sanofi-aventis: Strong Performance of Growth Platforms in Q1 2011

PARIS, April 28, 2011 /PRNewswire/ --


 

Q1 2011

Change on a reported basis

Change
at CER(2)

Change at CER(2)
excluding A/H1N1 sales

 

Net sales

euro 7,779m

-1.5%

-5.2%

+0.1%

 

Business net income(1)

euro 2,170m

-10.6%

-16.1%

-5.8%

 

Business EPS(1)

euro 1.66

-10.8%

-16.1%

-6.0%

 
           


In order to facilitate an understanding of our operational performance, we comment on our business net income statement. Business net income(1) is a non-GAAP financial measure. The consolidated income statement for Q1 2011 is provided in Appendix 8. A reconciliation of business net income to consolidated net income is provided in Appendix 7. Consolidated net income in Q1 2011 was euro 1,218 million (compared with euro 1,714 million in Q1 2010) and included a non-recurring charge of euro 325 million net of tax corresponding to the amortization of Merial assets that would have been recognized for the period from September 18, 2009 to December 31, 2010, had these assets not been classified as held for sale or exchange. Consolidated earnings per share in Q1 2011 was euro 0.93 versus euro 1.31 in Q1 2010.

   

Q1 2011 Performance

 
  • Group sales(3) reached euro 7,779 million (compared to euro 7,898 million in Q1 2010, including euro 513 million for Merial). Sales were up 0.1% excluding A/H1N1 sales and despite euro 569 million of sales lost in 2011 due to generic competition versus the comparable period in 2010.
  • Merial is now fully consolidated(4); sales were up 11.5% while business operating margin reached 36.7%.
  • Growth Platforms (excluding A/H1N1 sales) grew 15.5% and contributed 59.2% of Group sales in Q1 2011 versus 51.4% in Q1 2010.
  • Emerging Markets(5) sales reached euro 2,386 million, up 14.6% (excluding A/H1N1 sales), exceeding the U.S. and Western Europe and accounted for 30.7% of Group sales.
  • Business EPS(1) was euro 1.66, down 16.1% at CER. Excluding A/H1N1 sales, decrease in business EPS(1) was limited to 6.0% at CER.
  • Free cash flow was stable at euro 2,006 million, and the Group had a positive net cash position at the end of Q1 2011 prior to the Genzyme acquisition in April.
 

Outlook

 
  • The Group is on track to achieve previously announced cost savings of euro 2 billion(6) per year by end of 2011.
  • Regulatory filings for 3 major late-stage pipeline projects (lixisenatide, alemtuzumab and teriflunomide) are expected in the next 12 months. Aflibercept showed positive Phase III results in second-line metastatic colorectal cancer.
  • The acquisition of Genzyme adds a new growth platform and a global center for excellence in rare diseases. This transaction is an important achievement of the Group's sustainable growth strategy.
  • Full year 2011 guidance provided earlier this year will be reviewed at half-year results

(1) See Appendix 9 for definitions of financial indicators; (2) Constant Exchange Rates; (3) Growth in net sales is expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 9 for a definition); (4) Prior period Income Statement has been re-presented to include Merial results in income from continuing operations (cf Appendix 9; (5) See definition on page 6; (6) At CER before inflation and on a constant structure basis compared to 2008.

2011 first-quarter net sales

Unless otherwise indicated, all sales growth figures in this press release are stated at constant exchange rates(1).

 
   


 

Net sales in the first quarter of 2011 were 1.5% lower on a reported basis at euro 7,779 million. Exchange rate movements had a favorable effect of 3.7 percentage points, largely reflecting the appreciation of the Japanese Yen, U.S. dollar, Brazilian Real, Australian dollar and Chinese Yuan against the Euro. At constant exchange rates, and after taking into account changes in structure (mainly Chattem, consolidated from February 2010), net sales decreased by 5.2% or increased by 0.1% excluding pandemic influenza vaccine sales (euro 413 million) booked in the first quarter of 2010.

Key Growth Platforms (see Appendix 5)

The Group's growth platforms recorded sales of euro 4,607 million in the first quarter, an increase of 4.3% or 15.5% excluding A/H1N1 sales. These growth platforms collectively accounted for 59.2% of total consolidated sales versus 54.0% in Q1 2010 or 51.4% excluding A/H1N1 sales.

Pharmaceuticals

First-quarter net sales for the Pharmaceuticals business were euro 6,583 million, down 1.6%, reflecting generic competition for Lovenox®, Taxotere® and Ambien®CR in the U.S., for Plavix® and Taxotere® in the EU and the impact of austerity measures in EU and health care reform in the U.S.

Flagship Products(7)

 

(millions of euros)

Q1 2011

Change at constant  exchange rates

 

Lantus®

925

+13.2%

 

Apidra®

49

+20.5%

 

Amaryl®

108

-5.6%

 

  Total Diabetes

1,113

+10.5%

 

Lovenox®

583

-26.5%

 

Taxotere®

382

-31.6%

 

Plavix®

484

-14.4%

 

Aprovel®

320

-4.3%

 

Eloxatin®

188

+172.7%

 

Multaq®

63

+154.2%

 

Jevtana®

48


 
 
       


 

In the first quarter, net sales of the Diabetes division totaled euro 1,113 million, an increase of 10.5% led by the double digit growth of Lantus®, the world's leading diabetes brand. Lantus® reported net sales of euro 925 million, an increase of 13.2%, supported by its strong performance in the U.S. (+14.7%, euro 563 million), reflecting additional promotional effort put in place in mid-2010. The contribution from Lantus® SoloSTAR® in the U.S. represented 43.8% of total Lantus® sales, an increase of 9.6 percentage points versus Q1 2010. Over the period, sales of Lantus® grew by 34.8% in Japan, and by 19.1% (euro 136 million) in Emerging Markets(8) led by Latin America and China.

