 518 396 412
Taxotere(R) 475 417 429
Stilnox(R)/Ambien(R)/Ambien
CR(TM)/ Myslee(R) 207 506 538
Eloxatin(R) 383 401 417
Copaxone(R) 301 251 262
Aprovel(R) 267 252 252
Allegra(R) 159 148 156
Tritace(R) 168 225 223
Amaryl(R) 94 103 106
Xatral(R) 82 81 83
Nasacort(R) 61 57 60
Actonel(R) 79 86 84
Depakine(R) 79 75 73
TOTAL 4,120 4,104 4,221
Other products 1,962 1,995 2,033
TOTAL Pharmaceuticals 6,082 6,099 6,254
Vaccines 943 632 647
TOTAL Net sales 7,025 6,731 6,901
2007 second-quarter net sales by product:
Q2 2006 Q2 2006
Q2 2007 comparable reported
euro million net sales net sales net sales
Lovenox(R) 671 581 614
Plavix(R) 632 561 565
Lantus(R) 503 399 421
Taxotere(R) 474 435 456
Stilnox(R)/Ambien(R)/Ambien
CR(TM)/ Myslee(R) 252 433 467
Eloxatin(R) 380 423 445
Copaxone(R) 307 255 271
Aprovel(R) 272 247 250
Allegra(R) 198 174 189
Tritace(R) 167 241 248
Amaryl(R) 103 113 119
Xatral(R) 85 90 92
Nasacort(R) 87 73 78
Actonel(R) 82 90 91
Depakine(R) 81 75 76
TOTAL 4,294 4,190 4,382
Other products 2,026 2,054 2,131
TOTAL Pharmaceuticals 6,320 6,244 6,513
Vaccines 619 539 568
TOTAL Net sales 6,939 6,783 7,081
2007 first-quarter net sales by product:
Q1 2006 Q1 2006
Q1 2007 comparable reported
euro million net sales net sales net sales
Lovenox(R) 634 586 624
Plavix(R) 569 575 580
Lantus(R) 458 360 382
Taxotere(R) 449 408 430
Stilnox(R)/Ambien(R)/Ambien
CR(TM)/ Myslee(R) 606 406 441
Eloxatin(R) 393 406 429
Copaxone(R) 289 246 263
Aprovel(R) 264 245 248
Allegra(R) 201 165 180
Tritace(R) 211 225 235
Amaryl(R) 94 116 121
Xatral(R) 82 91 94
Nasacort(R) 79 65 71
Actonel(R) 78 87 89
Depakine(R) 76 76 78
TOTAL 4,483 4,057 4,265
Other products 2,127 2,165 2,258
TOTAL Pharmaceuticals 6,610 6,222 6,523
Vaccines 567 489 512
TOTAL Net sales 7,177 6,711 7,035
Appendix 3: 2007 fourth-quarter and full-year adjusted consolidated
income statements
2007 fourth-quarter adjusted consolidated income statement (unaudited)
Q4 2007 Q4 2006
adjusted adjusted
consolidated consolidated
income as % of income as % of %
euro million statement net sales statement net sales change
Net sales 6,911 100.0% 7,356 100.0% -6.0%
Other revenues 310 4.5% 228 3.1% +36.0%
Cost of sales (1,964) (28.4%) (1,957) (26.6%) +0.4%
Gross profit 5,257 76.1% 5,627 76.5% -6.6%
Research and
development expenses (1,271) (18.4%) (1,211) (16.5%) +5.0%
Selling and general
expenses (1,996) (28.9%) (2,153) (29.3%) -7.3%
Other current
operating
income/expenses 15 - 39 - -61.5%
Amortization of
intangibles (45) (0.6%) (30) (0.3%) +50.0%
Operating income -
current* 1,960 28.4% 2,272 30.9% -13.7%
Restructuring costs (87) (1.3%) (176) (2.4%) -
Impairment of PP&E
and intangibles - - (214) (2.9%) -
Gain/loss on disposals,
