Paris, February 7, 2018

Sanofi Delivers 2017 Business EPS(1) in line with Guidance

 

Sanofi Delivers 2017 Business EPS(1) in line with Guidance

Q4 2017

Change

Change
at CER

Change
at CER/CS(2)

2017

Change

Change
at CER

Change
at CER/CS(2)

IFRS net sales reported

€8,691m

-2.0%

+4.1%

-1.6%

€35,055m

+3.6%

+5.6%

+0.5%

IFRS net income reported

€129m

-83.7%

€8,434m

+79.1%

IFRS EPS reported

€0.10

-83.9%

€6.71

+83.3%

Business net income(1)

€1,332m

-17.1%

-10.8%

€6,964m

-4.7%

-2.6%

Business EPS(1)

€1.06

-15.2%

-8.8%

€5.54

-2.5%

-0.4%

Fourth-quarter and 2017 accounts reflect the acquisition of the former Boehringer Ingelheim Consumer Healthcare (CHC) business and the disposal of the Animal Health business (completed on January 1, 2017). In accordance with IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations), Animal Health results in 2016 and gain on disposal in 2017 are reported separately. Fourth-quarter and 2017 income statements also reflect the consolidation of European operations related to Sanofi vaccine portfolio, following the termination of the Sanofi Pasteur MSD joint venture (SPMSD JV) with Merck at the end of 2016.

Q4 2017 sales reflect strong Dupixent® launch offset by anticipated declines in U.S. diabetes and Renagel®

  • Net sales were €8,691 million, down 2.0% on a reported basis and up 4.1%(3) at CER. At CER/CS(3), net sales were down 1.6%.
  • Strong Sanofi Genzyme sales growth (up 16.8%) driven by contribution from new immunology franchise.
  • Sanofi Pasteur sales increased 1.2% at CER/CS impacted by order phasing effects and Dengvaxia®.
  • CHC sales grew 2.5% at CER/CS.
  • Diabetes and Cardiovascular GBU sales down 19.1%.
  • Emerging Markets(4) sales increased 2.1% at CER/CS, driven by Pharmaceuticals which increased 4.0% at CER/CS.

Sanofi Genzyme, Sanofi Pasteur and Emerging Markets sales growth more than offset Diabetes sales decline in 2017

  • Net sales in 2017 were €35,055 million, up 3.6% on a reported basis and 5.6%(2) at CER. Net sales were up 0.5% at CER/CS.
  • Sanofi Genzyme grew 15.1% to €5,674 million while Sanofi Pasteur increased 8.3% (at CER/CS) to €5,101 million.
  • Emerging Markets sales were up 6.0% at CER/CS supported by strong performance in China (up 15.1% at CER/CS).
  • Diabetes and Cardiovascular GBU sales declined 14.3% to €5,400 million.

Sanofi meets its full-year 2017 business EPS guidance

  • Q4 2017 business EPS(1) decreased 8.8% at CER to €1.06, including financial impact from Dengvaxia® (-€0.10).
  • 2017 business EPS(1) of €5.54 (-0.4% at CER) and IFRS EPS of €6.71 (+83.3% on a reported basis).
  • Net debt was €5,229 million at the end of 2017, a decrease from €8,206 million at the end of 2016.
  • Board proposes dividend of €3.03, an increase of 2.4%.
  • 2017 business net income (BNI) effective tax rate unaffected by the U.S. tax reform. In 2018, Sanofi expects the BNI effective tax rate to be around 22% primarily as a result of U.S. tax reform(5).

Sanofi progresses on its strategic priorities

  • Sanofi to acquire Bioverativ(6) for $11.6 billion to expand in specialty care and strengthen its leadership in rare diseases.
  • Sanofi to acquire Ablynx(6) for €3.9 billion to strengthen its R&D strategy with innovative Nanobody® technology platform.
  • Agreement signed with Regeneron to accelerate and expand investments for the development of cemiplimab and dupilumab.
  • FDA supplemental BLA submission for dupilumab in uncontrolled persistent asthma for adults and adolescents.

2018 financial outlook

  • Sanofi expects 2018 business EPS(1) to grow between 2% and 5%(7) at CER, including the anticipated contribution from the recently announced acquisitions, barring unforeseen major adverse events. Applying the average December 2017 exchange rates, the currency impact on 2018 business EPS is estimated to be -3% to -4%.

Sanofi Chief Executive Officer, Olivier Brandicourt, commented:

“In 2017, we continued to execute on our strategic goals with the strong launch of Dupixent®, the positive pivotal data for cemiplimab and for dupilumab in asthma. At the same time, we managed the challenges in U.S. diabetes as well as the impact from sevelamer generics and Dengvaxia®. Recently, we announced a series of strategic steps – we are obtaining the global rights to fitusiran and plan to acquire Bioverativ and Ablynx – which will establish Sanofi as a new global leader in rare blood disorders. Additionally, these actions will further strengthen our pipeline and provide us with the powerful new Nanobody® technology platform. Overall, after a period of significant reshaping since 2015, we are positioned to drive growth in 2018.”

 (1) 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 Q4 2017 and 2017 is provided in Appendix 3 and a reconciliation of IFRS net income reported to business net income is set forth in Appendix 4; (2) CS: constant structure: adjusted for BI CHC business, termination of SPMSD and others; (3) changes in net sales are expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 10); (4) See definition page 8; (5) based on current understanding of the US  tax reform; (6) Subject to the completion of the acquisition; (7) 2017 business EPS was €5.54

Investor Relations: (+) 33 1 53 77 45 45 – E-mail: IR@sanofi.comMedia Relations: (+) 33 1 53 77 46 46 – E-mail: MR@sanofi.com

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New segmentation

During 2017, Sanofi has progressively integrated the Consumer Healthcare operations of Boehringer Ingelheim, acquired on January 1, 2017. Following the completion of the integration process and effective December 31, 2017, the CHC business formed a distinct operating segment. Additionally, Sanofi achieved the realignment of its management reporting in accordance with its revised organizational structure in 2017. As a result, the costs of the global functions (Medical Affairs, External Affairs, Finance, Human Resources, Legal Affairs, Information Solutions & Technologies, Sanofi Business Services, etc.) will be included in “Other”, as reconciling items to Group numbers. However, comparative information for the previous year will not be restated to reflect the changes described above because the necessary information is not available and would be too complex to develop. The Q1 2018 earnings press release will be based on this new segmentation. Sanofi’s Annual report Form 20-F and Document de Référence will contain the information for the year 2017 on both the old basis (with comparative earlier periods) and the segmentation principles.

2018 adoption of IFRS15 and IFRS9

Based on the current assessment, Sanofi does not expect a material revenue recognition change under the new IFRS15 revenue standard which becomes effective in 2018. Sanofi will provide restated figures in the preview document related to Q1 2018. In addition, the Group does not anticipate a material restatement of 2017 Business EPS from the adoption of IFRS9, the new IFRS standard for financial instruments, also effective in 2018.

2017 fourth-quarter and full-year Sanofi sales

Unless otherwise indicated, all percentage changes in sales in this press release are stated at CER(8).

In the fourth quarter of 2017, Company sales were €8,691 million, down 2.0% on a reported basis. Exchange rate movements had a negative effect of 6.1 percentage points mainly driven by the movement of the U.S. Dollar accompanied by the Japanese Yen, Turkish Lira and Chinese Yuan. Company sales benefited from the acquisition of Boehringer Ingelheim’s CHC business and full consolidation of Sanofi’s European vaccines operations leading to an increase of 4.1% at CER. At CER and CS, Company sales were down 1.6%.

2017 Company sales reached €35,055 million, up 3.6% on a reported basis. Exchange rate movements had a negative effect of 2.0 percentage points. At CER and CS, Company sales were up 0.5%.

Global Business Units

The table below presents sales by Global Business Unit (GBU) and reflects the organization of Sanofi. This structure drives deeper specialization, simplifies reporting and provides a clear focus on growth drivers. Please note that Emerging Markets sales for Specialty Care and Diabetes and Cardiovascular are included in the General Medicines and Emerging Markets GBU.

Net Sales by GBU

(€ million)

Q4 2017

Change
(CER)

Change
CER/CS*

2017

Change
(CER)

Change
CER/CS*

Sanofi Genzyme (Specialty Care)(a)

1,466

+16.8%

+16.9%

5,674

+15.1%

+15.2%

Diabetes and Cardiovascular(a)

1,297

-19.1%

-19.1%

5,400

-14.3%

-14.3%

General Medicines & Emerging Markets(b)

3,347

-2.3%

-2.7%

14,048

-1.0%

-1.3%

Consumer Healthcare (CHC)

1,196

+51.8%

+2.5%

4,832

+46.3%

+2.1%

Total Pharmaceuticals

7,306

+3.3%

-2.1%

29,954

+4.2%

-0.8%

Sanofi Pasteur (Vaccines)

1,385

+8.7%

+1.2%

5,101

+14.5%

+8.3%

Total net sales

8,691

+4.1%

-1.6%

35,055

+5.6%

+0.5%

(a) Does not include Emerging Markets sales- see definition page 8; (b) Includes Emerging Markets sales for Diabetes & Cardiovascular and Specialty Care

Global Franchises

The tables below present fourth-quarter and full-year 2017 sales by global franchise, including Emerging Markets sales, to facilitate comparisons. Appendix 1 provides a reconciliation of sales by GBU and franchise.

(8) See Appendix 10 for definitions of financial indicators.

*CS: constant structure: adjusted for BI CHC business, termination of SPMSD and others

Net sales by Franchise

(€ million)

Q4 2017

Change
(CER)

Change
at CER/CS*

Developed

Markets

Change
at CER/CS*

Emerging

Markets

Change
at CER/CS*

Specialty Care

1,714

+16.5%

+16.6%

1,466

+16.9%

248

+15.0%

Diabetes and Cardiovascular

1,663

-14.2%

-14.2%

1,297

-19.1%

366

+8.7%

Established Rx Products

2,298

-5.5%

-6.0%

1,397

-11.4%

901

+3.3%

Consumer Healthcare (CHC)

1,196

+51.8%

+2.5%

796

+4.1%

400

-0.5%

Generics

435

-2.1%

-1.9%

252

-0.4%

183

-3.8%

Vaccines

1,385

+8.7%

+1.2%

914

+5.3%

471

-6.1%

Total net sales

8,691

+4.1%

-1.6%

6,122

-3.1%

2,569

+2.1%

*CS: constant structure

Net sales by Franchise

(€ million)

2017

Change
(CER)

Change
at CER/CS*

Developed

Markets

Change
at CER/CS*

Emerging

Markets

Change
at CER/CS*

Specialty Care

6,678

+14.5%

+14.6%

5,674

+15.2%

1,004

+11.3%

Diabetes and Cardiovascular

6,905

-9.6%

-9.6%

5,400

-14.3%

1,505

+11.6%

Established Rx Products

9,761

-3.4%

-3.8%

5,961

-8.8%

3,800

+4.8%

Consumer Healthcare (CHC)

4,832

+46.3%

+2.1%

3,216

+1.7%

1,616

+3.0%

Generics

1,778

-3.3%

-3.1%

1,020

-3.6%

758

-2.4%

Vaccines

5,101

+14.5%

+8.3%

3,526

+8.6%

1,575

+7.6%

Total net sales

35,055

+5.6%

+0.5%

24,797

-1.7%

10,258

+6.0%

  *CS: constant structure

Pharmaceuticals

Fourth-quarter Pharmaceutical sales were up 3.3% to €7,306 million. At CS, Pharmaceutical sales were down 2.1% primarily due to Diabetes and Established Rx Products. Full-year 2017 sales for Pharmaceuticals increased 4.2% to €29,954 million (down 0.8% at CS).

