Sanofi-aventis First Half 2007: Solid Results in a Difficult Context;
Plavix(R) recovers its position in the US, full impact expected in H2PARIS, Aug. 1 /PRNewswire-FirstCall/ -- In order to give a better representation of our underlying economic performance, sanofi-aventis has decided to present and comment an adjusted(1) income statement. The company has also decided to present its adjusted net income and adjusted EPS, excluding selected items, in US Dollar(3) in order to facilitate the comparison with the majority of large pharmaceutical groups. The adjusted consolidated income statement for the first half of 2007 is provided in the appendices. Consolidated net income for the first half of 2007 was euro2,665 million, compared with euro2,381 million for the first half of 2006.
2007 second-quarter net sales
Up 2.3% on a comparable basis (down 2.0% on a reported basis) at
euro6, 939 million
Up 7.1% excluding the impact of generics of Ambien(R) IR in the United
States and Eloxatin(R) in Europe(4)
14.8% growth in net sales for the Vaccines business
Ongoing cost adaptation measures
-- Selling and general expenses down by 6.3% in the first half,
equivalent to an improvement of 2 points of the SG&A to net sales
ratio, when compared to first half 2006.
Main events of the quarter
Successful outcome to the Plavix(R) litigation in the United States, which has confirmed the validity and enforceability of U.S. patent covering the active ingredient until November 2011
Withdrawal of the Zimulti(R) application in the United States following a negative recommendation from the Advisory Committee of the FDA. Sanofi-aventis remains committed to making all efforts necessary to make Zimulti(R) available on the U.S. market.
Approval of the labeling update of Acomplia(R) in Europe and confirmation of the positive benefit-risk profile of the product except in patients suffering from ongoing major depression
Approval in the United States of the new antihistamine Xyzal(R), to be marketed by sanofi-aventis and UCB from the fall of 2007
Share buyback program
-- The Board of Directors has authorized the company to purchase up to a
maximum amount of 3 billion euros of its own shares before the next
shareholders' meeting on May 14, 2008
Confirmation of guidance on 2007 full-year adjusted EPS growth excluding selected items as disclosed on May 3rd 2007 (see page 13)
(1) See Appendix 1 for definitions of financial indicators (2) See
Appendix 5 (3) U.S. dollar figures obtained by translating euro -
denominated figures at the average exchange date for the period: 1.348
for Q2 2007 (Q2 2006: 1.256), and 1.329 for H1 2007 (H1 2006: 1.229)
(4) Excluding net sales of Ambien IR(R) in the United States (from
April) and of Eloxatin(R) in Europe
2007 second-quarter and first-half net sales
Unless otherwise indicated, all sales growth figures in this press release are
stated on a comparable basis(1).
Sanofi-aventis generated second-quarter net sales of euro6,939 million, up 2.3%. Exchange rate movements had an unfavorable impact of 4.1 points, approximately 70% of which related to the U.S. dollar. Changes in Group structure had an unfavorable impact of 0.2 of a point. On a reported basis, net sales fell by 2.0%.
First-half net sales rose by 4.6% to euro14,116 million. Exchange rate movements had an unfavorable impact of 4.4 points, around two-thirds of which related to the U.S. dollar. Changes in Group structure had an unfavorable impact of 0.2 of a point. After taking account of these effects, reported net sales were stable.
Net sales by business segment -- Pharmaceuticals
Second-quarter net sales for the pharmaceuticals business were euro6,320 million, an increase of 1.2%. Net sales of the top 15 products were up 2.5% at euro4,294 million, representing 67.9% of pharmaceuticals net sales, as opposed to 67.1% for the comparable period of 2006. First-half net sales for the pharmaceuticals business totaled euro12,930 million, a rise of 3.7%. Net sales of the top 15 products advanced by 6.4% to euro8,777 million and represented 67.9% of pharmaceuticals net sales, compared with 66.2% for the comparable period of 2006. Excluding the impact of the arrival of generics(3) of Ambien(R) IR in the United States and Eloxatin(R) in Europe, the top 15 products would have achieved growth of 10.7% in the second quarter and 11.3% in the first half.
Change Change
Q2 2007 on a H1 2007 on a
euro million net comparable net comparable
sales basis sales basis
Lovenox(R) 671 +15.5 % 1,305 +11.8 %
Plavix(R) 632 +12.7 % 1,201 +5.7 %
Lantus(R) 503 +26.1 % 961 +26.6 %
Taxotere (R) 474 +9.0 % 923 +9.5 %
Stilnox(R)/Ambien(R)/Ambien CR(TM) 252 -41.8 % 858 +2.3 %
Eloxatin(R) 380 -10.2 % 773 -6.8 %
Copaxone(R) 307 +20.4 % 596 +19.0 %
Aprovel(R) 272 +10.1 % 536 +8.9 %
Allegra(R) 198 +13.8 % 399 +17.7 %
Tritace(R) 167 -30.7 % 378 -18.9 %
Amaryl(R) 103 -8.8 % 197 -14.0 %
Xatral(R) 85 -5.6 % 167 -7.7 %
Nasacort(R) 87 +19.2 % 166 +20.3 %
Actonel(R) 82 -8.9 % 160 -9.6 %
Depakine(R) 81 +8.0 % 157 +4.0 %
TOTAL TOP 15 4,294 +2.5 % 8,777 +6.4 %
TOTAL TOP 15 excl. Eloxatin(R) in
Europe and excl. Ambien(R) IR
in the USA (from April) 4,130 +10.7 % 8,504 +11.3 %
Second-quarter net sales of other pharmaceutical products were euro2,026 million, down 1.4% (against euro2,054 million(5) in Q2 2006). Restrictions on indications for the antibiotic Ketek(R) resulted in a further decline in the product's net sales in the period (euro9 million, versus euro29 million(5) in the second quarter of 2006).
First-half net sales of other pharmaceutical products fell by 1.6% to euro4,153 million, versus euro4,219 million(5) in 2006 (net sales of Ketek(R) totaled euro39 million, compared with euro88 million in the first half of 2006).
