LETTER TO SHAREHOLDERS #46

Transcription

1 LETTER TO SHAREHOLDERS #46 SEPTEMBER NEWS: SANOFI AND BOEHRINGER INGELHEIM HAVE REACHED DEFINITIVE AGREEMENTS FOR BUSINESS SWAP 02 - INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER «WE HAVE MADE STRONG PROGRESS ON OUR OBJECTIVE OF RESHAPING THE PORTFOLIO» 05 - NEWS: APPROVALS AND PROGRESS IN RESEARCH & DEVELOPMENT 06 - SHAREHOLDER INFORMATION: INDIVIDUAL SHAREHOLDERS COMMITTEE 07 - CALL FOR CANDIDATES: PARTIAL REAPPOINTMENT OF THE INDIVIDUAL SHAREHOLDERS COMMITTEE

2 RESULTS MESSAGE FROM THE CHAIRMAN SECOND QUARTER 2016 RESULTS AGGREGATE COMPANY SALES 1,2 E8,868M -0.2% (- 4.3%) BUSINESS NET INCOME 1 E1,680M -3.3% (-8.7%) SERGE WEINBERG, CHAIRMAN OF THE BOARD OF DIRECTORS DEAR SHAREHOLDERS, During the first half of 2016, our company continued its efforts to achieve its main strategic goals: reshape its portfolio, deliver outstanding launches of new products and sustain innovation in Research & Development. BUSINESS EPS 1,3 E % (-7.1%) Recent highlights include the approval of the Diabetes treatment Adlyxin in the United States and the submission of the marketing authorization application for sarilumab, a promising investigational treatment in rheumatoid arthritis. We also achieved a new key milestone to reshape our portfolio. As you may know, we decided to refocus our businesses on human health, without abandoning diversification which we think is important to give our company a solid foundation and a limited risk profile. When we signed the agreement with Boehringer Ingelheim, we decided to strengthen our Consumer Healthcare business by swapping our Animal Health business. By the end of this year, the expected closing of the transaction will lift us into a global leadership position in the large and growing Consumer Healthcare market thanks to the complementarity of both product portfolios. INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER Oncology is another area where we plan to rebuild a competitive position. Our pursuit of the U.S. based biopharmaceutical company Medivation eventually did not succeed. However, we will continue in our efforts to strengthen our position in Oncology, which is one of the largest and fastest growing therapeutic areas in the biopharmaceutical sector. Thank you for your trust and continuing loyalty. DIVERSIFICATION IS IMPORTANT TO GIVE SANOFI A SOLID FOUNDATION AND A LIMITED RISK PROFILE. OLIVIER BRANDICOURT, CHIEF EXECUTIVE OFFICER 2 - SANOFI - LETTER TO SHAREHOLDERS #46 - SEPTEMBER 2016