Rare Disease franchise

Net sales (€ million)

Q4 2017

Change
(CER)

2017

Change
(CER)

Myozyme® / Lumizyme®

205

+11.5%

789

+10.1%

Cerezyme®

183

+7.1%

730

+0.4%

Fabrazyme®

180

+6.0%

722

+9.2%

Aldurazyme®

48

+4.0%

207

+5.5%

Cerdelga®

33

+20.7%

126

+20.8%

Others Rare Diseases

77

+3.8%

314

-1.2%

Total Rare Disease

726

+8.0%

2,888

+6.0%

In the fourth quarter, Rare Disease sales increased 8.0% to €726 million driven by Europe (up 12.3% to €255 million) and Emerging Markets (up 11.8% to €129 million). In the U.S., Rare Disease sales grew 5.2% to €259 million in the fourth quarter. In 2017, Rare Disease sales increased 6.0% to €2,888 million.

Fourth-quarter Gaucher (Cerezyme® and Cerdelga®) sales were up 8.9% at €216 million supported by additional launches of Cerdelga® and solid Cerezyme® performance. Over this period, Cerezyme® sales were up 7.1% to €183 million and Cerdelga® sales increased 20.7% to €33 million of which €24 million were generated in the U.S. (up 13.0%). Full-year 2017 Gaucher sales increased 2.9% to €856 million.

Fourth-quarter Myozyme®/Lumizyme® sales grew 11.5% to €205 million driven by European sales (up 20.0% to €95 million). Full-year 2017 Myozyme®/Lumizyme® sales increased 10.1% to €789 million.

Fourth-quarter Fabrazyme® sales were up 6.0% to €180 million despite the market entry of a new competitor in Europe and some other markets. Full-year 2017 Fabrazyme® sales were up 9.2% to €722 million.

Multiple Sclerosis franchise

Net sales (€ million)

Q4 2017

Change
(CER)

2017

Change
(CER)

Aubagio®

389

+13.6%

1,567

+23.2%

Lemtrada®

112

+0.9%

474

+13.6%

Total Multiple Sclerosis

501

+10.5%

2,041

+20.8%

Fourth-quarter Multiple Sclerosis (MS) sales grew 10.5% to €501 million, driven by Aubagio® performance in the U.S. and Europe. Full-year 2017 MS sales increased 20.8% to €2,041 million.

Fourth-quarter Aubagio® sales increased 13.6% to €389 million driven by the U.S. (up 9.8% to €266 million) and Europe (up 21.5% to €96 million). Full-year 2017 Aubagio® sales increased 23.2% to €1,567 million. In the U.S., all of the pending ANDA litigations associated with Aubagio® (teriflunomide), have been settled and dismissed.

In the fourth quarter Lemtrada® sales were up 0.9% to €112 million driven by Europe (up 10.3% to €42 million). In the U.S., sales were down 10.4% to €56 million, reflecting fewer overall infusions due to the unique short-term dosing regimen with persistent duration of therapeutic effect as well as a more competitive environment. Full-year 2017 Lemtrada® sales increased 13.6% to €474 million.

Immunology franchise

Net sales (€ million)

Q4 2017

Change
(CER)

2017

Change
(CER)

Dupixent®

118

219

Kevzara®

8

11

Total Immunology

126

230

Dupixent® (collaboration with Regeneron), which was launched in the U.S. in March for the treatment of moderate-to-severe adult atopic dermatitis (AD), generated sales of €118 million in the fourth quarter. In Europe, Dupixent® was approved at the end of September 2017 for use in adults with moderate-to-severe AD who are candidates for systemic therapy and was launched in Germany in December. Full-year 2017, Dupixent® sales were €219 million.

Kevzara® (collaboration with Regeneron) was launched for rheumatoid arthritis in the U.S. in June and in Germany, the UK and the Netherlands during the second half of 2017. Fourth-quarter and full-year 2017 Kevzara® sales were €8 million and €11 million, respectively.

Oncology franchise

Net sales (€ million)

Q4 2017

Change
(CER)

2017

Change
(CER)

Jevtana®

99

+14.1%

386

+9.8%

Thymoglobulin®

72

0.0%

291

+5.3%

Taxotere®

40

0.0%

173

-0.6%

Eloxatin®

44

+14.6%

179

+8.2%

Mozobil®

40

+4.9%

163

+9.2%

Zaltrap®

22

+53.3%

75

+16.9%

Others

44

-26.2%

252

+2.0%

Total Oncology

361

+3.5%

1,519

+6.4%

Fourth-quarter and full-year 2017 oncology sales increased 3.5% to €361 million and 6.4% to €1,519 million, respectively.

Jevtana® sales were up 14.1% to €99 million in the fourth quarter supported by the performance in all regions. Full-year 2017 Jevtana® sales increased 9.8% to €386 million. Thymoglobulin® sales were stable at €72 million and increased 5.3% to €291 million in the fourth quarter and full-year, respectively. Eloxatin® sales increased 14.6% to €44 million in the fourth quarter driven by China. Fourth-quarter Taxotere® sales were stable at €40 million. Full-year 2017 sales of Taxotere® and Eloxatin® were down 0.6% (to €173 million) and up 8.2% (to €179 million), respectively.

Diabetes franchise

Net sales (€ million)

Q4 2017

Change
(CER)

2017

Change
(CER)

Lantus®

1,076

-20.9%

4,622

-17.5%

Toujeo®

216

-4.2%

816

+27.0%

Total glargine

1,292

-18.6%

5,438

-13.0%

Apidra®

97

+8.4%

377

+4.9%

Amaryl®

81

-2.2%

337

-1.4%

Insuman®

26

-12.9%

107

-15.5%

BGM (Blood Glucose Monitoring)

15

-6.3%

62

-6.1%

Lyxumia®

5

-14.3%

26

-18.2%

Soliqua®

9

26

Total Diabetes

1,533

-15.6%

6,395

-11.1%

In the fourth quarter, global Diabetes sales decreased 15.6% to €1,533 million, reflecting lower Sanofi glargine (Lantus® and Toujeo®) sales in the U.S. Fourth-quarter U.S. Diabetes sales were down 29.5% to €730 million reflecting exclusions from commercial formularies at CVS and UnitedHealthcare as well as a high basis of comparison in the fourth quarter of 2016. Full-year 2017 U.S. Diabetes sales decreased 22.8% to €3,128 million. Fourth-quarter sales in Emerging Markets increased 8.2% to €363 million. Fourth-quarter sales in Europe increased 1.3% to €323 million reflecting Toujeo® growth. Full-year 2017 global Diabetes sales decreased 11.1% to €6,395 million.

In the fourth quarter, Sanofi glargine (Lantus® and Toujeo®) sales decreased 18.6% to €1,292 million. U.S. Sanofi glargine sales were down 30.9% to €694 million, reflecting the impact of the exclusion from the CVS commercial formulary from January 1, 2017 and from the UnitedHealthcare commercial formulary from April 1, 2017 as well as a high basis of comparison in the fourth quarter of 2016. In Europe, Sanofi glargine sales increased 2.5% to €246 million due to the Toujeo® strong performance despite biosimilar glargine competition in several European markets. Full-year 2017 Sanofi glargine sales decreased 13.0% to €5,438 million.

In the fourth quarter, Lantus® sales were €1,076 million, down 20.9%. In the U.S., Lantus® sales decreased 31.4% to €584 million mainly reflecting lower average net price, the aforementioned impact of formulary exclusions as well as a high basis of comparison in the fourth quarter of 2016. In Europe, fourth-quarter Lantus® sales were €183 million (down 7.5%) due to biosimilar glargine competition and patients switching to Toujeo®. In Emerging Markets, fourth-quarter sales were up 4.9% to €234 million. Full-year 2017 Lantus® sales decreased 17.5% to €4,622 million.

Fourth-quarter Toujeo® sales were €216 million, down 4.2%. In the U.S., fourth-quarter Toujeo® sales were €110 million down 28.4% versus the fourth quarter of 2016 (which was a high basis of comparison). However, Toujeo® sales showed positive trend compared to the third quarter of 2017. In Europe and Emerging Markets, fourth-quarter Toujeo sales were €63 million (up 51.2%) and €25 million (versus €15 million in the fourth quarter of 2016). Full-year 2017 Toujeo® sales increased 27.0% to €816 million.

Soliqua® 100/33 (insulin glargine 100 Units/mL & lixisenatide 33 mcg/mL injection) was launched in the U.S. in January 2017 and Suliqua™ was also launched in some European countries in 2017. Soliqua® 100/33 / Suliqua™ sales were €9 million in the fourth quarter and €26 million in 2017.

Amaryl® sales were €81 million, down 2.2% in the fourth quarter, of which €66 million were generated in Emerging Markets (down 1.4%). Full-year 2017 Amaryl® sales were down 1.4% to €337 million.

Fourth-quarter Apidra® sales increased 8.4% to €97 million. Lower sales in the U.S. (down 10.3% to €25 million) were offset by strong growth in Emerging Markets (up 40.9% to €28 million). Full-year 2017 Apidra® sales increased 4.9% to €377 million.

Cardiovascular franchise

Fourth-quarter Praluent® sales (collaboration with Regeneron) were €53 million, of which €35 million was in the U.S. and €15 million in Europe. This reflected significant payer utilization management restrictions in the U.S. and limited market access in Europe. Full-year 2017 Praluent® sales were €171 million versus €105 million in 2016. Praluent® was launched in France in February 2018.

Fourth-quarter and 2017 Multaq® sales were €77 million (down 11.7%) and €339 million (down 2.5%), respectively.

Established Rx Products

Net sales (€ million)

Q4 2017

Change
(CER)

2017

Change
(CER)

Lovenox®

388

-2.7%

1,575

-2.1%

Plavix®

348

+2.5%

1,471

-1.2%

Renvela®/Renagel®

155

-28.5%

802

-12.3%

Aprovel®/Avapro®

158

+2.5%

691

+3.7%

Synvisc® /Synvisc-One®

86

-16.2%

387

-3.9%

Myslee®/Ambien®/Stilnox®

59

-19.0%

259

-13.5%

Allegra®

32

-9.8%

158

-12.9%

Other

1,072

-3.4%

4,418

-2.8%

Total Established Rx Products

2,298

-5.5%

9,761

-3.4%

In the fourth quarter, Established Rx Products sales decreased 5.5% to €2,298 million. This reflected a decline in sales in Europe (down 4.7% to €869 million), together with generic competition to Renvela®/Renagel® in the U.S. and the impact of generic competition to Plavix® in Japan, which more than offset Emerging Markets performance (up 3.2% to €901 million). Full-year 2017 Established Rx Products sales decreased 3.4% to €9,761 million.