(5) Comparable net sales
Geographical split of consolidated net sales by product (Top 15)
Change Change Change
Q2 2007 net sales on a on a on a
(euro million) compar- compar- compar-
able United able Other able
Europe basis States basis countries basis
Lovenox(R) 188 +5.0 % 415 +20.6 % 68 +17.2 %
Plavix(R) 431 +7.5 % 64 +30.6 % 137 +23.4 %
Lantus(R) 151 +19.8 % 302 +25.8 % 50 +51.5 %
Taxotere (R) 204 +9.1 % 178 +5.3 % 92 +16.5 %
Stilnox(R)/
Ambien(R)/
Ambien CR(TM) 21 -12.5 % 210 -46.0 % 21 +5.0 %
Eloxatin(R) 97 -35.8 % 243 +5.2 % 40 -2.4 %
Copaxone(R) 81 +15.7 % 210 +22.8 % 16 +14.3 %
Aprovel(R) 209 +6.1 % - - 63 +26.0 %
Allegra(R) 18 -5.3 % 116 +13.7 % 64 +20.8 %
Tritace(R) 121 -9.7 % 0 ns 46 -54.9 %
Amaryl(R) 32 -33.3 % 2 -50.0 % 69 +13.1 %
Xatral(R) 42 -27.6 % 28 +27.3 % 15 +50.0 %
Nasacort(R) 13 -7.1 % 65 +22.6 % 9 50.0 %
Actonel(R) 52 -17.5 % - - 30 +11.1 %
Depakine(R) 54 +3.8 % - - 27 +17.4 %
Change Change Change
H1 2007 net sales on a on a on a
(euro million) compar- compar- compar-
able United able Other able
Europe basis States basis countries basis
Lovenox(R) 374 +6.3 % 800 +14.1 % 131 +14.9 %
Plavix(R) 854 +5.2 % 86 -21.8 % 261 +22.0 %
Lantus(R) 299 +17.3 % 572 +28.5 % 90 +52.5 %
Taxotere (R) 402 +11.4 % 346 +4.8 % 175 +15.1 %
Stilnox(R)/
Ambien(R)/
Ambien CR(TM) 43 -10.4 % 765 +2.1 % 50 +19.0 %
Eloxatin(R) 206 -30.2 % 488 +7.5 % 79 -1.3 %
Copaxone(R) 159 +16.9 % 407 +20.1 % 30 +15.4 %
Aprovel(R) 418 +5.6 % - - 118 +22.9 %
Allegra(R) 35 +6.1 % 208 +16.9 % 156 +21.9 %
Tritace(R) 239 -10.8 % 1 -88.9 % 138 -27.0 %
Amaryl(R) 64 -37.9 % 4 -42.9 % 129 +8.4 %
Xatral(R) 86 -28.3 % 53 +35.9 % 28 +27.3 %
Nasacort(R) 26 8.3 % 125 +23.8 % 15 15.4 %
Actonel(R) 103 -18.9 % - - 57 +14.0 %
Depakine(R) 107 0.0 % - - 50 +13.6 %
Comments by product
Net sales of Lovenox(R), the leading low molecular weight heparin on the market, rose by 15.5% in the quarter to euro671 million. Growth of the product was driven by its increased use in medical prophylaxis in the United States, where net sales of Lovenox(R) rose by 20.6% to euro415 million. Growth was also sustained in the other countries, where net sales were 17.2% higher at euro68 million. In May, following a priority review, the FDA approved a supplemental new drug application for Lovenox(R)in the treatment of patients with acute ST-segment elevation myocardial infarction (STEMI). Application for approval for the same indication was filed in Europe in the last quarter of 2006. This new indication is expected to further enhance the superiority of Lovenox(R) over non-fractioned heparins.
The results of the EXCLAIM study, presented in July at the XXIst Congress of the ISTH (International Society on Thrombosis and Haemostasis) in Geneva, showed the benefit of extended prophylaxis in acutely ill medical patients with reduced mobility. The results demonstrated that 5 weeks of thrombo- prophylaxis with Lovenox(R) was more effective than a 10-day treatment, giving a statistically significant 44% reduction in venous thromboembolism events.
Following expiry of the Ambien(R) IR patent in the United States on April 20, generics of the product soon became widely available, causing a drop in total second-quarter net sales to euro67 million, compared with euro308 million in the second quarter of 2006. Ambien CR(TM) posted second-quarter net sales of $190 million in the United States, becoming the leading brand of prescription sleeping drug. First-half net sales of Ambien CR(TM) were $385 million.
In Japan, sales of Myslee(R) (not consolidated by sanofi-aventis) were 16.2% higher in the second quarter at euro31 million. First-half net sales rose by 12.6% to euro55 million.
Taxotere(R) once again posted strong growth in the "Other countries" region during the quarter. In Europe, the product recorded growth of 9.1%, while net sales in the United States rose by 5.3%. In June, Taxotere(R) was granted two priority reviews:
-- in Japan, for the treatment of metastatic hormono-refractory prostate
cancer;
-- in the United States, in association with cisplatin and 5-fluorouracil
for the induction (neo-adjuvant)
therapy of patients with locally -advanced squamous cell carcinoma of
the head and neck prior to chemoradiotherapy and surgery.
In Europe, Eloxatin(R), which is facing competition from generics in some countries including Germany and the United Kingdom, recorded a 35.8% fall in second-quarter net sales to euro97 million. In the United States, the product - which is the market-leading colorectal cancer treatment both as adjuvant and in the metastatic phase - reported a 5.2% increase in net sales to euro243 million. The 6-year survival analysis in the MOSAIC study was presented in June at the 43rd Annual Meeting of the American Society of Clinical Oncology (ASCO) in Chicago. The results showed that FOLFOX4, an Eloxatin(R)based chemotherapy regimen, significantly improved the overall survival of patients with surgicallyresected stage III colon cancer when compared to standard chemotherapy (5-FU/LV).