and litigation - - 16 0.2% -
Operating income 1,873 27.1% 1,898 25.8% -1.3%
Financial expenses (73) (1.1%) (56) (0.8%) +30.4%
Financial income 45 0.7% 122 1.7% -63.1%
Income before tax and
associates 1,845 26.7% 1,964 26.7% -6.1%
Income tax expense (464) (6.7%) (534) (7.3%) -13.1%
Reported tax rate (25.1%) - (27.2%) - -
Share of profit/loss
of associates 178 2.6% 50 0.7% 256.0%
Minority interests (97) (1.4%) (103) (1.4%) -5.8%
Net income after
minority interests 1,462 21.2% 1,377 18.7% +6.2%
Average number of
shares outstanding
(million) 1,335.3 1,348.8
Earnings per share
(in euros) 1.09 1.02 +6.9%
* Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation
2007 full-year adjusted consolidated income statement
FY 2007 FY 2006
adjusted adjusted
consolidated consolidated
income as % of income as % of %
euro million statement net sales statement net sales change
Net sales 28,052 100.0% 28,373 100.0% -1.1%
Other revenues 1,155 4.1% 1,116 3.9% +3.5%
Cost of sales (7,571) (27.0%) (7,555) (26.6%) +0.2%
Gross profit 21,636 77.1% 21,934 77.3% -1.4%
Research and
development expenses (4,537) (16.2%) (4,430) (15.6%) +2.4%
Selling and general
expenses (7,554) (26.9%) (8,020) (28.3%) -5.8%
Other current operating
income/expenses 215 - 275 - -21.8%
Amortization of
intangibles (143) (0.5%) (132) (0.5%) +8.3%
Operating income -
current* 9,617 34.3% 9,627 33.9% -0.1%
Restructuring costs (137) (0.5%) (176) (0.6%) -
Impairment of PP&E
and intangibles - - (217) (0.8%) -
Gain/loss on disposals,
and litigation - - 536 1.9% -
Operating income 9,480 33.8% 9,770 34.4% -3.0%
Financial expenses (329) (1.2%) (455) (1.6%) -27.7%
Financial income 190 0.7% 375 1.4% -49.3%
Income before tax
and associates 9,341 33.3% 9,690 34.2% -3.6%
Income tax expense (2,572) (9.2%) (2,816) (10.0%) -8.7%
Reported tax rate (27.5%) - (29.1%) - -
Share of profit/loss
of associates 760 2.7% 559 2.0% +36.0%
Minority interests (419) (1.5%) (393) (1.4%) +6.6%
Net income after
minority interests 7,110 25.3% 7,040 24.8% +1.0%
Average number of
shares outstanding
(million) 1,346.9 1,346.8
Earnings per share
(in euros) 5.28 5.23 +1.0%
* Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation
Appendix 4: 2007 fourth-quarter and full-year reconciliation of
consolidated income statement to adjusted consolidated income statement
2007 fourth-quarter reconciliation of consolidated income statement to
adjusted consolidated income statement (unaudited)
The adjustments to the income statement reflect the elimination of
material impacts of the application of purchase accounting to acquisitions,
primarily the acquisition of Aventis, amounting to euro 709 million net of
deferred taxes (with no cash impact for the Group).