3 RESULTS SALES IMPACTED BY EXCHANGE RATE MOVEMENTS In the second quarter of 2016, aggregate company sales were 8,868M, down 4.3% on a reported basis. Exchange rate movements had a negative effect of 4.1 percentage points with the adverse evolution of the U.S. dollar as well as several emerging market currencies. At constant exchange rates (CER) aggregate company sales were down 0.2%. This performance included a negative currency impact related to the change of exchange rate applied for the translation of operations in Venezuela which is going through a deep economic crisis. In addition, in the second quarter of 2015, Sanofi benefited from a significant increase in product demand in Venezuela. As a consequence, sales in Venezuela were 199M in the second quarter of 2015 compared to 6M in the second quarter of Excluding Venezuela, aggregate company sales increased 1.9% at CER in the second quarter of Sales by franchise Q Change at CER Specialty Care 1,493M +19.5% Diabetes & Cardiovascular 1,962M -2.0% Established Products 2,617M -9.7% Consumer Healthcare 800M -4.3% Generics 474M -1.9% Vaccines 797M +6.3% Animal Health 725M +9.1% PERFORMANCE SUPPORTED BY GROWTH OF SPECIALTY CARE, VACCINES AND ANIMAL HEALTH FRANCHISES Specialty Care maintains a positive momentum, supported by the strong performance of the Multiple Sclerosis franchise, up 67.3% at CER thanks to the growth of Aubagio and Lemtrada sales. The doubledigit sales growth (14.2% at CER) of the Rare Diseases franchise also contributes to the strong momentum. Consolidated Sanofi Pasteur sales were up 6.3% at CER, notably driven by the Polio/Pertussis/Hib vaccines in Emerging Markets. Animal Health sales were up 9.1% at CER, driven by the success of NexGard family of products, Merial s next generation flea and tick products for dogs, in the U.S., Europe and Japan. Lisa, multiple sclerosis, United States According to the Multiple Sclerosis Foundation, there are approximately 2.5 million people living with multiple sclerosis worldwide. This disease is 2 to 3 times more common in women. 1 - Growth rates are expressed at constant exchange rates (CER). Growth rates in brackets are expressed on a reported basis. For definitions of financial indicators, please consult the press release issued on July 29, Including Animal Health Business which is reported on a single line in the consolidated income statements in accordance with IFRS 5 (Non-current held for sale and discontinued operations). 3 - Earnings per share. WHAT ARE THE HIGHLIGHTS OF THE SECOND QUARTER 2016? Our 2 nd quarter results are in line with expectations and reflect some of the headwinds we anticipated from the situation in Venezuela and Plavix loss of exclusivity in Japan in June Sales were slightly down to 8.9bn, but up 1.9% at CER excluding Venezuela. Business EPS also declined by 2.1% at CER. Importantly, this is the last quarter we will be seeing the negative impact from the Venezuela currency situation and the Plavix loss of exclusivity impact will be diminished in the second half of this year. Sanofi Genzyme remained our fastest growing business driven by our Multiple Sclerosis and Rare Diseases franchises. Sanofi Pasteur performed well despite a delay in Dengvaxia uptake. In addition, we made further solid progress with the launches of Toujeo in a competitive Diabetes market and Praluent which gained market share in the U.S. and was recently approved in Japan for the treatment of hypercholesterolemia. WHAT PROGRESS HAVE YOU MADE WITH THE RESHAPING OF YOUR PORTFOLIO AND R&D ACTIVITIES? We have made strong progress in both areas. We signed the Consumer Healthcare asset swap with Boehringer Ingelheim in June, and expect to close by the end of the year. 1 Concerning innovation, we enlarged our offer in Diabetes with the approval in the U.S. of Adlyxin, which is also known as Lyxumia in other countries. We also made progress with our Immunology pipeline. We submitted sarilumab for approval to health authorities in Europe and the U.S. in rheumatoid arthritis. YOU MENTIONED THE DELAY IN DENGVAXIA UPTAKE? In Latin America, four news registrations 2 were recently granted and Brazil announced the launch of its first public vaccination program in the State of Paraná. Despite these encouraging developments, the overall uptake of Dengvaxia is delayed by recent political changes and economic volatility in Latin America. In Asia, the vaccine is available in the Philippines, and was recently approved in Indonesia. WE REMAIN FOCUSED ON IMPLEMENTING OUR 2020 STRATEGIC ROADMAP AND HAVE MADE STRONG PROGRESS ON OUR OBJECTIVE OF RESHAPING THE PORTFOLIO. 1 - Subject to regulatory clearances in different countries. 2 - Costa Rica, Paraguay, Peru, Guatemala. SANOFI - LETTER TO SHAREHOLDERS #46 - SEPTEMBER

4 NEWS SANOFI AND BOEHRINGER INGELHEIM HAVE REACHED DEFINITIVE AGREEMENTS FOR BUSINESS SWAP RANKING OF CONSUMER HEALTHCARE BUSINESS IN KEY REGIONS Evolution based on combined Sanofi and BI CHC sales 3 Europe: #4 #1 Latin America: #1 (no change) Asia-Japan-Pacific: #8 #2 Rest of world 4 : #2 (no change) North America: #7 #6 1- Subject to regulatory clearances in different countries 2- Excluding Venezuela 3- Nicholas Hall & Company, FY 2015, excludes BI CHC in China 4- CIS, Middle-East Africa and South Asia. 4 SANOFI - LETTER TO SHAREHOLDERS #46 - SEPTEMBER 2016 MAJOR MILESTONE BEFORE CLOSING OF TRANSACTION EXPECTED BY YEAR-END Sanofi and Boehringer Ingelheim (BI) signed contracts to secure the strategic transaction initiated in December 2015 which consists of an exchange of Sanofi s Animal Health business and BI s Consumer Healthcare (CHC) business. Upon successful completion, BI s CHC business (enterprise value of e6.7bn) would be transferred to Sanofi and Sanofi s Animal Health business (enterprise value of e11.4bn) would be transferred to BI. The transaction includes a cash payment to Sanofi of e4.7bn to reflect the difference in value of the two businesses. COMPLEMENTARY CHC PORTFOLIOS With this transaction, Sanofi would integrate BI s CHC business in all countries except China. Joint CHC sales would amount to approx. e4.9bn 2 based upon 2015 global sales. Thanks to the addition of a highly complementary product and brand portfolio, Sanofi would enhance its position in several of its strategic categories Pain Care, Allergy Solutions, Cough & Cold Care, Feminine Care, Digestive Health and Vitamins, Minerals and Supplements. The transaction would also expand Sanofi s CHC scale in key geographic regions, in particular in Europe and the Asia-Japan- Pacific regions (see box.) BUILDING GLOBAL LEADERSHIP IN CONSUMER HEALTHCARE IN LINE WITH OUR STRATEGY.