Lantus(R), the world's leading insulin brand, continues to record excellent performances in second-quarter. Net sales of the product advanced by 25.8% in the United States, 19.8% in Europe and 51.5% in the other countries. SoloSTAR(R), a new disposable pen that can be used to administer Lantus(R) and/or the rapid-acting insulin Apidra(R), has been gradually rolled out in Europe since April. Lantus(R) SoloSTAR(R) is now being sold in France and Germany, and has been very well received. In June, new data on Lantus(R) and Apidra(R) were presented at the 67th Annual Scientific Sessions of the American Diabetes Association (ADA) in Chicago:
-- a meta-analysis from a large-scale data set confirmed the superiority
of the basal insulin Lantus(R) over insulin NPH with regard to the risk
of hypoglycemia;
-- a new study showed that adding Apidra(R) (insulin glulisine) to a Basal
insulin and Oral antidiabetic drug Therapy (BOT+ or Basal plus) may
provide an effective treatment option for people with type 2 diabetes
unable to control their blood sugar (HbA1C > 6.5%), despite good
titration (fasting blood glucose [FBG] < 120 mg/dl), with BOT alone.
Allegra(R) enjoyed a good first half, with a favorable pollen season in Japan. In May, the FDA approved Xyzal(R), a new once-daily prescription antihistamine for the relief of symptoms associated with seasonal and perennial allergic rhinitis and for the treatment of uncomplicated skin manifestations of chronic idiopathic urticaria in adults and children aged six and over. Xyzal(R) will be marketed jointly by sanofi-aventis and UCB in the United States from the fall of 2007.
Second-quarter net sales of Tritace(R) were down 30.7% at euro167 million mainly due to the introduction of generics in Canada.
Acomplia(R) is now approved in 42 countries and marketed in 20 countries. Net sales reached euro22 million in the second quarter and euro37 million in the first half. On June 13, the Endocrinologic and Metabolic Drugs Advisory Committee of the FDA issued a negative recommendation on the approval of rimonabant for use in obese and overweight patients with associated risk factors. On June29, sanofi-aventis announced its decision to withdraw the new drug application for rimonabant in the United States. Sanofi-aventis will work towards resubmitting the application at a future date. Sanofi-aventis is confident in the positive risk benefit ratio of rimonabant 20mg when used in the appropriate population, and is committed to making all efforts necessary to make the product available to patients in the U.S. market.
In July, the Committee for Medicinal Products for Human Use (CHMP), after re-evaluation, confirmed the positive benefit-risk profile of Acomplia(R) in the indicated patient population and issued a positive opinion on the labeling update in Europe. The product is now contra-indicated in patients with ongoing major depressive illness and/or ongoing anti-depressive treatment.
Worldwide presence(1) of Plavix(R) / Iscover(R):
Change Change
euro million on a on a
comparable comparable
Q2 2007 basis H1 2007 basis
Europe 452 +4.1 % 900 +4.8 %
United States 759 +2.6 % 1,362 -2.1 %
Other countries 205 +21.3 % 388 +19.8 %
TOTAL 1,416 +5.4 % 2,650 +3.0 %
On June 19, 2007, the U.S. District Court for the Southern District of New York upheld the validity and enforceability of U.S. patent covering clopidogrel bisulfate, the active ingredient of Plavix(R), and issued a permanent injunction enjoining Apotex from marketing its generic clopidogrel bisulfate in the United States prior to the expiration of the patent. Apotex had launched a generic clopidogrel bisulfate in August 2006, following which the U.S. District Court for the Southern District of New York awarded sanofi- aventis a temporary injunction on August 31, 2006 ordering Apotex to halt further sales of its generic clopidogrel bisulfate, without however ordering a recall of products already shipped. This injunction has been upheld on appeal in December 2006. The main patent protection for this product has now been maintained in the United States until patent expiration November 2011.
In the second quarter, Plavix(R) posted sales of $1,019 million in the United States, up 2.6%, reflecting the disappearance of the generic version from the market at the end of the quarter. First-half sales of Plavix(R) amounted to $1,809 million, a decrease of 2.1%.
In Europe, second-quarter net sales of Plavix(R) were up 4.1% at euro452 million, still affected by parallel imports in Germany.
In the other countries, growth in sales of Plavix(R) accelerated in the second quarter to 21.3%, realizing net sales of euro205 million. In Japan, the two-week limit on prescriptions imposed by the authorities was lifted in May, and net sales reached euro12 million for the quarter and euro16 million for the first half. In July, the Japanese authorities granted a priority review to an application for the use of Plavix(R) in acute coronary syndrome.
Worldwide presence(1) of Aprovel(R)/ Avapro(R)/ Karvea(R):
Change Change
euro million on a on a
comparable comparable
Q2 2007 basis H1 2007 basis
Europe 233 +5.4 % 460 +6.2 %
United States 127 +2.4 % 250 +8.2 %
Other countries 106 +20.5 % 199 +19.9 %
TOTAL 466 +7.6 % 909 +9.5 %
Second-quarter worldwide sales of Aprovel(R)/Avapro(R)/Karvea(R) were up 7.6% at euro466 million. Net sales of the product in the United States rose by 8.2% over the first half.
On April 18, the Cardio-Renal Advisory Committee of the FDA recommended approval of Avalide(R)as an initial treatment for hypertension. Avalide(R) is a fixed-dose combination of irbesartan and hydrochloro thiazide that is currently approved for the treatment of hypertension in patients with blood pressure uncontrolled on monotherapy. If approved, the new indication for Avalide(R) would be the first-line treatment for hypertension in patients who are unlikely to obtain their blood pressure goals on monotherapy.