Q4 2007
Q4 2007 adjusted
euro million consolidated Adjustments consolidated
Net sales 6,911 6,911
Other revenues 310 310
Cost of sales (1,964) (1,964)
Gross profit 5,257 5,257
Research and development expenses (1,271) (1,271)
Selling and general expenses (1,996) (1,996)
Other current operating income/expenses 15 15
Amortization of intangibles (915) 870(a) (45)
Operating income - current* 1,090 870 1,960
Restructuring costs (87) (87)
Impairment of PP&E and intangibles (63) 63(b) -
Gain/loss on disposals, and litigation - -
Operating income 940 933 1,873
Financial expenses (73) (73)
Financial income 45 45
Income before tax and associates 912 933 1,845
Income tax expense (117) (347)(c) (464)
Share of profit/loss of associates 55 123(d) 178
Minority interests (97) (97)
Net income after minority interests 753 709 1,462
Average number of shares
outstanding (million) 1,335.3 1,335.3
Earnings per share (in euros) 0.56 0.53 1.09
* Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation
The material impacts of the application of purchase accounting to
acquisitions (primarily the acquisition of Aventis) on the 2007
fourth-quarter consolidated income statement are:
a) An amortization charge of euro 870 million against intangible assets.
This adjustment has no cash impact on the Group.
b) Impairment losses of euro 63 million charged against intangible
assets, primarily on Amaryl(R) further to the FDA Advisory Committee's
review of Avandia(R) (Avandaryl(R) is marketed by GSK). This
adjustment has no cash impact on the Group.
c) Deferred taxes of euro 347 million, comprising euro 321 million
generated by the euro 870 million amortization charge taken against
intangible assets and euro 26 million generated by the euro 63 million
of impairment losses taken against intangible assets.
d) In "Share of profit/loss of associates", reversals of euro 123 million,
mainly comprising the reversal of a euro 102 million impairment loss
on the investment in Zentiva to align on the quoted market price at
December 31, 2007. This adjustment has no cash impact on the Group.
2007 full-year reconciliation of consolidated income statement to
adjusted consolidated income statement
The adjustments to the income statement reflect the elimination of
material impacts of the application of purchase accounting to acquisitions,
primarily the acquisition of Aventis, amounting to euro 1,847 million net
of deferred taxes (with no cash impact for the Group).
2007
2007 adjusted
euro million consolidated Adjustments consolidated
Net sales 28,052 28,052
Other revenues 1,155 1,155
Cost of sales (7,571) (7,571)
Gross profit 21,636 21,636
Research and development expenses (4,537) (4,537)
Selling and general expenses (7,554) (7,554)
Other current operating income/expenses 215 215
Amortization of intangibles (3,654) 3,511(a) (143)
Operating income - current* 6,106 3,511 9,617
Restructuring costs (137) (137)
Impairment of PP&E and intangibles (58) 58(b) -
Gain/loss on disposals, and litigation - -
Operating income 5,911 3,569 9,480
Financial expenses (329) (329)
Financial income 190 190
Income before tax and associates 5,772 3,569 9,341
Income tax expenses (687) (1,885)(c) (2,572)
Share of profit/loss of associates 597 163(d) 760
Minority interests (419) (419)
Net income after minority interests 5,263 1,847 7,110
Average number of shares
outstanding (million) 1,346.9 1,346.9
Earnings per share (in euros) 3.91 1.37 5.28
* Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation
The material impacts of the application of purchase accounting to
acquisitions (primarily the acquisition of Aventis) on the 2007 full-year
consolidated income statement are:
a) An amortization charge of euro 3,511 million against intangible assets.
This adjustment has no cash impact on the Group.
b) A net impairment loss of euro 58 million taken against intangible
assets. This adjustment has no cash impact on the Group.
c) Deferred taxes of euro 1,885 million comprising (i) euro 1,295 million
generated by the euro 3,511 million amortization charge taken against
intangible assets; (ii) euro 24 million generated by the euro 58
million impairment loss taken against intangible assets; (iii) euro 566
million arising primarily from the impact of the cut in German tax
rates on deferred tax liabilities recognized in 2004 on the
remeasurement of acquired intangible assets of Aventis. This adjustment
has no cash impact on the Group.
d) In "Share of profit/loss of associates", reversals of euro 163 million,
comprising the reversal of a euro 102 million impairment loss on the
investment in Zentiva to align on the quoted market price at December
31, 2007 and the reversal of euro 61 million of amortization charged
against intangible assets, net of tax. This adjustment has no cash
impact on the Group.