Lovenox® sales decreased 2.7% to €388 million in the fourth quarter, reflecting increased competition in Europe (down 9.0% to €231 million) which offset the growth in Emerging Markets (up 5.6% to €120 million). As of September, biosimilars have been introduced in the UK and Germany. Full-year 2017 Lovenox® sales decreased 2.1% to €1,575 million.

In the fourth quarter, Plavix® sales were up 2.5% to €348 million sustained by Emerging Markets performance (up 13.5% to €244 million) driven by China which exceeded the impact of generic competition in Japan (sales in Japan were down 25.6% to €54 million). Full-year 2017 Plavix® sales decreased 1.2% to €1,471 million.

Fourth-quarter Renvela®/Renagel® sales decreased 28.5% to €155 million due to generic competition in the U.S. (down 33.5% to €117 million). In October, Sanofi launched an authorized generic of Renvela®/Renagel® on the U.S. market. Full-year 2017 Renvela®/Renagel® sales decreased 12.3% to €802 million.

Fourth-quarter Aprovel®/Avapro® sales increased 2.5% to €158 million, reflecting strong performance in China which offset lower sales to Sanofi’s partner in Japan. Full-year 2017 Aprovel®/Avapro® sales increased 3.7% to €691 million.

Consumer Healthcare

CHC sales by geography and category are provided in Appendix 1.

Net sales (€ million)

Q4 2017

Change
(CER)

Change
at CER/CS*

2017

Change
(CER)

Change
at CER/CS*

Allergy Cough & Cold

293

+71.3%

+3.7%

1,226

+56.6%

+3.2%

   of which Allegra®

85

+8.1%

+8.1%

423

+2.4%

+2.4%

   of which Mucosolvan®

40

na

na

125

na

na

   of which Xyzal®

7

65

Pain

328

+51.1%

+7.5%

1,258

+45.9%

+5.7%

   of which Doliprane®

95

+11.6%

+11.6%

323

+5.5%

+5.5%

   of which Buscopan®

51

na

na

191

na

na

Digestive

242

+84.1%

+0.4%

930

+79.5%

-0.8%

   of which Dulcolax®

56

na

na

211

na

na

   of which Enterogermina®

41

+19.4%

+19.4%

168

+6.9%

+6.9%

   of which Essentiale®

44

+2.2%

+2.2%

150

+0.7%

+0.7%

   of which Zantac®

29

na

na

117

na

na

Nutritionals

156

+52.3%

-2.9%

652

+44.9%

-2.7%

   of which Pharmaton®

23

na

na

100

na

na

Other

177

+7.3%

0.0%

766

+11.2%

+2.5%

   of which Gold Bond®

56

+7.0%

+7.0%

201

+5.6%

+5.6%

Total Consumer Healthcare

1,196

+51.8%

+2.5%

4,832

+46.3%

+2.1%

*CS: constant structure

In the fourth quarter, Consumer Healthcare (CHC) sales increased 51.8% to €1,196 million reflecting the closing of the acquisition of Boehringer Ingelheim CHC business on January 1, 2017. At CS, Sanofi CHC sales increased 2.5% in the fourth quarter, driven by Europe (up 5.7% to €387 million) and the U.S. (up 3.8% to €251 million) which offset the slight decline in Emerging Markets (down 0.5% to €400 million). At CS, full-year 2017 CHC sales increased 2.1% to €4,832 million.

In Europe, fourth-quarter CHC sales were up 69.0% to €387 million. At CS, sales increased 5.7% mainly driven by Doliprane® and Mucosolvan®, reflecting an unusual spike in demand at the end of the year, earlier than in previous seasons. At CS, full-year 2017 CHC sales in Europe increased 2.0% to €1,422 million.

In the U.S., fourth-quarter CHC sales increased 31.1% to €251 million. At CS, CHC sales were up 3.8% reflecting strong performance of allergy franchise as well as Gold Bond®. Fourth-quarter Xyzal® Allergy 24HR sales (approved in February) were €7 million. Fourth-quarter sales of the Digestive category were down 16.4%, reflecting lower Zantac® sales. At CS, full-year 2017 CHC sales increased 1.3% to €1,133 million.

In Emerging Markets, fourth-quarter CHC sales increased 32.8% to €400 million. At CS, CHC sales were down 0.5% reflecting lower sales in Russia and Mexico. Full-year 2017 Emerging Markets CHC sales increased 3.0% to €1,616 million at CS.

Generics

In the fourth quarter, Generics sales decreased 2.1% to €435 million reflecting lower sales in Europe (down 1.6% to €189 million) and in Emerging Markets (down 4.3% to €183 million). Full-year 2017 Generics sales decreased 3.3% to €1,778 million. Signing of definitive transaction agreements(9) on divestiture of European Generics is expected in the third quarter of 2018.

Vaccines

Net sales (€ million)

Q4 2017

Change
(CER)

Change
at CER/CS*

2017

Change
(CER)

Change
at CER/CS*

Polio/Pertussis/Hib vaccines

(incl. Hexaxim® / Hexyon® Pentacel®, Pentaxim® and Imovax®)

493

-3.9%

-9.8%

1,827

+24.3%

+15.3%

Influenza vaccines

(incl. Vaxigrip®, Fluzone HD® & Fluzone®)

502

+28.4%

+20.5%

1,589

+9.5%

+8.2%

Meningitis/Pneumonia vaccines

(incl. Menactra®)

81

-27.1%

-28.3%

623

+0.2%

-0.3%

Adult Booster vaccines (incl. Adacel ®)

137

+13.2%

-0.7%

474

+16.5%

-0.2%

Travel and other endemic vaccines

160

+55.1%

+33.9%

493

+35.9%

+19.0%

Dengvaxia®

-19

ns

ns

3

-98.2%

-98.2%

Other vaccines

31

+6.1%

+6.1%

92

+9.1%

+7.9%

Total Vaccines

1,385

+8.7%

+1.2%

5,101

+14.5%

+8.3%

*CS: constant structure

Fourth-quarter Vaccines sales were up 8.7% to €1,385 million and reflected the termination of the Sanofi Pasteur MSD joint venture in Europe from December 31, 2016. At CS, sales were up 1.2%. In Europe, sales were up 347.7% to €196 million and up 37.8% at CS driven by Polio/Pertussis/Hib, Boosters and Flu franchises. This strong performance offset lower sales in Emerging Markets (down 6.1% to €471 million), as a result of a phasing effect of Hexaxim® sales and the buy back of unused doses of Dengvavia® following the announced label update in November. In the U.S. (down 0.4% to €642 million) sales were impacted by decreased sales of Polio/Pertussis/Hib and Boosters vaccines. Full-year 2017 Vaccines sales grew 8.3% at CS to €5,101 million.

In the fourth quarter, Polio/Pertussis/Hib (PPH) vaccines sales decreased 3.9% to €493 million. At CS, PPH sales were down 9.8%. In the U.S., PPH franchise sales decreased 27.1% reflecting the high sales level in the fourth quarter of 2016 which benefited from a stock replenishment effect on Pentacel®. The strong performance of Hexaxim® in Europe and Pentaxim® in China offset lower sales of the Pediatric AcXim combination family in Emerging Markets mainly reflecting the timing of public tenders. In China, Sanofi Pasteur expects supply of Pentaxim® to be constrained in the first half of 2018 due to a testing issue which, together with the high base for comparison on Menactra®, is expected to result in lower overall Vaccines GBU sales over this time period. At CS, full-year 2017 Polio/Pertussis/Hib vaccines sales increased 15.3% to €1,827 million.

(9) Following completion of the dialogue with social partners

Fourth-quarter Influenza vaccines sales increased 28.4% to €502 million and 20.5% at CS. This was driven by a strong performance in the U.S. (up 25.4%) reflecting €43 million of pandemic flu vaccines sales to BARDA (Biomedical Advanced Research and Development Authority) and by the success of VaxigripTetra™ in Europe (flu vaccines sales were up 45.5% in Europe). Full-year 2017 Influenza vaccines sales were €1,589 million, up 8.2% at CS.

Fourth-quarter Menactra® sales decreased 19.6% to €79 million due to lower sales in the U.S., reflecting the phasing effect from CDC (Centers for Disease Control) orders. Full-year 2017 Menactra® sales were up 4.6% to €600 million.

Fourth-quarter Adult Booster vaccines sales were €137 million, up 13.2% and down 0.7% at CS reflecting lower Adacel® sales in the U.S despite improved supply of Repevax® in Europe. At CS, full-year 2017 Adult Booster vaccines sales were broadly stable at €474 million.

Fourth-quarter Travel and other endemic vaccines sales were €160 million up 55.1% (up 33.9% at CS) reflecting improved supply of Rabies and Hepatitis A vaccines. At CS, full-year 2017 Travel and other endemic vaccines sales were up 19.0% to €493 million.

On November 29, 2017, Sanofi announced that it will ask health authorities to update information provided to physicians and patients on its dengue vaccine Dengvaxia® in countries where it is approved. The request was based on a new analysis of long-term clinical trial data, which found differences in vaccine performance based on prior dengue infection.

Fourth-quarter Dengvaxia® sales were -€19 million reflecting the buy back of unused doses. Full-year 2017 Dengvaxia® sales were €3 million.

Company sales by geographic region        

Sanofi sales (€ million)

Q4 2017

Change
(CER)

Change

(CER/CS*)

2017

Change
(CER)

Change

(CER/CS*)

United States

2,851

-6.2%

-7.7%

11,855

-2.0%

-3.5%

Emerging Markets(a)

2,569

+6.3%

+2.1%

10,258

+9.7%

+6.0%

  of which Latin America

756

+14.5%

+7.4%

2,837

+12.8%

+5.9%

  of which Asia (including South Asia(b))

874

+5.1%

+3.0%

3,732

+10.3%

+8.7%

  of which Africa, Middle East

582

-3.6%

-6.1%

2,326

+2.5%

-0.5%

  of which Eurasia(c)

329

+11.2%

+3.1%

1,242

+18.3%

+12.6%

Europe(d)

2,467

+15.8%

+3.7%

9,525

+10.2%

+0.7%

Rest of the World(e)

804

+8.3%

-3.7%

3,417

+10.6%

-1.5%

  of which Japan

416

+9.3%

-9.3%

1,803

+11.6%

-7.3%

Total Sanofi sales

8,691

+4.1%

-1.6%

35,055

+5.6%

+0.5%

*CS : constant structure : Adjusted for BI CHC business and termination of SPMSD and others

  1. World excluding U.S., Canada, Western & Eastern Europe (except Eurasia), Japan, South Korea, Australia, New Zealand and Puerto Rico
  2. India, 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

Fourth-quarter sales in the U.S. were €2,851 million, a decrease of 6.2% or 7.7% at CS impacted by the decline of Diabetes sales (down 29.5%) and generic competition to Renvela®/Renagel® which were partially offset by the performance of Dupixent®. In the U.S., full-year 2017 sales decreased 3.5% at CS to €11,855 million.