Net sales by business segment -- Human Vaccines
Second-quarter consolidated net sales for the Human Vaccines business were euro619 million, an increase of 14.8%. The figure for the quarter includes $113 million of H5N1 vaccine sales in the United States, compared with $150 million in the second quarter of 2006. Results for the second quarter were supported by strong growth in sales of pediatric combination vaccines and the oral polio vaccine. Sales of Adacel(TM) (adult and adolescent tetanus- diphtheria-pertusis booster), launched in the United States in July 2005, reached euro51 million for the quarter, an increase of 19.6%. Menactra(R)recorded a 73.9% rise in net sales for the quarter, to euro105 million.
First-half consolidated net sales for the Human Vaccines business were euro1,186 million, an increase of 15.4%.
Construction of a new influenza vaccine manufacturing facility in the United States was completed in July. This facility is due to be operational by late 2008 or early 2009 once it has been licensed by the FDA, and will more than double current annual production capacity at the site to over 100 million doses of vaccines. In June, sanofi pasteur was awarded a $77.4 million contract by the U.S. Department of Health and Human Services (HHS) to retrofit its existing influenza vaccine manufacturing facility in the United States so that it is in a state of readiness to switch to pandemic influenza vaccine manufacture when requested by the HHS. Sanofi pasteur will contribute $25 million to the project. Work will start as soon as the company's new U.S. influenza vaccine manufacturing facility is licensed by the FDA and operational. Combining the capacities of the new facility with that of the retrofitted facility should enable sanofi pasteur to triple its current influenza vaccine capacity in the United States.
Q2 Change H1 Change
euro million 2007 on a 2007 on a
net comparable net comparable
sales basis sales basis
Polio/Pertusis/Hib
Vaccines 190 +39.7 % 371 +17.8 %
Adult Booster Vaccines 94 +4.4 % 219 +31.9 %
Meningitis/Pneumonia
Vaccines 118 +45.7 % 207 +46.8 %
Travel & Other Endemics
Vaccines 83 +23.9 % 163 +14.0 %
Influenza Vaccines 98 -30.5 % 156 -26.1 %
Other Vaccines 36 +50.0 % 70 +34.6 %
TOTAL 619 +14.8 % 1,186 +15.4 %
Second-quarter sales at Sanofi Pasteur MSD, the joint venture with Merck & Co in Europe, rose sharply on a reported basis (by 37.5%) to euro196 million, supported by the successful launch of Gardasil(R), which achieved net sales of euro58 million.
Gardasil(R) is marketed by Sanofi Pasteur MSD in 18 European countries. To date, the authorities in Germany, France, Italy, Austria, Norway, Luxembourg, Belgium, Switzerland, and the United Kingdom have recommended the vaccination of girls (and in many cases, young women) against human papillomavirus.
First-half sales at Sanofi Pasteur MSD amounted to euro345 million, up 20.4% on a reported basis. Net sales of Gardasil(R) over the period were euro81 million. Sanofi Pasteur MSD sales are not consolidated by sanofi- aventis.
Net sales by geographic region
Q2 2007 Change H1 2007 Change
euro million net on a net on a
sales comparable sales comparable
basis basis
Europe 3,037 -0.7 % 6,150 -1.0 %
United States 2,352 +2.4 % 4,844 +9.2 %
Other countries 1,550 +8.5 % 3,122 +9.7 %
TOTAL 6,939 +2.3 % 14,116 +4.6 %
In Europe, the impact of healthcare reforms (especially in France and Germany) depressed sales, which fell by 0.7% in the second quarter and by 1.0% over the first half. The introduction of Eloxatin(R)generics across Europe accounted for approximately 1% of the first-half decline in the region's net sales.
In the United States, net sales rose by 2.4% in the second quarter, with growth hampered by competition from generics of Ambien(R) IR following expiry of the patent on April 20. Stripping out the effect of these generics, sales growth in the United States would have been 14.9%. Sales rose by 9.2% over the first half, or by 15.7% if the impact of Ambien(R) IR generics is excluded.
In other countries, second-quarter net sales growth was 8.5%, driven by Latin America, Asia and the Middle East. First-half net sales for the region advanced by 9.7%.
In Japan, sanofi-aventis has pursued its strategy to reinforce its position by announcing the recovery of marketing rights of 7 products (of which Rythmodan(R)- disopyramyde-arrhythmia and Amoban(R) -zopiclone- hypnotic)from January 1st, 2008. These products are currently marketed by Chugai and Mitsubishi.
Adjusted consolidated income statement
The adjusted consolidated income statement is presented in Appendix 3.
Refer to Appendix 1 for a definition of "adjusted net income", and to Appendix 4 for a reconciliation of the consolidated income statement to the adjusted consolidated income statement.
Second quarter of 2007
Net sales generated by sanofi-aventis in the second quarter of 2007 fell by 2.0% on a reported basis to euro6,939 million.
Gross profit was euro5,390 million. The gross margin ratio was 77.7%, compared with 78.4% for the second quarter of 2006. The drop in this ratio was due to a fall in "Other revenues" (royalties) from euro358 million to euro291 million, mainly as a result of the effect of U.S. dollar exchange rates on royalties from Plavix(R) and Avapro(R) in the United States and the discontinuation of royalty income from Merial on fipronil. The ratio of cost of sales to net sales improved by 0.2 of a point to 26.5%, despite the arrival of generics of Ambien(R) IR in the United States from end April.
Research and development expenses rose by 0.3% to euro1,101 million, while selling and general expenses were 4.0% lower than in the second quarter of 2006 at euro1,931 million, equivalent to 27.8% of net sales (versus 28.4% for the comparable period of 2006).
Other current operating income and expenses resulted in an income of euro5 million, compared with euro49 million in the second quarter of 2006. The 2007 second-quarter figure includes an expense of euro61 million (euro42 million after tax) related to the harmonization of the Group's welfare and healthcare plans for retirees.
Operating income -- current(1) totaled euro2,329 million. Excluding the effect of the harmonization of welfare and healthcare plans (euro61 million), operating income -- current fell by 2.6%, and represented 34.4% of net sales (versus 34.7% in the comparable period of 2006).