5 NEWS LAUNCH OF FIRST DENGUE IMMUNIZATION PUBLIC PROGRAM IN BRAZIL First dengue immunization public program in the Americas started at the beginning of August in Brazil, in Paraná State. Paraná will lead dengue prevention in Brazil with this benchmark public program initiated to immunize 500,000 individuals with Dengvaxia dengue vaccine over the next three weeks. Paraná State, home to 10 million people, has seen a steep 3-fold increase in both dengue incidence and deaths in recent years. APPROVALS AND PROGRESS IN RESEARCH & DEVELOPMENT A mother and her daughter in Brazil. They had dengue fever within 15 days of each other. In 2015, over 1.4 million Brazilian citizens were reportedly infected with the virus (Secretaria de Vigilância em Saúde Ministério da Saúde). RESEARCH AGREEMENT FOR ZIKA VACCINE On July 6, Sanofi announced a Cooperative Research and Development Agreement with the Walter Reed Army Institute of Research (WRAIR) on the co-development of a Zika vaccine candidate. WRAIR will transfer its Zika purified inactivated virus vaccine technology to Sanofi Pasteur, opening the door for a broader collaboration with the U.S. government. In addition to the work on the WRAIR technology, Sanofi Pasteur is performing pre-clinical studies, utilizing a technology previously and successfully developed for both its dengue fever and Japanese encephalitis vaccines. However, since that pathway will take longer to get a Zika vaccine candidate into clinical development, Sanofi Pasteur has also been exploring partnerships with external experts to rapidly advance a vaccine candidate. ADLYXIN APPROVED IN THE UNITED STATES FOR THE TREATMENT OF TYPE 2 DIABETES At the end of July, the U.S. Food and Drug Administration (FDA) approved Adlyxin (lixisenatide), a once-daily mealtime GLP-1 receptor agonist injection, indicated as an adjunct to diet and exercise for the treatment of adults with type 2 diabetes. Adlyxin is approved under the proprietary name, Lyxumia in more than 60 countries and marketed in over 40. NEW DRUG APPLICATION FOR INVESTIGATIONAL FIXED-RATIO COMBINATION OF INSULIN GLARGINE AND LIXISENATIDE On May 25, 2016, the FDA Advisory Committee recommended the approval of the investigational once-daily fixed-ratio combination of basal insulin glargine and lixisenatide (known under the project name LixiLan) for the treatment of adults with type 2 diabetes. On August 19, Sanofi announced the submission of updated information on the pen delivery device as part of the New Drug Application for the fixedratio combination. The company looks forward to hearing from the FDA once the review of the updated information has been completed. PRALUENT APPROVED IN JAPAN FOR THE TREATMENT OF HYPERCHOLESTEROLEMIA Sanofi and Regeneron announced at the beginning of July that Praluent was granted marketing and manufacturing authorization in Japan. In this country, Praluent is indicated for the treatment of patients with hypercholesterolemia and familial hypercholesterolemia who are at high cardiovascular risk and in whom treatment with statins is not sufficient. POSITIVE PHASE III RESULTS FOR DUPILUMAB IN ATOPIC DERMATITIS Zika, Japanese encephalitis, and dengue belong to the same family of viruses (Flavivirus) and are transmitted by the same type of mosquito. Results from the Phase III study CHRONOS demonstrated that a treatment with dupilumab used with topical corticosteroids was superior to a treatment with topical corticosteroids used alone in patients with moderate to severe atopic dermatitis that were inadequately controlled. SANOFI - LETTER TO SHAREHOLDERS #46 - SEPTEMBER