Fourth-quarter sales in Emerging Markets were €2,569 million, up 6.3% or 2.1% at CS constrained by lower Vaccines sales and stable CHC performance. In Asia, fourth-quarter sales were up 5.1% (up 3.0% at CS) to €874 million driven by performance in China (up 14.2% at CS to €525 million), partially offset by the buy back of unused doses of Dengvaxia® in the Philippines. In Latin America, fourth-quarter sales increased 14.5% (up 7.4% at CS) to €756 million driven by Brazil (up 10.3% at CS to €260 million) and sustained by Established Rx products and the Rare Disease franchise. Fourth-quarter sales in the Eurasia region increased 11.2% (up 3.1% at CS) to €329 million supported by strong growth in Turkey. During the quarter, sales in Russia were €174 million down 8.2% at CS. In Africa and the Middle East, sales were €582 million down 3.6% and down 2.5% at CS (which also excludes Maphar in Morocco) impacted by lower sales of Vaccines. In Emerging Markets, full-year 2017 sales increased 6.0% at CS to €10,258 million.

Fourth-quarter sales in Europe were €2,467 million, up 15.8% or 3.7% at CS driven by Vaccines (up 37.8% at CS), Rare Diseases (up 12.3%) and Multiple Sclerosis franchise (up 17.8%) which offset lower Established Rx Products sales (down 6.1%). In Europe, full-year 2017 sales increased 0.7% at CS to €9,525 million.

Sales in Japan increased 9.3% to €416 million in the fourth quarter. At CS, sales in Japan were down 9.3% reflecting generic Plavix® competition, together with lower sales of Aprovel® and Vaccines. In Japan, full-year 2017 sales decreased 7.3% at CS to €1,803 million.

R&D update

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

Sanofi presented its R&D strategy and innovative pipeline on December 13, 2017 which are summarized in the following press release: http://mediaroom.sanofi.com/sanofi-presents-rd-strategy-and-innovative-pipeline/

Regulatory update

Regulatory updates since December 13, 2017 include the following:

  • In January, the Ministry of Health, Labor and Welfare (MHLW) in Japan granted marketing and manufacturing authorization for Dupixent® for the treatment of atopic dermatitis in adults not adequately controlled with existing therapies.
  • In December, a marketing authorization application for patisiran (partnership with Alnylam), an investigational RNAi therapeutic targeting transthyretin for the treatment of adults with hereditary transthyretin-mediated amyloidosis, was submitted by Alnylam to the European Medicines Agency (EMA).
  • In December a supplemental biologics license application for dupilumab (partnership with Regeneron) was submitted to the U.S. Food and Drug Administration (FDA) for uncontrolled, persistent asthma for patients aged 12 and over.

At the beginning of February 2018, the R&D pipeline contained 70 projects including 36 new molecular entities and novel vaccines in clinical development. 25 projects are in Phase 3 or have been submitted to the regulatory authorities for approval.

Portfolio update

Phase 3:

  • At the end of 2017, the phase 3 program evaluating efpeglenatide (partnership with Hanmi), a weekly GLP-1 agonist, in type 2 diabetes was initiated.
  • In December 2017, the FDA lifted the hold on clinical studies with fitusiran (an investigational RNAi therapeutic targeting antithrombin for the treatment of patients with hemophilia A and B; partnership with Alnylam), including the Phase 2 open-label extension (OLE) study and the ATLAS Phase 3 program.Phase 1:
  • In November 2017, Sanofi announced that Principia will grant Sanofi an exclusive, worldwide license to develop and commercialize SAR442168/PRN2246. This is a low dose covalent BTK inhibitor which crosses the blood brain barrier. Recently a Phase 1 clinical trial in healthy volunteers was initiated in multiple sclerosis.

Alliances/Collaboration

  • In January, 2018, Sanofi and Regeneron announced that they will accelerate and expand investment for the clinical development of the PD-1 (programmed cell death protein 1) antibody cemiplimab in oncology and dupilumab in Type 2 allergic diseases.
  • In January, 2018, Sanofi and Alnylam announced a strategic restructuring of their RNAi therapeutics alliance to streamline and optimize development and commercialization of certain products for the treatment of rare genetic diseases. Specifically:
    • Sanofi will obtain global development and commercialization rights to fitusiran, an investigational RNAi therapeutic, currently in development for the treatment of people with hemophilia A and B.

Alnylam will obtain global development and commercialization rights to its investigational RNAi therapeutics programs for the treatment of ATTR amyloidosis, including patisiran and ALN-TTRsc02.

  • Sanofi recently signed a clinical collaboration agreement with Roche to explore the role of atezolizumab in combination with isatuximab in certain solid tumors, reflecting scientific evidence that checkpoint inhibition by CD38 may reverse resistance to PD-L1.017 fourth-quarter and full-year 2017 financial results(10)

 

Business Net Income(10)

In the fourth quarter of 2017, Sanofi generated net sales of €8,691 million, a decrease of 2.0% (up 4.1% at CER). Full-year 2017 net sales were €35,055 million, up 3.6% on a reported basis (up 5.6% at CER).

Fourth-quarter other revenues decreased 6.5% (up 1.6% at CER) to €290 million, reflecting VaxServe sales contribution of non-Sanofi products of €223 million (up 10.0% at CER). In 2017, other revenues increased 29.5% (up 32.9% at CER) to €1,149 million, reflecting VaxServe sales contribution of €859 million (up 51.8% at CER).

Fourth-quarter Gross Profit decreased 5.4% to €5,883 million (up 1.3% at CER). At CER and CS*, fourth-quarter Gross Profit decreased 3.7% and 2.6% excluding the impact of Dengvagia®. The gross margin ratio was 67.7% versus 70.2% in the fourth quarter of 2016. The positive gross margin impact of multiple sclerosis franchise, Dupixent® and China was more than offset by the negative U.S. Diabetes net price evolution, the impact of the Dengvagia®, lower sales of Pentacel® and Renagel® and currency variations. In the fourth quarter, the gross margin ratio of Pharmaceuticals was 70.1%, a decrease of 1.6 percentage points and the gross margin ratio of Vaccines was 54.9%, a decrease of 6.7 percentage points. In 2017, the gross margin ratio was 70.6%, a decrease of 0.4 percentage points.

Research and Development (R&D) expenses increased 1.9% to €1,464 million in the fourth quarter. At CER, R&D expenses increased 6.3% reflecting mainly the increased spending on immuno-oncology programs and sotagliflozin. In 2017, R&D expenses increased 5.8% to €5,472 million (up 7.0% at CER and up 5.0% at CER and CS*).

Fourth-quarter selling general and administrative expenses (SG&A) were up 3.6% to €2,698 million (up 9.6% at CER). At CER and CS*, SG&A expenses were up 2.6% reflecting immunology franchise launch costs and additional expenses in China, which were partially offset by lower Diabetes spending in the U.S. General expenses decreased in the fourth quarter, driven by cost containment measures. In the fourth quarter, the ratio of SG&A to sales increased 1.6 percentage points to 31.0% compared to the fourth quarter of 2016. In 2017, SG&A expenses increased 6.0% to €10,058 million (up 7.8% at CER and up 0.4% at CER and CS*). In 2017, the ratio of SG&A to sales increased 0.7 percentage points to 28.7% compared to 2016.

Fourth-quarter other current operating income net of expenses was -€114 million versus -€78 million in 2016. In the fourth quarter of 2017, this line included an impairment of tangible assets of €87 million related to Dengvaxia®. In 2017, other current operating income net of expenses was €4 million versus -€127 million in 2016.

The share of profits from associates was €114 million in the fourth quarter versus €53 million for the same period of 2016. The share of profits from associates included Sanofi’s share in Regeneron profit. In the fourth quarter of 2016, this line included the share of profit of Sanofi Pasteur MSD for an amount of €13 million. In 2017, the share of profits from associates was €235 million versus €177 million in 2016.

In the fourth quarter, non-controlling interests were -€30 million versus -€32 million in the fourth quarter of 2016. In 2017, non-controlling interests were -€125 million versus -€113 million in 2016.

Fourth-quarter business operating income decreased 20.4% to €1,691 million. At CER, business operating income decreased 14.0%. At CER and CS*, business operating income decreased 18.5%, and 11.4% excluding the €158 million impact linked to Dengvaxia®. The ratio of business operating income to net sales decreased 4.5 percentage points to 19.5% versus 2016. In the fourth quarter, the business operating income ratio of Pharmaceuticals was 20.3%, 2 percentage points lower and the business operating income ratio of Vaccines was 16.8%, 18.9 percentage points lower. Full-year 2017 business operating income increased 0.6% (or up 3.0% at CER) to €9,343 million. At CER and CS*, business operating income decreased 1.1%. In 2017, the ratio of business operating income to net sales decreased 0.8 percentage points to 26.7%.

Net financial expenses were €73 million in the fourth quarter versus €125 million in the fourth quarter of 2016. Full-year 2017 net financial expenses were €273 million versus €399 million in 2016.

The fourth-quarter effective tax rate was 18.6% compared to 24.0% in the fourth quarter of 2016 reflecting variances in the geographic profile mix. The full-year 2017 effective tax rate was 23.5% compared to 23.3% in 2016. Taken into account an estimated net positive impact from the recent U.S. tax reform and reduction of tax rates in various countries, Sanofi expects that the 2018 effective tax rate should be around 22%. 

Fourth-quarter business net income(10) decreased 17.1% to €1,332 million (down 10.8% at CER). The ratio of business net income to net sales decreased 1.9 percentage points to 15.3% versus 2016 (excluding Animal Health business). Full-year 2017 business net income decreased 4.7% to €6,964 million (down 2.6% at CER).

(10) See Appendix 3 for 2017 fourth-quarter and 2017 consolidated income statement; see Appendix 10 for definitions of financial indicators, and Appendix 4 for reconciliation of IFRS net income reported to business net income.

* Adjusted for BI CHC business and termination of SPMSD and others.

The ratio of business net income to net sales decreased 0.3 percentage points to 19.9% compared to 2016 (excluding Animal Health business).

In the fourth quarter of 2017, business earnings per share(10) (EPS) decreased 15.2% to €1.06 on a reported basis and 8.8% at CER. The average number of shares outstanding was 1,252.9 million versus 1,282.9 million in the fourth quarter of 2016.

In 2017, business earnings per share(10) was €5.54, down 2.5% on a reported basis and down 0.4% at CER. The average number of shares outstanding was 1,256.9 million versus 1,286.6 million in 2016.

2018 Guidance

Sanofi expects 2018 Business EPS to grow between 2% and 5% at CER, including the anticipated contribution from the recently announced acquisitions, barring unforeseen major adverse events. Applying the average December 2017 exchange rates, the currency impact on 2018 Business EPS is estimated to be -3% to -4%.