Net financial expense was euro39 million, compared with euro63 million in the comparable period of 2006. Interest expense on debt was euro55 million, against euro85 million in the second quarter of 2006.
Income tax expense came to euro695 million, compared with euro707 million in the second quarter of 2006. The reported tax rate was 30.7 %, against 29.7% for the comparable period of 2006.
The share of profits from associates was stable at euro210 million (versus euro212 million in the second quarter of 2006). The share of after-tax profits from territories managed by BMS (primarily the United States) under the Plavix(R) and Avapro(R) alliance was flat (euro136 million, versus euro139 million in the second quarter of 2006), reflecting the discontinuation of a clopidogrel bisulfate generic in the United States during the quarter and unfavorable currency effects. The contribution from Merial increased, while the contribution from Sanofi Pasteur MSD was affected by the launch costs of Gardasil(R).
Minority interests totaled euro99 million, compared with euro93 million in the second quarter of 2006. This line includes the share of pre-tax profits paid to BMS from territories managed by sanofi-aventis (euro93 million, against euro88 million in the second quarter of 2006).
Adjusted net income was down 6.3% at euro1,678 million.
Adjusted earnings per share (adjusted EPS) was euro1.24, 6.8% lower than the 2006 second-quarter figure (euro1.33), based on an average number of shares outstanding of 1,351.9 million in the second quarter of 2007 and 1,346.0 million in the second quarter of 2006.
Excluding selected items (see Appendix 5), adjusted net income was euro1,740 million, 3.2% down on the 2006 second-quarter figure of euro1,797 million and adjusted EPS was euro1.29, 3.7% down on the 2006 second-quarter figure of euro1.34.
Expressed in dollars(3) and excluding selected items, adjusted net income was $2,346 million, 3.9% up on the 2006 second-quarter figure and adjusted EPS was $1.74, 3.6% up on the 2006 second-quarter figure.
First half of 2007
In the first half of 2007, net sales generated by sanofi-aventis were stable at euro14,116 million on a reported basis.
Gross profit was euro10,959 million. The gross margin ratio was 77.6%, against 78.0% for the comparable period of 2006. This fall was mainly due to the effect of U.S. dollar exchange rates on royalties from Plavix(R)and Avapro(R), the presence in the U.S. market of a generic of clopidogrel bisulfate during the period and the discontinuation of royalty income on fipronil. The ratio of cost of sales to net sales, which was helped by a favorable product mix over the period, was 26.3% compared with 26.6% for the comparable period of 2006.
Research and development expenses totaled euro2,182 million, 1.8% higher than in the first half of 2006(around 5% excluding currency effects). Selling and general expenses were down 6.3% at euro3,804 million, representing 26.9% of net sales (versus 28.8% in the first half of 2006). This improvement reflects measures implemented by sanofi-aventis in 2006, especially in France, Germany and the United States. Selling expenses and general expenses each fell by the same proportion over the period.
Operating income -- current rose by 3.6% to euro5,048 million, representing 35.8% of net sales (versus 34.5% in the first half of 2006).
Other operating income and expenses represented an expense of euro50 million, as opposed to an income of euro519 million in the first half of 2006. In the first half of 2007, a restructuring charge of euro50 million (euro35 million after tax) was recognized for the restructuring plan begun in France in 2006, while the first half of 2006 included euro553 million of gains on disposal, mainly on the sale of the Exubera(R) rights (euro460 million, euro384 million after tax) and of the residual stake in Animal Health business (euro45 million, euro31 million after tax).
Net financial expense was euro71 million, against euro93 million for the comparable period of 2006. Interest expense on debt came to euro111 million, compared with euro158 million in the first half of 2006.
Income tax expense totaled euro1,290 million, compared with euro1,539 million in the first half of 2006, giving a reported tax rate of 26.2% (versus 29.0% in the first half of 2006). In 2007, this line included a euro223 million gain relating to provisions for and settlements of tax disputes, while the 2006 figure was influenced by the low income tax charge on the Exubera(R) gain. The effective tax rate for 2007 is 30.7%. The cut in German tax rates effective from January 1, 2008, which should reduce the Group's effective tax rate by approximately 1% in 2008, will have an initial effect in the third quarter of 2007 with a gain of some euro500 million at consolidated level (impact estimated on the basis of known contingent tax positions as of June 30, 2007). The bulk of this relates to a reduction in the deferred tax liabilities recognized in 2004 on the remeasurement of the acquired intangible assets of Aventis, and will have no impact on adjusted net income. The residual impact in the adjusted consolidated income statement for the third quarter of 2007 will be a charge of approximately euro50 million, which will be treated as a "selected item" for the period.
(3) U.S. dollar figures obtained by translating euro -denominated figures
at the average exchange date for the period: 1.348 for Q2 2007 (Q2
2006: 1.256), and 1.329 for H1 2007 (H1 2006: 1.229)
The share of profits from associates was euro369 million, compared with euro393 million in the first half of 2006. The share of after-tax profits from territories managed by BMS under the Plavix(R) and Avapro(R) alliance was euro235 million, against euro252 million in the first half of 2006. There was a decrease in the contribution from Sanofi-Pasteur MSD, which is currently in the Gardasil(R) launch phase, while the contribution from Merial continued to increase in line with activity.
Minority interests were euro211 million, compared with euro190 millions in the first half of 2006. This line includes the share of pre-tax profits paid to BMS from territories managed by sanofi-aventis (euro200 million, versus euro182 million in the first half of 2006).
Adjusted net income was down 4.3% at euro3,795 million.
Adjusted earnings per share (adjusted EPS) was euro2.81, 4.7% lower than the 2006 first-half figure (euro2.95), based on an average number of shares outstanding of 1,351.5 million in the first half of 2007 and 1,345.2 million in the first half of 2006.
Excluding selected items (see Appendix 5), adjusted net income totaled euro3,649 million, up 4.1% on the 2006 first-half figure of euro3,504 million and adjusted EPS was euro2.70, up 3.8% on the 2006 first-half figure of euro2.60.