Appendix 5: Simplified consolidated statement of cash flows and
consolidated balance sheet
Simplified consolidated statement of cash flows
euro million 2007 2006
Adjusted net income 7,110 7,040
Depreciation, amortization and impairment of
property, plant & equipment and intangibles 1,095 1,296
Net gain/loss on disposals of non-current assets,
net of tax (64) (558)
Other items and impact of restructuring costs*,
net of tax (224) (168)
Operating cash flow before changes in working
capital 7,917 7,610
Changes in working capital (811) (1,006)
Net cash provided by operating activities 7,106 6,604
Acquisitions of property, plant & equipment and
intangibles (1,610) (1,454)
Acquisitions of investments, net of cash acquired (435) (513)
Proceeds from disposals of property, plant &
equipment and intangibles (net of tax), and other
items 329 1,177
Net cash used in investing activities (1,716) (790)
Issuance of sanofi-aventis shares 271 307
Proceeds from sale of own shares on exercise of
stock options 23 50
Repurchase of own shares (1,806) -
Dividends (2,373) (2,050)
Other items 56 14
Change in net debt 1,561 4,135
* associated with the acquisition of Aventis
Simplified consolidated balance sheet
euro million
ASSETS 31/12/07 31/12/06 LIABILITIES & 31/12/07 31/12/06
EQUITY
Property, plant 6,538 6,219 Equity 44,542 45,600
and equipment attributable to
equity-holders
of the company
Intangible 46,381 52,210 Minority 177 220
assets interests
(including
goodwill)
Non-current 6,442 7,174 Total 44,719 45,820
financial shareholders'
assets, equity
investments in
associates and
deferred taxes
Long-term debt 3,734 4,499
Non-current 59,361 65,603 Provisions and 6,857 7,920
assets other non-
current
liabilities
Deferred tax 6,935 9,246
liabilities
Inventories, 10,842 11,007 Non-current 17,526 21,665
accounts liabilities
receivable and
current
financial
assets
Cash and cash 1,711 1,153 Accounts 7,462 7,833
equivalents payable and
other current
liabilities
Short-term debt 2,207 2,445
Current assets 12,553 12,160 Current 9,669 10,278
liabilities
Total ASSETS 71,914 77,763 Total 71,914 77,763
LIABILITIES &
EQUITY
Appendix 6: Trends in selected items in the adjusted income statement
items, net of tax
euro million Q4 2007 Q4 2006 FY 2007 FY 2006
Restructuring costs (60) (122) (95) (122)
Gain/loss on disposals - 106 553(2)
Provisions for financial
instruments, litigation,
tax inspections &
other items 93 25 244(1) 38(3)
TOTAL net of tax 33 9 149 469
(1) Includes:
-- Tax risks/settlement of tax disputes: euro 93 million for the
quarter and euro 337 million for the full year. The 2007 full-year
figure also includes an income tax expense of euro 51 million
relating to the reversal of deferred tax assets due to changes in
tax rates announced during the period, in particular in Germany.
-- Harmonization of welfare and healthcare plans for retirees:
-euro 42 million, net of tax
(2) Includes:
-- Exubera(R): euro 384 million
-- Rhodia: euro 101 million
-- Animal Nutrition: euro 31 million
(3) Includes:
-- Tax risks/settlement of tax disputes: euro 105 million
-- Impairment of Ketek industrial assets: -euro 79 million
-- CSL: euro 43 million
-- Provisions for investment portfolio: -euro 26 million
SOURCE sanofi-aventis
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Related links:
http://www.sanofi-aventis.us
http://www.sanofi-aventis.com/
http://www.prnewswire.com/comp/232375.html/
CONTACT:
Jean-Marc Podvin of sanofi-aventis,
jean-marc.podvin@sanofi-aventis.com, +33-1-53-77-42-23
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