Dividend

The Board of Directors convened on February 6, 2018, and proposed a dividend of €3.03 per share.

                                                                       —————————

Financial statements are not audited. The audit procedures by the Statutory Auditors are underway.

                                                                       —————————

Reconciliation of IFRS net income reported to business net income (see Appendix 4)

In 2017, the IFRS net income was €8,434 million reflecting the acquisition of BI’s CHC business and full consolidation of Sanofi’s European vaccine operations. The main items excluded from the business net income were:

  • A net gain of €4,643 million resulting from the divestment of the Animal Health business.

  • An amortization charge of €1,866 million related to fair value remeasurement on intangible assets of acquired companies (primarily Aventis: €365 million, Genzyme: €857 million and BI CHC business €245 million) and to acquired intangible assets (licenses/products: €140 million). An amortization charge of €442 million related to fair value remeasurement on intangible assets of acquired companies (primarily Aventis: €80 million, Genzyme: €199 million and BI CHC business €57 million) and to acquired intangible assets (licenses/products: €35 million) was recorded in the fourth quarter. These items have no cash impact on the Company.

  • An impairment of intangible assets of €293 million (of which €262 million recorded in the fourth quarter mostly linked to Dengvaxia® and the C.difficile vaccine). This item has no cash impact on the Company.

  • A charge of €159 million (of which an income of €15 million in the fourth quarter) mainly reflecting a decrease of Bayer contingent considerations linked to Lemtrada® (an income of €28 million of which €114 million in the fourth quarter 2017) and fair value adjustment of contingent consideration linked to Sanofi Pasteur MSD termination (a charge of €187 million of which €96 million in the fourth quarter).

  • Expenses of €166 million arising from the impact of the acquisition of BI CHC business on inventories.

  • Restructuring costs and similar items of €731 million (of which €118 million in the fourth quarter) mainly related to streamlining initiatives in addition to the rationalization of the industrial network mainly in Europe and in the U.S.

  • A €1,126 million tax effect arising from the items listed above, mainly comprising €719 million of deferred taxes generated by amortization and impairments of intangible assets, €134 million associated with restructuring costs and similar items, €52 million associated with the impact of acquisition on inventories. The fourth quarter tax effect arising from the items listed above was €217 million, including mainly €242 million of deferred taxes on amortization and impairments of intangible assets,-€82 million associated with restructuring costs and similar items, -€37 million associated with fair value remeasurement of contingent consideration as well as the impact of the tax rate reduction in France on the deferred taxes (down to 25% in 2022) (see Appendix 4).

 (10) See Appendix 3 for 2017 fourth-quarter and 2017 consolidated income statement; see Appendix 10 for definitions of financial indicators, and Appendix 4 for reconciliation of IFRS net income reported to business net income.

  • A charge of €742 million was recorded in 2017 of which €631 million recorded in the fourth quarter mainly reflecting:
    • A charge of €1,193 million associated with consequences of the U.S. tax reform, notably repatriation cost of foreign earnings estimated at €1,084 million to be paid over the next 8 years and a charge of €109 million due to, on the one hand, reevaluation of deferred taxes following Corporate tax rate reduction and, on the other hand, adjustment to the deferred taxes on the fair value of investments in affiliates(11).
    • Partially offset by an income of €451 million (of which €562 million in the fourth quarter) associated with a litigation regarding the 3% dividend tax in France, net of temporary exceptional surcharge.

  • An expense of €131 million net of tax related to restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures

Capital Allocation

In 2017, net cash generated by operating activities was €6,715 million after capital expenditures of €1,500 million and an increase in working capital of €589 million. This net cash flow funded acquisitions and partnerships net of disposals (€1,053 million), restructuring costs and similar items (€754 million) and the dividend paid by Sanofi (€3,710 million). The swap between BI CHC business and Sanofi Animal Health business generated a net cash flow of €3,535 million, partially used to finance share repurchases (€2,158 million) over the period. Net debt decreased from €8,206 million at December 31, 2016 to €5,229 million at December 31, 2017 (amount net of €10,315 million cash and cash equivalents).

(11) The U.S. Tax reform impacts are preliminary based on the Company’s initial analysis of the 2017 Act. The final impact may differ and will be adjusted accordingly during 2018, due to, among other things, changes in the Company’s interpretations and assumptions as well as additional guidance from the U.S. legislators, the U.S.Internal Revenue Services, the U.S. Securities and Exchange Commission or the Financial Accounting Standards Board. 

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, to complete related transactions 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, 2016. 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: 

2017 fourth-quarter and 2017 net sales by GBU, franchise, geographic region and product

Appendix 2:

2017 fourth-quarter and 2017 business net income statement

Appendix 3:

2017 fourth-quarter and 2017 consolidated income statement

Appendix 4:

Reconciliation of IFRS net income reported to business net income

Appendix 5

Appendix 6

Appendix 7:

Appendix 8:

Appendix 9:

Change in net debt

Simplified consolidated balance sheet

Currency sensitivity

R&D pipeline

Expected R&D milestones

Appendix 10:

Definitions of non-GAAP financial indicators

AnchorAnchorAppendix 1: 2017 fourth-quarter net sales by GBU, franchise, geographic region and product

Q4 2017
(€ million)

Total
GBUs

% CER

% reported

Europe

% CER

United States

% CER

Rest of the World

% CER

Emerging Markets

% CER

Total
Franchises

% CER

% reported

Aubagio

379

13.7%

6.2%

96

21.5%

266

9.8%

17

46.2%

10

10.0%

389

13.6%

6.0%

Lemtrada

105

-1.8%

-6.3%

42

10.3%

56

-10.4%

7

16.7%

7

60.0%

112

0.9%

-4.3%

Total MS

484

10.0%

3.2%

138

17.8%

322

5.7%

24

36.8%

17

26.7%

501

10.5%

3.5%

Cerezyme

129

5.5%

1.6%

74

5.7%

43

4.3%

12

9.1%

54

10.5%

183

7.1%

-0.5%

Cerdelga

32

17.2%

10.3%

8

60.0%

24

13.0%

0

-100.0%

1

33

20.7%

13.8%

Myozyme

174

12.3%

7.4%

95

20.0%

64

6.1%

15

0.0%

31

6.7%

205

11.5%

6.8%

Fabrazyme

162

4.8%

-1.8%

42

7.5%

91

5.3%

29

0.0%

18

17.6%

180

6.0%

-1.1%

Aldurazyme

35

8.6%

0.0%

19

5.6%

10

9.1%

6

16.7%

13

-6.7%

48

4.0%

-4.0%

Total Rare Disease

597

7.1%

1.4%

255

12.3%

259

5.2%

83

0.0%

129

11.8%

726

8.0%

1.4%

Taxotere

8

-10.0%

-20.0%

0

-100.0%

0

-100.0%

8

12.5%

32

3.1%

40

0.0%

-4.8%

Jevtana

92

11.5%

5.7%

38

11.4%

40

10.3%

14

15.4%

7

60.0%

99

14.1%

7.6%

Eloxatine

7

-11.1%

-22.2%

1

0.0%

0

6

-12.5%

37

21.9%

44

14.6%

7.3%

Thymoglobulin

55

1.7%

-6.8%

9

0.0%

40

2.3%

6

0.0%

17

-5.6%

72

0.0%

-6.5%

Mozobil

37

0.0%

-7.5%

11

10.0%

22

-11.1%

4

66.7%

3

200.0%

40

4.9%

-2.4%

Zaltrap

20

42.9%

42.9%

13

18.2%

3

0.0%

4

2

200.0%

22

53.3%

46.7%

Total Oncology

259

-1.1%

-6.5%

83

10.3%

126

-8.0%

50

2.0%

102

17.4%

361

3.5%

-2.2%

Dupixent

118

1

116

1

0

118

Kevzara

8

1

7

0

0

8

Total Immunology

126

2

123

1

0

126

Sanofi Genzyme (Specialty Care)