Expressed in dollars(3) and excluding selected items, adjusted net income was $4,850 million, 12.6% up on the 2006 first-half figure and adjusted EPS was $3.59, 12.2% up on the 2006 first-half figure.
(3) U.S. dollar figures obtained by translating euro-denominated figures
at the average exchange date for the period: 1.348 for Q2 2007 (Q2
2006: 1.256), and 1.329 for H1 2007 (H1 2006: 1.229)
2007 first-half consolidated statement of cash flows and balance sheet
Operating cash flow before changes in working capital for the first half of 2007 was euro4,209 million, against euro4,040 million in the first half of 2006.
Working capital needs increased by euro1,163 million during the period, compared with euro1,076 million in the first half of 2006.
Investing activities generated a net cash outflow of euro584 million in the first half of 2007, compared with a net cash inflow of euro75 million in the first half of 2006. Acquisitions of property, plant and equipment and intangibles totaled euro694 million in the first half of 2007, essentially comprising investment in industrial plant and equipment (euro645 million) and contractual payments for intangible rights (mainly under the exclusive license agreement to develop and market TroVax(R)). The figures for the first half of 2006 included the gain on disposal of the Exubera(R) rights.
Acquisitions of investments (euro198 million) mainly comprised the buyout of preferred shares issued by our subsidiary Carderm Capital, while the main disposal related to the additional consideration paid by CSL on the sale of Aventis Behring (euro295 million net of tax). In 2006, this line included an amount of euro497 million, mainly representing the acquisition of a 24.87% interest in Zentiva.
After a dividend payout of euro2.37 billion, net cash generated during the first half of 2007 was euro212 million. Net debt as June 30, 2007 was euro5,579 million, compared with euro5,791 million at December 31, 2006. Gearing stood at 12.1% at June 30, 2007, compared with 12.6% at December 31, 2006.
2007 Guidance
Barring major adverse events (such as major adverse events on Lovenox(R) in the United States), the group expects 2007 full-year growth in adjusted EPS excluding selected items 2/6 to be in the range of 9%, calculated using an exchange rate of euro1 = $1.25, despite the end of protection for Ambien(R) IR in the United States in April and the arrival of generic competition for Eloxatin(R) in Europe. Sensitivity to the euro/dollar exchange rate is estimated at 0.6% of growth for a 1-cent movement in the exchange rate.
Expressed on the basis of the actual average exchange rate for the first half of 2007 (euro1 = $1.329), guidance for growth in adjusted EPS excluding selected items would be approximately 4.3%.
About sanofi-aventis
Sanofi-aventis is one of the world leaders in the pharmaceutical industry, ranking number one in Europe. Backed by a world-class R&D organization, sanofi-aventis is developing leading positions in seven major therapeutic areas: cardiovascular, thrombosis, oncology, metabolic diseases, central nervous system, internal medicine and vaccines. Sanofi-aventis is listed in Paris and in New York .
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 financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future events, operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words "expects," "anticipates," "believes," "intends," "estimates," "plans" and similar expressions. Although sanofi-aventis' management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of sanofi-aventis, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward- looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with the SEC and the AMF made by sanofi-aventis, including those listed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in sanofi-aventis' annual report on Form 20-F for the year ended December 31, 2006. Other than as required by applicable law, sanofi-aventis does not undertake any obligation to update or revise any forward-looking information or statements.
(2) See Appendix 5
(6) Adjusted EPS excluding selected items for the year ended December 31,
2006 was euro4.88.
Forward-Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future events, operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words "expect," "anticipates," "believes," "intends," "estimates," "plans" and similar expressions. Although sanofi-aventis management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of sanofi aventis, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward- looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with the SEC and the AMF made by sanofi-aventis, including those listed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in the sanofi- aventis annual report on Form 20-F for the year ended December 31, 2006. Other than as required by applicable law, sanofi-aventis does not undertake any obligation to update or revise any forward-looking information or statements.
Recent Events
May 21, 2007 Announcement of FDA approval for a new
indication for Lovenox(R) in the most
severe form of myocardial infarction
May 29, 2007 Announcement by UCB and sanofi-aventis of
FDA approval for Xyzal(R), a new
prescription antihistamine
May 31, 2007 Approval by the sanofi-aventis
shareholders' meeting of payment of a net
dividend of euro1.75 per share, an increase
of 15.1%
June 2, 2007 Announcement by Regeneron Pharmaceuticals
and sanofi-aventis at ASCO of encouraging
preliminary results from two phase II
studies on the VEGF Trap in advanced
ovarian cancer and advanced lung cancer
June 3, 2007 Announcement by Taiho and sanofi-aventis
at ASCO of the results of a phase III
study evaluating S1 plus cisplatin in
advanced gastric cancer
June 3, 2007 Announcement by Oxford BioMedica and
sanofi-aventis at ASCO of encouraging new
data from two Phase II studies on Trovax
in kidney cancer
June 4, 2007 Announcement at ASCO that the FOLFOX4
regimen improves long-term survival (5
years) of patients with metastatic
colorectal cancer
June 7, 2007 Announcement that the Japanese
authorities had granted a priority review
to Taxotere(R) in an additional
indication for prostate cancer
June 13, 2007 Announcement that the Endocrinologic and
Metabolic Drugs Advisory Committee of the
FDA had voted against recommending FDA
approval for rimonabant for use in obese
and overweight patients with associated
risk factors
June 14, 2007 Award of a contract to sanofi pasteur to
retrofit its influenza vaccine
manufacturing facility so that it is in a
state of readiness to switch to pandemic
influenza vaccine manufacture when
requested by the HHS
June 19, 2007 Confirmation by the U.S. District Court
for the Southern District of New York of
the validity and enforceability of U.S.
patent 4.847.265, which covers
clopidogrel bisulfate (the active
ingredient of Plavix(R)). The main patent
protection for this product has been
maintained in the United States until
patent expiration November 2011.