6 SHAREHOLDER INFORMATION INDIVIDUAL SHAREHOLDERS COMMITTEE A REGULAR DIALOG BETWEEN SANOFI AND ITS SHAREHOLDERS The Sanofi individual shareholders committee was created in 2005 to strengthen the dialog and interaction between the company and its shareholders. Currently, the committee has 10 members, selected to reflect the composition of our individual shareholder base in France. The committee meets with the Investor Relations team every quarter to discuss the company s news, inform Sanofi about individual shareholders expectations and participate in the formulation of communication projects. To allow the committee to be a real link between Sanofi and the individual shareholders it represents, the Investor Relations team regularly informs it about the company s business and invites its members to participate in different communication activities. In addition to quarterly meetings, the committee members are invited to participate in the annual general meeting and to join the Sanofi team on their stand at the Actionaria shareholder exhibition. Once a year, the committee has the opportunity to visit one of the company s sites. As a result, the committee members learn more about how a leading pharmaceutical company operates and are able to assess the challenges of an efficient shareholder communication. The committee visited the Dengvaxia production unit and had a look at the rooms dedicated to cell and viral culture. SITE VISIT AT NEUVILLE-SUR-SAÔNE In June 2016, the committee visited the Neuville-sur-Saône site, near Lyon, France, the world s first and only production facility of the dengue vaccine, Dengvaxia. Antoine Quin, Head of the Neuville site, presented the ambitious industrial reconversion of the site that is today the third European production center of Sanofi Pasteur, entirely dedicated to the biotechnological production of Dengvaxia. In 2008, six years prior to the publication of Phase III results demonstrating the efficacy of the dengue vaccine, Sanofi decided to invest 300 million in the transformation of the Neuville facility. The site benefits from the proximity of the Marcy l Etoile site, the largest vaccines research, development and production center worldwide and the global headquarters of Sanofi Pasteur in Lyon. More than 200 employees work in Neuville in different industrial units with key expertise for the manufacturing of Dengvaxia. These include a vaccine production unit, a unit for the production and distribution of utilities (purified water, compressed air ), another unit for quality control which can also be used for other control activities of different Sanofi Pasteur vaccines; and a building dedicated to the development and improvement of industrial and analytical processes. 6 - SANOFI - LETTER TO SHAREHOLDERS #46 - SEPTEMBER 2016

7 CALL FOR CANDIDATES The committee visited the production unit of Dengvaxia and was shown the rooms dedicated to cell and viral culture. Thierry Youhanna, head of this unit, explained the different production steps of the active ingredient of Dengvaxia which respect the highest quality and safety standards. The committee members were impressed by the complexity of the process, which consists of the production of a very high number of cells that are used to reproduce the live attenuated viruses (four serotypes of the virus are included in the final vaccine). After purification, concentration and filtration the active ingredient (bulk) is ready. Bags containing the bulk are stored at -70 C and transported to another site, Val de Reuil in Upper Normandy, where the final vaccine is produced and packaged. DIALOG WITH THE CHAIRMAN OF THE BOARD In March 2016, the committee gathered at Sanofi s headquarters in Paris. During the meeting, the Investor Relations team presented Sanofi s fullyear 2015 results, the strategic roadmap 2020 and discussed communication projects for PARTIAL REAPPOINTMENT OF THE INDIVIDUAL SHAREHOLDERS COMMITTEE As the current members of the committee were appointed at the beginning of 2014, the partial reelection of the committee is due at the start of Potential candidates should send a letter with an accompanying CV by mail to: Sanofi Investor Relations 54 Rue La Boétie Paris - France Or by to: individualshareholders@sanofi.com Please provide the following information when submitting your application: Your motivations to join the Sanofi committee The number of Sanofi shares you hold, and since which date Your membership in other shareholder committees Your membership in shareholder groups and/or investment clubs Serge Weinberg, Chairman of the Board, joined the group after lunch to talk about the next annual general meeting and answer the group s questions about the company s perspectives, its dividend policy and new Board members. MEETING WITH THE CFO AND THE NEW CEO In September 2015, just a few months after the arrival of Olivier Brandicourt as new Chief Executive Officer, the committee met with Olivier Brandicourt and Jérôme Contamine, Chief Financial Officer, on the occasion of a meeting at Sanofi s headquarters in Paris. COMMITTEE COMPOSITION The committee currently counts 10 members (the number can vary between 8 and 12), selected to reflect the composition of our individual shareholder base in France, in terms of their geographical origin, professional background, age, their interest in the healthcare sector and the stock market, and their membership of shareholder associations. No member may belong to more than 3 committees at any time. No current employee of Sanofi may be a member. Members serve for a term of 3 years, renewable at the discretion of Sanofi. The Committee is partially reappointed every 3 years. ORGANIZATION AND MISSION The committee is chaired by our Chief Financial Officer Jérôme Contamine, and organized by the Investor Relations Department. The committee s language is French. It meets 3 or 4 times a year, generally at the headquarters of Sanofi. One meeting is dedicated to a site visit. The committee also meets every year in November at the Actionaria shareholder exhibition. The committee has two roles: to provide Sanofi with feedback about individual shareholders concerns; to work with us on the formulation of our communication projects. SANOFI - LETTER TO SHAREHOLDERS #46 - SEPTEMBER