1,466

16.8%

9.8%

478

13.9%

830

20.7%

158

5.7%

248

15.0%

1,714

16.5%

9.2%

Lantus

842

-26.1%

-31.0%

183

-7.5%

584

-31.4%

75

-12.2%

234

4.9%

1,076

-20.9%

-26.5%

Apidra

69

-1.4%

-5.5%

34

6.3%

25

-10.3%

10

0.0%

28

40.9%

97

8.4%

2.1%

Amaryl

15

-6.3%

-6.3%

5

-16.7%

1

0.0%

9

0.0%

66

-1.4%

81

-2.2%

-9.0%

Insuman

18

-10.0%

-10.0%

18

-5.3%

0

-100.0%

0

8

-18.2%

26

-12.9%

-16.1%

Soliqua/iGlarLixi

9

0

10

-1

0

9

Toujeo

191

-9.4%

-14.3%

63

51.2%

110

-28.4%

18

46.2%

25

73.3%

216

-4.2%

-9.2%

Total Diabetes

1,170

-21.1%

-25.9%

323

1.3%

730

-29.5%

117

-2.3%

363

8.2%

1,533

-15.6%

-21.2%

Multaq

75

-12.9%

-19.4%

10

0.0%

65

-12.3%

0

-100.0%

2

100.0%

77

-11.7%

-18.1%

Praluent

52

51.4%

40.5%

15

150.0%

35

30.0%

2

100.0%

1

53

54.1%

43.2%

Total Cardiovascular

127

5.4%

-2.3%

25

56.3%

100

-0.9%

2

-33.3%

3

200.0%

130

6.9%

-0.8%

Diabetes & Cardiovascular

1,297

-19.1%

-24.2%

348

3.9%

830

-27.0%

119

-3.0%

366

8.7%

1,663

-14.2%

-19.9%

Plavix

348

2.5%

-4.1%

35

-5.4%

1

68

-21.6%

244

13.5%

348

2.5%

-4.1%

Lovenox

388

-2.7%

-6.3%

231

-9.0%

14

23.1%

23

9.1%

120

5.6%

388

-2.7%

-6.3%

Renagel / Renvela

155

-28.5%

-34.0%

16

-15.8%

117

-33.5%

7

-12.5%

15

14.3%

155

-28.5%

-34.0%

Aprovel

158

2.5%

-3.1%

27

-6.9%

2

-25.0%

24

-25.0%

105

15.3%

158

2.5%

-3.1%

Allegra

32

-9.8%

-22.0%

2

-50.0%

0

30

-7.7%

0

32

-9.8%

-22.0%

Myslee / Ambien / Stilnox

59

-19.0%

-25.3%

10

-9.1%

15

-33.3%

23

-13.3%

11

-14.3%

59

-19.0%

-25.3%

Synvisc / Synvisc One

86

-16.2%

-22.5%

7

-22.2%

61

-20.2%

4

33.3%

14

0.0%

86

-16.2%

-22.5%

Depakine

111

8.3%

2.8%

40

0.0%

0

4

-20.0%

67

15.9%

111

8.3%

2.8%

Tritace

61

8.5%

3.4%

39

5.4%

0

1

100.0%

21

9.5%

61

8.5%

3.4%

Lasix

32

-2.9%

-5.9%

17

-5.6%

0

2

0.0%

13

0.0%

32

-2.9%

-5.9%

Targocid

28

-14.3%

-20.0%

11

-25.0%

0

2

-50.0%

15

0.0%

28

-14.3%

-20.0%

Other Rx Drugs

840

-5.1%

-9.3%

434

-1.4%

48

-3.8%

82

-4.0%

276

-10.4%

840

-5.1%

-9.3%

Total Established Rx Products

2,298

-5.5%

-10.5%

869

-4.7%

258

-24.0%

270

-11.5%

901

3.2%

2,298

-5.5%

-10.5%

Generics

435

-2.1%

-7.1%

189

-1.6%

40

2.3%

23

4.2%

183

-4.3%

435

-2.1%

-7.1%

Total Emerging Markets Specialty Care

248

15.0%

6.0%

0

0

0

248

15.0%

0

Total Emerging Markets Diabetes & Cardiovascular

366

8.7%

0.0%

0

0

0

366

8.7%

0.0%

General Medicines & Emerging Markets

3,347

-2.3%

-7.9%

1,058

-4.2%

298

-21.3%

293

-10.4%

1,698

5.0%

2.7E+09

Allergy, Cough and Cold

293

71.3%

61.9%

106

218.2%

62

28.3%

32

89.5%

93

32.9%

293

71.3%

61.9%

Pain

328

51.1%

43.2%

144

34.9%

40

10.0%

31

1066.7%

113

55.0%

328

51.1%

43.2%

Digestive

242

84.1%

75.4%

81

78.3%

46

750.0%

17

700.0%

98

25.0%

242

84.1%

75.4%

Nutritional

156

52.3%

43.1%

32

47.6%

0

-100.0%

63

94.4%

61

27.5%

156

52.3%

43.1%

Consumer Healthcare

1,196

51.8%

43.4%

387

69.0%

251

31.1%

158

145.7%

400

32.8%

1,196

51.8%

43.4%

Total Pharmaceuticals

7,306

3.3%

-2.8%

2,271

8.8%

2,209

-7.7%

728

9.5%

2,098

9.4%

7,306

3.3%

-2.8%

Polio / Pertussis / Hib

493

-3.9%

-9.4%

85

258.3%

109

-27.1%

41

-8.0%

258

-11.2%

493

-3.9%

-9.4%

Adult Booster Vaccines

137

13.2%

6.2%

36

400.0%

79

-13.0%

7

125.0%

15

-16.7%

137

13.2%

6.2%

Meningitis/Pneumonia

81

-27.1%

-31.4%

0

-100.0%

53

-37.6%

5

0.0%

23

20.0%

81

-27.1%

-31.4%

Influenza Vaccines

502

28.4%

20.7%

48

700.0%

323

25.4%

8

0.0%

123

4.1%

502

28.4%

20.7%

Travel And Other Endemics Vaccines

160

55.1%

49.5%

26

420.0%

49

51.4%

13

-13.3%

72

42.3%

160

55.1%

49.5%

Dengue

-19

-520.0%

-480.0%

0

0

0

-19

-520.0%

-19

-520.0%

-480.0%

Vaccines

1,385

8.7%

2.4%

196

347.7%

642

-0.4%

76

-2.4%

471

-6.0%

1,385

8.7%

2.4%

Total Company

8,691

4.1%

-2.0%

2,467

15.8%

2,851

-6.2%

804

8.3%

2,569

6.3%

8,691

4.1%

-2.0%

2017 net sales by GBU, franchise, geographic region and product

2017
(€ million)

Total
GBUs

% CER

% reported

Europe

% CER

United States

% CER

Rest of the World

% CER

Emerging Markets

% CER

Total
Franchises

% CER

% reported

Aubagio

1,530

23.3%

21.3%

387

26.0%

1,084

22.0%

59

31.1%

37

17.6%

1,567

23.2%

21.0%

Lemtrada

450

12.5%

10.6%

174

18.5%

246

7.3%

30

26.1%

24

38.9%

474

13.6%

11.5%

Total MS

1,980

20.7%

18.7%

561

23.5%

1,330

19.0%

89

29.4%

61

25.0%

2,041

20.8%

18.7%

Cerezyme

501

-0.4%

-1.6%

281

0.7%

177

0.0%

43

-8.3%

229

2.1%

730

0.4%

-2.4%

Cerdelga

125

19.8%

17.9%

26

52.9%

95

14.1%

4

0.0%

1

126

20.8%

18.9%

Myozyme

673

9.6%

8.0%

352

8.6%

262

11.3%

59

8.9%

116

12.7%

789

10.1%

8.8%

Fabrazyme

644

8.4%

6.3%

163

5.8%

369

9.3%

112

9.5%

78

16.2%

722

9.2%

7.1%

Aldurazyme

142

2.8%

0.7%

75

1.3%

42

2.4%

25

8.3%

65

11.7%

207

5.5%

3.0%

Total Rare Disease

2,354

5.5%

3.7%

961

5.0%

1,058

6.4%

335

3.9%

534

8.5%

2,888

6.0%

4.0%

Taxotere

37

-22.4%

-24.5%

3

-25.0%

0

-100.0%

34

-14.6%

136

7.7%

173

-0.6%

-3.4%

Jevtana

359

9.3%

7.2%

148

7.2%

159

6.6%

52

25.0%

27

17.4%

386

9.8%

7.8%

Eloxatine

32

-11.1%

-11.1%

4

0.0%

1

27

-15.6%

147

13.4%

179

8.2%

5.3%

Thymoglobulin

225

3.2%

1.4%

39

2.6%

162

3.8%

24

0.0%

66

13.6%

291

5.3%

3.6%

Mozobil

154

8.3%

6.2%

44

4.8%

96

3.2%

14

87.5%

9

28.6%

163

9.2%

7.2%

Zaltrap

67

9.8%

9.8%

51

8.5%

9

-35.7%

7

8

125.0%

75

16.9%

15.4%

Total Oncology

1,110

4.1%

2.7%

340

5.2%

589

2.9%

181

5.8%

409

13.2%

1,519

6.4%

4.5%

Dupixent

219

2

216

1

0

219

Kevzara

11

1

10

0

0

11

Total Immunology

230

3

226

1

0

230

Sanofi Genzyme (Specialty Care)