June 23, 2007 Presentation to the ADA of the results of
two new comparative studies showing that
when added to metformin and/or a
sulfonylurea, Lantus(R) significantly
reduced free fatty acid levels in
patients with type 2 diabetes
June 23, 2007 Presentation to the ADA of the results of
a meta-analysis from confirming the
superiority of the basal insulin
Lantus(R) over insulin NPH
June 24, 2007 Presentation to the ADA of the results of
a new study evaluating Apidra(R) with a
Basal insulin and an Oral antidiabetic
drug
June 27, 2007 Announcement that the FDA had granted a
priority review to Taxotere(R) for the
treatment of locally-advanced squamous
cell carcinoma of the head and neck prior
to chemoradiotherapy and surgery
June 29, 2007 Announcement that as part of the
continuous monitoring of the safety of
rimonabant, the CHMP of the European
Medicines Agency was reviewing the
available data on psychiatric events, and
that sanofi-aventis was submitting an
update of the safety data to the CHMP
June 29, 2007 Announcement of the decision by sanofi-
aventis to withdraw the New Drug
Application for rimonabant in the United
States
July 4, 2007 Announcement of priority review in Japan
for Plavix(R) in a new indication for the
treatment of acute coronary syndrome
July 8, 2007 Presentation to the ISTH of the results
of the EXCLAIM study, showing that a
prolonged thrombo-prophylaxis with
Lovenox(R) was more effective in reducing
the risk of thrombo-embolism events in
acutely ill medical patients with reduced
mobility
July 11, 2007 Presentation to the ISTH of the results
of the AMADEUS study showing that
idraparinux was as effective as warfarin
in preventing stroke and systemic embolic
events in patients with atrial
fibrillation
July 19, 2007 Announcement that the CHMP had approved
the labeling update for Acomplia(R) in
Europe and confirmed the benefit-risk
ratio of the product except in patients
suffering ongoing severe depression
July 20, 2007 Announcement by Sanofi pasteur, of the
completion of construction of its new
influenza vaccine manufacturing facility
that is expected to more than double its
production capacity in the United States.
July 31, 2007 Announcement by sanofi-aventis, of the
buy back in Japan of marketing rights
from January 1st ,2008, of 7 of its
products. These products are currently
marketed by Chugai and Mitsubishi
Financial Timetable
September 17, 2007
Research and Development Meeting
October 31, 2007
2007 third-quarter net sales and results
Appendices
List of Appendices
Appendix 1: Explanatory notes / Financial indicators Appendix 2: 2007
second-quarter and first-half net sales by product Appendix 3:
2007 second-quarter and first-half adjusted consolidated
income statements Appendix 4: 2007 second-quarter and first-
half reconciliation of consolidated income statement to
adjusted consolidated income statement
Appendix 5: Trends in selected adjusted income statement items
Appendix 6: 2007 first-half simplified consolidated statement of cash
flows/balance sheet
Appendix 1: Explanatory notes / Financial indicators
Comparable net sales
When we refer to the change in our sales on a "comparable" basis, we mean that we exclude the impact of exchange rate movements and changes in Group structure (acquisitions and divestments of interests in entities and rights to products, and changes in consolidation method for consolidated entities). We exclude the impact of exchange rates by recalculating sales for the prior period on the basis of exchange rates used in the current period. We exclude the impact of acquisitions by including sales from the acquired entity or product rights for a portion of the prior period equal to the portion of the current period during which we owned them, based on sales information we receive from the party from whom we make the acquisition. Similarly, we exclude sales in the relevant portion of the prior period when we have sold an entity or rights to a product. For a change in consolidation method, the prior period is recalculated on the basis of the method used for the current period.
Reconciliation of 2006 second-quarter and first-half net sales to 2006 comparable second-quarter and first-half net sales
euro million Q2 2006
Q2 2006 net sales 7,081
Impact of changes in structure (14)
Impact of exchange rates (284)
Q2 2006 comparable net sales 6,783
euro million H1 2006
H1 2006 net sales 14,116
Impact of changes in Group structure (30)
Impact of exchange rates (592)
H1 2006 comparable net sales 13,494
Worldwide presence of a product
When we refer to the "worldwide presence" of a product, we mean our consolidated net sales of that product, minus sales of the product to our alliance partners plus non-consolidated sales made through our alliances with Bristol-Myers Squibb on Plavix(R)/Iscover(R) (clopidogrel) and Aprovel(R)/Avapro(R)/Karvea(R) (irbesartan), based on information provided to us by our alliance partner.
Operating income -- current
We define "operating income -- current" as operating income before restructuring, impairment of property, plant and equipment and intangibles, gains/losses on disposals, and litigation.
Adjusted net income
We define "adjusted net income" as accounting net income after minority interests adjusted to exclude (i) the material impacts of the application of purchase accounting to acquisitions and (ii)acquisition-related integration and restructuring costs. Sanofi-aventis believes that eliminating these impacts from net income gives investors a better understanding of the underlying economic performance of the combined Group.
The material impacts of the application of purchase accounting to acquisitions, primarily the acquisition of Aventis, are as follows:
charges arising from the remeasurement of inventories at fair value, net
of tax;
amortization/impairment expense generated by the remeasurement of
intangible assets, net of tax;
Any impairment of goodwill.
Sanofi-aventis also excludes from adjusted net income any integration and restructuring costs (net of tax) that are specific to the acquisition of Aventis by sanofi-aventis.