8 SHAREHOLDER INFORMATION SHARE PERFORMANCE IN PARIS CALENDAR September 29, 2016: Shareholder meeting in Nice October 28, 2016: Third quarter results 2016 November 18-19, 2016: Actionaria exhibition, Paris November 28, 2016: Shareholder meeting in Tours SANOFI SHARE PRICE TREND OVER 5 YEARS Euronext Paris, from January 1, 2011 to August 29, SANOFI STOCK Euronext Paris, compartment A Member code: SAN ISIN code: FR New York Stock Exchange Symbol: SNY CUSIP number: 80105N Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 August 29,2016 CAC 40 rebased on the Sanofi share. Source: vwdgroup SANOFI E % CAC 40 4, points SHAREHOLDER RELATIONS SANOFI - Shareholder Relations 54, rue La Boétie Paris - France Tel. Europe: +33 (0) Toll-free tel. U.S.: Individualshareholders@sanofi.com Mobile app: SANOFI IR (available in the App Store and Google Play) SAVE THE DATE FOR SALON ACTIONARIA 2016 The Sanofi Investor Relations team will be happy to welcome you at the 19 th edition of Actionaria, Europe s largest exhibition for individual shareholders: On November 18 & 19, 2016 Palais des Congrès de Paris 2 Place de la Porte Maillot, Paris Come and join us at Espace «Grandes Cap», Level 2 - stand E 32, from 9:30 am to 7:00 pm CET on Friday and from 9:30 am to 6:30 pm CET on Saturday. Request a free invitation: By calling: +33 (0) Sending an to: individualshareholders@sanofi.com Or visiting the Actionaria Website at: Forward-looking statement: This letter contains projections and other forward-looking statements that are not historical facts. Although the management of Sanofi believes that these projections and forward-looking statements, and their underlying assumptions, are reasonable as of the date of this letter, investors are cautioned that such projections, assumptions, intentions and forward-looking 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 or implied. These risks and uncertainties include those discussed elsewhere in this letter, as well as in the filings of Sanofi with the U.S. Securities and Exchange Commission (SEC) and the French Autorité des marchés financiers (AMF), notably under the caption Risk Factors in the company s annual report on Form 20-F. Other than as required by applicable law, Sanofi does not undertake any obligation to update any statement that is not a historical fact. The Letter to Shareholders is published by Sanofi Investor Relations / Shareholder Relations. Photographs: p. 2: Marthe Lemelle, Denis FELIX - p. 3: Denis FELIX p. 4: Piotr Redlinski / Capa Pictures - p. 5: Sanofi Pasteur / Marizilda Cruppe, Sanofi Pasteur, Peter Strumpf / Capa Pictures p. 6: Sanofi Pasteur / Vincent Moncorgé, Sanofi Pasteur p. 7: Franck Parisot p. 8: Sanofi Design/production: SEITOSEI Status: September 13, 2016 Our team will be on the stand to discuss the company s strategy, news and outlook. We will also answer your questions on the Sanofi share price trend, how to hold Sanofi shares and our communication tools for individual shareholders. You will have access to our publications and the SANOFI IR mobile app on the stand.