5,674

15.1%

13.1%

1,865

10.2%

3,203

19.8%

606

7.7%

1,004

11.3%

6,678

14.5%

12.2%

Lantus

3,617

-22.9%

-24.0%

760

-12.8%

2,542

-26.6%

315

-10.7%

1,005

9.2%

4,622

-17.5%

-19.1%

Apidra

280

-1.0%

-2.1%

136

7.1%

102

-10.4%

42

0.0%

97

25.9%

377

4.9%

2.7%

Amaryl

59

-15.7%

-15.7%

21

-22.2%

2

-33.3%

36

-10.0%

278

2.1%

337

-1.4%

-6.9%

Insuman

78

-8.2%

-8.2%

76

-7.3%

2

-33.3%

0

29

-29.5%

107

-15.5%

-17.1%

Soliqua/iGlarLixi

26

0

26

0

0

26

Toujeo

737

18.7%

17.0%

217

80.8%

455

-2.1%

65

88.6%

79

300.0%

816

27.0%

25.7%

Total Diabetes

4,901

-16.3%

-17.6%

1,287

-2.0%

3,128

-22.8%

486

-1.4%

1,494

11.4%

6,395

-11.1%

-12.9%

Multaq

332

-2.9%

-4.3%

42

-2.3%

286

-2.7%

4

-25.0%

7

16.7%

339

-2.5%

-4.0%

Praluent

167

64.4%

60.6%

46

155.6%

116

40.0%

5

500.0%

4

300.0%

171

66.7%

62.9%

Total Cardiovascular

499

12.6%

10.6%

88

43.5%

402

6.8%

9

80.0%

11

57.1%

510

13.3%

11.4%

Diabetes & Cardiovascular

5,400

-14.3%

-15.6%

1,375

0.1%

3,530

-20.2%

495

-0.6%

1,505

11.6%

6,905

-9.6%

-11.5%

Plavix

1,471

-1.2%

-4.7%

150

-7.4%

1

0.0%

294

-26.0%

1,026

10.4%

1,471

-1.2%

-4.7%

Lovenox

1,575

-2.1%

-3.7%

951

-7.1%

58

9.3%

91

-2.2%

475

7.8%

1,575

-2.1%

-3.7%

Renagel / Renvela

802

-12.3%

-13.0%

71

-13.4%

645

-14.8%

36

6.1%

50

20.9%

802

-12.3%

-13.0%

Aprovel

691

3.7%

1.5%

115

-9.4%

11

-20.0%

132

3.1%

433

8.7%

691

3.7%

1.5%

Allegra

158

-12.9%

-15.1%

9

0.0%

0

149

-13.6%

0

158

-12.9%

-15.1%

Myslee / Ambien / Stilnox

259

-13.5%

-14.8%

40

-9.1%

55

-33.3%

106

-8.3%

58

1.8%

259

-13.5%

-14.8%

Synvisc / Synvisc One

387

-3.9%

-5.1%

30

-9.1%

292

-5.1%

14

0.0%

51

6.3%

387

-3.9%

-5.1%

Depakine

443

9.6%

6.5%

161

1.2%

0

15

0.0%

267

15.8%

443

9.6%

6.5%

Tritace

241

1.2%

-1.6%

152

-1.3%

0

5

25.0%

84

4.6%

241

1.2%

-1.6%

Lasix

137

-4.7%

-7.4%

72

-4.0%

0

11

-36.8%

54

5.6%

137

-4.7%

-7.4%

Targocid

130

-10.1%

-12.8%

59

-18.9%

0

6

-14.3%

65

0.0%

130

-10.1%

-12.8%

Other Rx Drugs

3,467

-4.1%

-5.6%

1,663

-1.7%

207

-19.7%

360

-5.5%

1,237

-3.8%

3,467

-4.1%

-5.6%

Total Established Rx Products

9,761

-3.4%

-5.3%

3,473

-4.4%

1,269

-13.8%

1,219

-11.7%

3,800

4.8%

9,761

-3.4%

-5.3%

Generics

1,778

-3.3%

-4.1%

760

-4.9%

150

-12.0%

110

23.9%

758

-2.9%

1,778

-3.3%

-4.1%

Total Emerging Markets Specialty Care

1,004

11.3%

7.8%

1,004

11.3%

Total Emerging Markets Diabetes & Cardiovascular

1,505

11.6%

7.3%

1,505

11.6%

General Medicines & Emerging Markets

14,048

-1.0%

-3.1%

4,233

-4.5%

1,419

-13.6%

1,329

-9.5%

7,067

6.2%

11,539

-3.4%

-5.1%

Allergy, Cough and Cold

1,226

56.6%

55.0%

352

183.9%

367

10.8%

158

143.9%

349

33.1%

1,226

56.6%

55.0%

Pain

1,258

45.9%

44.3%

515

34.8%

167

8.3%

122

814.3%

454

43.9%

1,258

45.9%

44.3%

Digestive

930

79.5%

78.5%

307

70.2%

188

668.0%

58

742.9%

377

22.1%

930

79.5%

78.5%

Nutritional

652

44.9%

44.9%

122

28.7%

2

-50.0%

255

67.7%

273

36.5%

652

44.9%

44.9%

Consumer Healthcare

4,832

46.3%

45.1%

1,422

62.0%

1,133

22.5%

661

145.1%

1,616

31.3%

4,832

46.3%

45.1%

Total Pharmaceuticals

29,954

4.2%

2.4%

8,895

6.2%

9,285

-3.9%

3,091

10.3%

8,683

10.0%

29,954

4.2%

2.4%

Polio / Pertussis / Hib

1,827

24.3%

22.2%

300

187.6%

435

10.1%

152

2.6%

940

14.5%

1,827

24.3%

22.2%

Adult Booster Vaccines

474

16.5%

13.7%

119

172.7%

292

0.0%

26

17.4%

37

-22.9%

474

16.5%

13.7%

Meningitis/Pneumonia

623

0.2%

-1.6%

1

-80.0%

485

-4.1%

34

106.3%

103

9.6%

623

0.2%

-1.6%

Influenza Vaccines

1,589

9.5%

4.5%

113

37.3%

1,128

7.3%

51

28.2%

297

7.4%

1,589

9.5%

4.5%

Travel And Other Endemics Vaccines

493

35.9%

34.0%

90

253.8%

155

26.2%

54

6.0%

194

18.1%

493

35.9%

34.0%

Dengue

3

-98.2%

-94.5%

0

0

0

3

-98.2%

3

-98.2%

-94.5%

Vaccines

5,101

14.5%

11.4%

630

137.3%

2,570

5.6%

326

13.4%

1,575

7.8%

5,101

14.5%

11.4%

Total Company

35,055

5.6%

3.6%

9,525

10.2%

11,855

-2.0%

3,417

10.6%

10,258

9.7%

35,055

5.6%

3.6%

Appendix 2: Business net income statement

Fourth Quarter 2017

Pharmaceuticals

Vaccines

Others

Total Group

€ million

Q4

 2017

Q4

2016

Var

Q4

 2017

Q4

2016

Var

Q4

 2017

Q4

2016

Q4

 2017

Q4

2016

Var

Net sales

7,306

7,515

(2.8%)

1,385

1,352

2.4%

8,691

8,867

 (2.0%)

Other revenues

66

83

(20.5%)

224

227

(1.3%)

290

310

 (6.5%)

Cost of sales

(2,250)

(2,210)

1.8%

(848)

(746)

13.7%

(3,098)

(2,956)

4.8%

As % of net sales

(30.8%)

(29.4%)

(61.2%)

(55.2%)

(35.6%)

(33.3%)

Gross profit

5,122

5,388

(4.9%)

761

833

(8.6%)

5,883

6,221

 (5.4%)

As % of net sales

70.1%

71.7%

54.9%

61.6%

67.7%

70.2%

Research and development expenses

(1,278)

(1,292)

(1.1%)

(186)

(145)

28.3%

(1,464)

(1,437)

1.9%

As % of net sales

(17.5%)

(17.2%)

(13.4%)

(10.7%)

(16.8%)

(16.2%)

Selling and general expenses

(2,460)

(2,401)

2.5%

(238)

(202)

17.8%

(2,698)

(2,603)

3.6%

As % of net sales

(33.7%)

(31.9%)

(17.2%)

(14.9%)

(31.0%)

(29.4%)

Other operating income

/expenses

15

(28)

(102)

(14)

(27)

(36)

(114)

(78)

Share of profit/loss of associates* and joint-ventures

115

41

(1)

12

114

53

Net income attributable to non-controlling interests

(29)

(31)

(1)

(1)

(30)

(32)

Business operating income

1,485

1,677

(11.4%)

233

483

(51.8%)

(27)

(36)

1,691

2,124

 (20.4%)

As % of net sales

20.3%

22.3%

16.8%

35.7%

19.5%

24.0%

Financial income and expenses

(73)

(125)

Income tax expense

(286)

(474)

Tax rate**

18.6%

24.0%

Business net income excl. Animal Health business

1,332

1,525

(12.7%)

As % of net sales

15.3%

17.2%

Business Net Income of Animal Health business

81

Business Net Income

1,332

1,606

(17.1%)

Business earnings / share (in euros) ***

1.06

1.25

(15.2%)

*     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 1,252.9 million in the fourth quarter of 2017 and 1,282.9 million in the fourth quarter of 2016.

Full year

2017

Pharmaceuticals

Vaccines

Others

Total Group

€ million

12M

 2017

12M

2016

Change

12M

 2017

12M

2016

Change

12M

 2017

12M

2016

12M

 2017

12M

2016

Change

Net sales

29,954

29,244

2.4%

5,101

4,577

11.4%

35,055

33,821

3.6%

Other revenues

287

274

4.7%

862

613

40.6%

1,149

887

29.5%

Cost of sales

(8,628)

(8,349)

3.3%

(2,817)

(2,353)

19.7%

(11,445)

(10,702)

6.9%

As % of net sales

 (28.8%)

(28.5%)

 (55.2%)

(51.4%)

 (32.6%)

(31.6%)

Gross profit

21,613

21,169

2.1%

3,146

2,837

10.9%

24,759

24,006

3.1%

As % of net sales

72.2%

72.4%

61.7%

62.0%

70.6%

71.0%

Research and development expenses

(4,835)

(4,618)

4.7%

(637)

(554)

15.0%

(5,472)

(5,172)

5.8%

As % of net sales

 (16.1%)

(15.8%)

 (12.5%)

(12.1%)

 (15.6%)

(15.3%)

Selling and general expenses

(9,176)

(8,743)

5.0%

(881)

(743)

18.6%

(1)

 –

(10,058)

(9,486)

6.0%

As % of net sales

(30.6%)

(29.9%)

 (17.3%)

(16.2%)

 (28.7%)

(28.0%)

Other operating income

/expenses

180

(1)

(108)

(14)

(68)

(112)

4

(127)

Share of profit/loss of associates* and joint-ventures

234

129

1

48

235

177

Net income attributable to non-controlling interests

(125)

(112)

(1)

(125)

(113)

Business operating income

7,891

7,824

0.9%

1,521

1,573

 (3.3%)

(69)

(112)

9,343

9,285

0.6%

As % of net sales

26.3%

26.8%

29.8%

34.4%

26.7%

27.5%

Financial income and expenses

(273)

(399)

Income tax expense

(2,106)

(2,054)

Tax rate**

23.5%

23.3%

Business net income excl. Animal Health business

6,964

6,832

1.9%

As % of net sales

19.9%

20.2%

Business Net Income of Animal Health business

476

Business Net Income

6,964

7,308

(4.7%)

Business earnings / share (in euros) ***

5.54

5.68

(2.5%)

*   Net of tax.

** Determined on the basis of Business income before tax, associates and non-controlling interests.

***Based on an average number of shares outstanding of 1,256.9 million in 2017 and 1,286.6 million in 2016.

Appendix 3: Consolidated income statements

€ million

Q4 2017 (1)

Q4 2016 (1)

12M 2017 (1)

12M 2016 (1)

Net sales

8,691

8,867

35,055

33,821

Other revenues

290

310

1,149

887

Cost of sales

(3,088)

(2,956)

(11,611)

(10,702)

Gross profit

5,893

6,221

24,593

24,006

Research and development expenses

(1,464)

(1,437)

(5,472)

(5,172)

Selling and general expenses

(2,698)

(2,603)

(10,058)

(9,486)

Other operating income

10

56

237

355

Other operating expenses

(124)

(134)

(233)

(482)

Amortization of intangible assets

(442)

(412)

(1,866)

(1,692)

Impairment of intangible assets

(262)

(119)

(293)

(192)

Fair value remeasurement of contingent consideration

15

(41)

(159)

(135)

Restructuring costs and similar items

(118)

(189)

(731)

(879)

   Other gains and losses and litigation

(61)

211

(215)

211

Operating income

749

1,553

5,803

6,534

Financial expenses

(99)

(422)

(420)

(924)

Financial income

26

1

147

68

Income before tax and associates and joint ventures

676

1,132

5,530

5,678

Income tax expense

(700)

(369)

(1,722)

(1,326)

Share of profit/loss of associates and joint ventures

24

30

104

134

Net income excluding the held for exchange Animal Health business

793

3,912

4,486

Net income from the held for exchange Animal Health business

159

18

4,643

314

Net income

159

811

8,555

4,800

Net income attributable to non-controlling interests

30

21

121

91

Net income attributable to equity holders of Sanofi

129

790

8,434

4,709

Average number of shares outstanding (million)

1,252.9

1,282.9

1,256.9

1,286.6

Earnings per share (in euros) excluding the held for exchange Animal Health business

(0.02)

0.60

3.02

3.42

IFRS earnings per share (in euros)

0.10

0.62

6.71

3.66

  1. Animal Health results and gain on disposal reported separately in accordance with IFRS 5 (Non-Current Assets Held for Sale and Discontinued Operations).

Appendix 4: Reconciliation of Net income attributable to equity holders of Sanofi to Business net income

€ million

Q4 2017

Q4 2016

Variation

Net income attributable to equity holders of Sanofi

129

790

(83.7%)

Amortization of intangible assets(1)

442

412

Impairment of intangible assets

262

119

Fair value remeasurement of contingent consideration

(15)

41

Expenses arising from the impact of acquisitions on inventories

(10)

Restructuring costs and similar items

118

189

Other gains and losses, and litigation(2)

61

(211)

Tax effect of items listed above (3)/(4):

(217)

(105)

Amortization and impairment of intangible assets

(242)

(221)

Fair value remeasurement of contingent consideration

37

(1)

Expenses arising from the impact of acquisitions on inventories

4

Restructuring costs and similar items

82

139

Other tax effects

(98)

(22)

Other tax items (5)

631

Share of items listed above attributable to non-controlling interests

(11)

Restructuring costs of associates and joint-ventures, and expenses arising from the impact of acquisitions on associates and joint-ventures

90

9

Animal Health items (6)/(7)

(159)

63

Other Sanofi Pasteur MSD items (8)

14

Impairment loss on Alnylam investment

296

Business net income

1,332

1,606

 (17.1%)

IFRS earnings per share(9) (in euros)

0.10

0.62

  1. Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations: €407 million in the fourth quarter of 2017 and €374 million in the fourth quarter of 2016.
  2. In 2016, gain on Sanofi Pasteur MSD investment in associates and joint-ventures upon termination of the joint-venture.
  3. In 2017, this line includes the impact of changes in corporate income tax rates, mainly in France (25% standard rate effective as of January 1, 2022).
  4. In 2016, this lines includes the impact on deferred tax assets and liabilities coming from the reconciliation items (in particular amortization and impairment of intangible assets and restructuring costs).
  5. In 2017, +562m€ litigation gain on French 3% tax on dividends and temporary exceptional surcharge and US tax reform (1,193)m€.
  6. In 2017, net gain resulting from the divestment of the Animal Health business (including the closing in Mexico in Q4-2017).
  7. In 2016, 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 the tax effect of these items.
  8. In 2016, 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 vaccine operations in Europe.
  9. Based on an average number of shares outstanding of 1,252.9 million in the fourth quarter of 2017 and 1,282.9 million in the fourth quarter of 2016.