Q2 2007 Q2 2007 H1 2007 H1 2007
Consolidated Adjusted Consolidated Adjusted
euro million financial consolidated financial consolidated
statements financial statements financial
(unaudited) statements statements
(unaudited)
Net sales 6,939 6,939 14,116 14,116
Net income
after minority
interests 1,128 1,678 2,665 3,795
Basic earnings
per share 0.83 1.24 1.97 2.81
Appendix 2: 2007 second-quarter and first-half net sales 2007 second-
quarter net sales by product:
Q2 2007 Q2 2006 Q2 2006
euro million net comparable reported
sales net sales net sales
Lovenox(R) 671 581 614
Plavix(R) 632 561 565
Lantus(R) 503 399 421
Taxo tere (R) 474 435 456
Stilnox(R)/Ambien(R)/Ambien CR(TM) 252 433 467
Eloxatin(R) 380 423 445
Copaxone(R) 307 255 271
Aprovel(R) 272 247 250
Allegra(R) 198 174 189
Tritace(R) 167 241 248
Amaryl(R) 103 113 119
Xatral(R) 85 90 92
Nasacort(R) 87 73 78
Actonel(R) 82 90 91
Depakine(R) 81 75 76
TOTAL 4,294 4,190 4,382
Other products 2,026 2,054 2,131
TOTAL Pharmaceuticals 6,320 6,244 6,513
Vaccines 619 539 568
TOTAL Net sales 6,939 6,783 7,081
2007 first-half net sales by product:
H1 2007 H1 2006 H1 2006
euro million net comparable reported
sales net sales net sales
Lovenox(R) 1,305 1,167 1,238
Plavix(R) 1,201 1,136 1,145
Lantus(R) 961 759 803
Taxotere (R) 923 843 886
Stilnox(R)/Ambien(R)/Ambien CR(TM) 858 839 908
Eloxatin(R) 773 829 874
Copaxone(R) 596 501 534
Aprovel(R) 536 492 498
Allegra(R) 399 339 369
Tritace(R) 378 466 483
Amaryl(R) 197 229 240
Xatral(R) 167 181 186
Nasacort(R) 166 138 149
Actonel(R) 160 177 180
Depakine(R) 157 151 154
TOTAL 8,777 8,247 8,647
Other products 4,153 4,219 4,389
TOTAL Pharmaceuticals 12,930 12,466 13,036
Vaccines 1,186 1,028 1,080
TOTAL Net sales 14,116 13,494 14,116
Appendix 3: 2007 second-quarter and first-half adjusted consolidated
income statements 2007 second-quarter adjusted consolidated
income statement (unaudited)
Q2 2007 Q2 2006
Adjusted as % Adjusted as %
consolidated of consolidated of %
euro million income net income net change
statement sales statement sales
(unaudited) (unaudited)
Net sales 6,939 100.0% 7,081 100.0% -2.0%
Other revenues 291 4.2% 358 5.1% -18.7%
Cost of sales (1,840) (26.5%) (1,891) (26.7%) -2.7%
Gross profit 5,390 77.7% 5,548 78.4% -2.8%
Research and development
expenses (1,101) (15.9%) (1,098) (15.5%) +0.3%
Selling and general expenses (1,931) (27.8%) (2,011) (28.4%) -4.0%
Other current operating income 87 - 81 - -
Other current operating expenses (82) - (32) - -
Amortization of intangibles (34) - (33) - -
Operating income - current* 2,329 33.6% 2,455 34.7% -5.1%
Restructuring costs (28) - - - -
Impairment of PP&E and
intangibles - - - - -
Gain/loss on disposals,
and litigation - - (13) - -
Operating income 2,301 33.2% 2,442 34.5% -5.8%
Financial expenses (87) - (171) - -49.1%
Financial income 48 - 108 - -55.6%
Income before tax and
associates 2,262 32.6% 2,379 33.6% -4.9%
Income tax expense (695) (10.0%) (707) (10.0%) -1.7%
Reported tax rate 30.7% - 29.7% - -
Share of profit/loss of
associates 210 - 212 - -0.9%
Consolidated net income 1,777 25.6% 1,884 26.6% -5.7%
Minority interests 99 - 93 - +6.5%
Net income after
minority interests 1,678 24.2% 1,791 25.3% -6.3%
Average number of shares
outstanding (million) 1,351.9 1,346.0
Earnings per share (in euros) 1.24 1.33 -6.8%
* Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation 2007 first-half
adjusted consolidated income statement
H1 2007 H1 2006
Adjusted as % Adjusted as %
consolidated of consolidated of %
euro million income net income net change
statement sales statement sales
(unaudited) (unaudited)
Net sales 14,116 100.0% 14,116 100.0% 0.0%
Other revenues 547 3.9% 647 4.6% -15.5%
Cost of sales (3,704) (26.3%) (3,758)(26.6%) -1.4%
Gross profit 10,959 77.6% 11,005 78.0% -0.4%
Research and development
expenses (2,182) (15.5%) (2,144)(15.2%) +1.8%
Selling and general
expenses (3,804) (26.9%) (4,061)(28.8%) -6.3%
Other current operating
income 278 - 200 - -
Other current operating
expenses (136) - (60) - -
Amortization of intangibles (67) - (66) - -
Operating income - current* 5,048 35.8% 4,874 34.5% +3.6%
Restructuring costs (50) - - - -
Impairment of PP&E and
intangibles - - (1) - -
Gain/loss on disposals,
and litigation - - 520 - -
Operating income 4,998 35.4% 5,393 38.2% -7.3%
Financial expenses (170) - (280) - -39.3%
Financial income 99 - 187 - -47.1%
Income before tax and 4,927 34.9% 5,300 37.5% -7.0%
associates
Income tax expense (1,290) (9.1%) (1,539) (10.9) -16.2%
Reported tax rate 26.2% - 29.0% - -
Share of profit/loss of
associates 369 - 393 - -6.1%
Consolidated net income 4,006 28.4% 4,154 29.4% -3.6%
Minority interests 211 - 190 - +11.1%
Net income after
minority interests 3,795 26.9% 3,964 28.1% -4.3%
Average number of shares
outstanding (million) 1,351.5 1,345.2
Earnings per share (in 2.81 2.95 -4.7%
* Operating income before restructuring, impairment of PP&E and
intangibles, gains/losses on disposals, and litigation
Appendix 4: 2007 second-quarter and first-half reconciliation of
consolidated income statement to adjusted consolidated income statement
2007 second-quarter reconciliation of consolidated
Pharma Industry News Archive
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