€ million

12M 2017

12M 2016

Variation

Net income attributable to equity holders of Sanofi

8,434

4,709

79.1%

Amortization of intangible assets(1)

1,866

1,692

Impairment of intangible assets

293

192

Fair value remeasurement of contingent consideration

159

135

Expenses arising from the impact of acquisitions on inventories

166

Restructuring costs and similar items

731

879

Other gains and losses, and litigation(2)/(3)

215

(211)

Tax effect of items listed above (4)/(5):

(1,126)

(841)

Amortization and impairment of intangible assets

(719)

(694)

Fair value remeasurement of contingent consideration

4

(24)

Expenses arising from the impact of acquisitions on inventories

(52)

Restructuring costs and similar items

(134)

(95)

Other tax effects

(225)

(28)

Other tax items (6)

742

113

Share of items listed above attributable to non-controlling interests

(4)

(22)

Restructuring costs of associates and joint-ventures, and expenses arising from the impact of acquisitions on associates and joint-ventures

131

(9)

Animal Health items (7)/(8)

(4,643)

162

Other Sanofi Pasteur MSD items (9)

52

 Impairment loss on Alnylam investment

457

Business net income

6,964

7,308

(4.7%)

IFRS earnings per share(10) (in euros)

6.71

3.66

  1. Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations: €1,726 million in 2017 and €1,550 million in 2016.
  2. In 2017, mainly adjustment to vendor’s guarantee provision in connection with past divestment.
  3. In 2016, gain on Sanofi Pasteur MSD investment in associates and joint-ventures upon termination of the joint-venture.
  4. In 2017, this line includes the impact of changes in corporate income tax rates, mainly in France (25% standard rate effective as of January 1, 2022).
  5. In 2016, this lines includes the impact on deferred tax assets and liabilities coming from the reconciliation items (in particular amortization and impairment of intangible assets and restructuring costs).
  6. In 2017, +451m€ litigation gain on French 3% tax on dividends and temporary exceptional surcharge and US tax reform (1,193)m€.
  7. In 2017, net gain resulting from the divestment of the Animal Health business (including the closing in Mexico in Q4-2017).
  8. In 2016, 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 the tax effect of these items.
  9. In 2016, 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 vaccine operations in Europe.
  10. Based on an average number of shares outstanding of 1,256.9 million in 2017 and 1,286.6 million in 2016.

Appendix 5: Change in net debt

€ million

2017

2016

Business net income

6,964

7,308

Depreciation amortization and impairment of property, plant and equipment and software

1,349

1,278

Gains and losses on disposals of non-current assets, net of tax

(127)

(34)

Other non-cash items

618

(452)

Operating cash flow before changes in working capital (1)/(2)

8,804

8,100

Changes in working capital (1)

(589)

727

Acquisitions of property, plant and equipment and software

(1,500)

(1,361)

Free cash flow (1)/(2)

6,715

7,466

Acquisitions of intangibles, excluding software

(398)

(715)

Acquisitions of investments, including assumed debt

(1,063)

(533)

Restructuring costs and similar items paid

(754)

(729)

Proceeds from disposals of property, plant and equipment, intangibles, and other non-current assets, net of tax

408

313

Issuance of Sanofi shares

319

306

Dividends paid to shareholders of Sanofi

(3,710)

(3,759)

Acquisition of treasury shares

(2,158)

(2,908)

Transactions with non-controlling interests including dividends

(52)

(31)

Foreign exchange impact

438

(192)

Net cash flow from the swap between BI-CHC and Sanofi animal Health business

3,535

Other items

(303)

(170)

Change in net debt

2,977

(952)

(1)  Excluding restructuring costs and similar items.

(2)  Excluding Animal Health business for the 2016 comparative period.

Appendix 6: Simplified consolidated balance sheet

ASSETS

€ million

12/31/17

12/31/16

LIABILITIES

€ million

12/31/17

12/31/16

Equity attributable to equity-holders of Sanofi

58,089

57,554

Equity attributable to non-controlling interests

169

170

Total equity

58,258

57,724

Long-term debt

14,326

16,815

Property, plant and equipment

9,579

10,019

Non-current liabilities related to business combinations and to non-controlling interests

1,026

1,378

Intangible assets (including goodwill)

53,344

51,166

Non-current provisions and other non-current liabilities

9,154

8,834

Non-current financial assets, investments in associates, and deferred tax assets

10,517

10,379

Deferred tax liabilities

1,605

2,292

Non-current assets

73,440

71,564

Non-current liabilities

26,111

29,319

Accounts payable and other current liabilities

13,839

14,472

Inventories, accounts receivable and other current assets

16,037

16,414

Current liabilities related to business combinations and  to non-controlling interests

343

198

Cash and cash equivalents

10,315

10,273

Short-term debt and current portion of long-term debt

1,275

1,764

Current assets

26,352

26,687

Current liabilities

15,457

16,434

Assets held for sale or exchange

34

6,421

Liabilities related to assets held for sale or exchange

 –

1,195

Total ASSETS

99,826

104,672

Total LIABILITIES & EQUITY

99,826

104,672

Appendix 7: currency sensitivity

2018 Business EPS currency sensitivity

Currency

Variation

Business EPS Sensitivity

U.S. Dollar

+0.05 USD/EUR

-EUR 0.10

Japanese Yen

+5 JPY/EUR

-EUR 0.01

Chinese Yuan

+0.2 CNY/EUR

-EUR 0.02

Brazilian Real

+0.4 BRL/EUR

-EUR 0.02

Russian Ruble

+10 RUB/EUR

-EUR 0.03

Currency exposure on Q4 2017 sales

Currency

Q4 2017

US $

33.7%

Euro €

25.0%

Chinese Yuan

6.0%

Japanese Yen

4.6%

Brazilian Real

2.7%

Mexican Peso

2.6%

Russian Ruble

2.0%

British Pound

1.9%

Australian $

1.5%

Canadian $

1.5%

Others

18.5%

Currency average rates

Q4 2016

Q4 2017

Change

€/$

1.08

1.18

+9.2%

€/Yen

117.92

133.00

+12.8%

€/Yuan

7.38

7.79

+5.5%

€/Real

3.55

3.83

+7.8%

€/Ruble

67.99

68.80

+1.2%

Appendix 8: R&D Pipeline

New Molecular Entities(*)

Additional Indications(*)

Expected Submission Timeline(1)

Pipeline Movements Since Q3 2017

Appendix 9: Expected R&D milestones

Products

Expected milestones

Timing

Praluent®

ODYSSEY OUTCOMES top-line results

Q1 2018

cemiplimab (PD-1)

U.S. and European regulatory submission in advanced Cutaneous Squamous Cell Carcinoma

Q1 2018

cemiplimab (PD-1)

Start of two Phase 3 combination studies in 1st line Non-Small Cell Lung Cancer (part of EMPOWER program)

Q1 2018

dupilumab

EU regulatory submission in Asthma in Adult/Adolescent patients

Q2 2018

mavacamten

Start of Phase 3 in Obstructive Hypertrophic Cardiomyopathy

Q2 2018

isatuximab (anti-CD38 mAb)

Start of Phase 3 in 1st line Multiple Myeloma in SCT eligible patients (GMMG)

H1 2018

dupilumab

Start of Phase 3 trial in Eosinophilic Esophagitis

Q4 2018

dupilumab

Start of Phase 3 trial in Chronic Obstructive Pulmonary Disease

Q4 2018

isatuximab

Phase 3 results in Multiple Myeloma in combination with PomDex (ICARIA)

Q4 2018

isatuximab

U.S. regulatory submission in Multiple Myeloma in combination with PomDex

Q4 2018

dupilumab

Phase 3 read-out in Atopic Dermatitis patients aged 12-17 year old

Q4 2018

dupilumab

Phase 3 read-out in Nasal Polyps

Q4 2018

efpeglenatide

Start of Phase 3 in Type 2 Diabetes as add-on to basal insulins

Q4 2018

efpeglenatide

Start of Phase 3 in Type 2 Diabetes as add-on to metformin vs dulaglutide

Q4 2018

venglustat

Start of Pivotal study in Autosomal Dominant Polycystic Kidney Disease

H2 2018

SAR425899 – dual agonist

Start of Phase 3 in Obese/overweight patients with co-morbidities

H2 2018

SAR425899 – dual agonist

Start of Phase 3 in Obese/overweight patients with Type 2 Diabetes

H2 2018

SAR425899 – dual agonist

Start of Phase 3 in Obese/overweight patients with Pre-diabetes

H2 2018

alemtuzumab

Start of Phase 3 in Primary Progressive Multiple Sclerosis

H2 2018

Appendix 10: Definitions of non-GAAP financial indicators

Company

“Company” corresponds to Sanofi and its subsidiaries

Company sales at constant exchange rates (CER)

When we refer to changes in our net sales “at constant exchange rates” (CER), this means that we exclude the effect of changes in exchange rates.

We eliminate the effect of exchange rates by recalculating net sales for the relevant period at the exchange rates used for the previous period.

Reconciliation of net sales to Company sales at constant exchange rates for the fourth quarter and full-year 2017

€ million

Q4 2017

2017

Net sales

8,691

35,055

Effect of exchange rates

(539)

(672)

Company sales at constant exchange rates

9,230

35,727

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:

  • amortization of intangible assets,
  • impairment of intangible assets,
  • fair value remeasurement of contingent consideration related to business combinations or to disposals,
  • other impacts associated with acquisitions (including impacts of acquisitions on associates and joint ventures),
  • restructuring costs and similar items(1),
  • other gains and losses (including gains and losses on disposals of non-current assets(1)),
  • costs or provisions associated with litigation(1),
  • tax effects related to the items listed above as well as effects of major tax disputes,
  • tax (3%) on dividends paid to Sanofi shareholders,
  • the effects of the application of (and transactions related to) US tax reforms, and the consequences of the French Constitutional Council ruling of October 6, 2017 on the additional 3% levy on dividends paid out in cash,
  • Impairments loss on Alnylam investment for the difference between the market value based on the stock price as of December 31, 2016 and historical cost,
  • Animal Health items out of business net income(2),
  • Net income attributable to non-controlling interests related to the items listed above,
  • Other items relating to the Sanofi Pasteur MSD joint venture.

  1. Reported in the line items Restructuring costs and similar items and Gains and losses on disposals, and litigation, which are defined in Note B.20. to our consolidated financial statements.
  2. In 2016, 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; and in 2017 gain on the disposal of the Animal Health business, net of tax.