(7) See Appendix 2 for a geographical split of consolidated net sales by product.

(8) World excluding the U.S. and Canada, Western Europe, Japan, Australia and New Zealand  

In Western Europe, sales of Lantus® were euro 174 million, an increase of 1.2%, reflecting good growth in volume partially offset by price pressure notably in Germany.

The first launches of BGStar® and iBGStar®, the first range of blood glucose monitoring systems (BGMs) co-developed by sanofi-aventis and its partner AgaMatrix, occurred in Germany in April and will take place in France in May, respectively.

Net sales of Apidra®, the rapid-acting insulin analog, grew 20.5% to euro 49 million in the first quarter driven by Western Europe, Japan and Emerging Markets. Net sales of Amaryl® reached euro 108 million, down 5.6%, reflecting robust performance in Emerging markets offset by performance in Western Europe and Japan due to generic competition.

First-quarter net sales of Lovenox® were euro 583 million, down 26.5%, reflecting a generic competitor in the U.S. (U.S. sales were euro 222 million down 51.0%). Outside the U.S., sales reached euro 361 million (representing 61.9% of Lovenox sales) and grew by 5.4% driven by the Emerging Markets (+16.7% to euro 132 million).

Taxotere® has been facing generic competition in the EU since the end of 2010 following the expiry of its composition of matter patent and in the U.S. since the end of the first quarter following the loss of its market exclusivity. First-quarter net sales of the product decreased by 31.6% to euro 382 million, reflecting decreases of 61.3% in Western Europe (euro 74 million) and 19.9% in the U.S. (euro 168 million). In Japan, Taxotere® continued to record good performance with sales up 13.2%.

First-quarter net sales of Eloxatin® were euro 188 million (up 172.7%), reflecting partial recovery of U.S. sales (euro 119 million, versus euro 8 million in Q1 2010) which continue to be impacted by the workdown of generic inventory at the wholesaler level.

Since June 30, 2010, following the settlement of the Eloxatin U.S. patent infringement suits, generic manufacturers remain enjoined by the U.S. District Court for the District of New Jersey from selling their Eloxatin® generic products in the U.S. until August 9, 2012 or the earlier entry of a competing generic product. One generic manufacturer, Sun Pharmaceuticals, sought appellate review of the court's injunction. Following this appeal, Sun's case was remanded to the District Court for further consideration. In the event Sun prevails before the District Court, the generic manufacturers could re-enter the market prior to August 9, 2012.

Sales from new products (Jevtana® and Multaq®) totaled euro 111 million versus euro 24 million in Q1 2010.

Net sales for Jevtana® (cabazitaxel) were euro 48 million in the first quarter of 2011 mostly generated in the U.S. This new anti-cancer agent was launched in the U.S. in July 2010 for patients with metastatic hormone-refractory prostate cancer previously treated with a docetaxel-based therapy. The patient share of Jevtana® in the U.S. in second line metastatic hormone-refractory prostate cancer reached 54% in February (IntrinsiQ February 2011). In March 2011, Jevtana® received marketing authorization from the European Commission. The first launch of Jevtana® in the EU occurred in Germany in April 2011.

First-quarter net sales of Multaq® were euro 63 million (versus euro 24 million in Q1 2010), of which euro 44 million was generated in the U.S. Sales in Western Europe reached euro 17 million in the period. In January 2011, sanofi-aventis issued a Dear Health Care Provider Letter worldwide. The FDA also issued a Drug Safety Communication on hepatic events reported in patients treated with Multaq®. The revised product information was updated accordingly. The benefit/risk assessment of Multaq® by the EMA is ongoing. In the U.S. Multaq® received new Tier 2 unrestricted status with two major Managed Care accounts (United Healthcare Medicare and Commercial).

Worldwide presence(1) of Plavix®/Iscover®

First-quarter worldwide presence of Plavix® was euro 1,734 million, up 0.4% impacted by generic competition in Europe. In the U.S., Plavix® sales were euro 1,200 million, up 7.2% (net sales consolidated by Bristol-Myers Squibb). The product continued its success in Japan and China with a sales increase of +28.8% (euro 139 million) and +31.1% (euro 65 million), respectively. In Europe, sales declined by 40.0% to euro 153 million due to generic competition.

Worldwide presence of Plavix®/Iscover®: geographic split

 

(millions of euros)

Q1 2011

Change at constant exchange rates

 

Europe

153

-40.0%

 

United States

1,200

+7.2%

 

Other Countries

381

+9.3%

 

TOTAL

1,734

+0.4%

 
       


 

Worldwide presence(1) of Aprovel®/Avapro®/Karvea®/Avalide®

First-quarter worldwide presence of Aprovel® reached euro 482 million, down 9.7% and impacted notably by a voluntary recall of certain lots of Avalide® (irbesartan-hydrochlorothiazide) by Bristol-Myers Squibb and sanofi-aventis from the U.S., Puerto Rican, Canadian, Mexican and Argentinean markets. The resupply of Avalide® to these markets took place in February. Consolidated sales of the product in Emerging Markets grew by 10.5% to euro 93 million.

Worldwide presence of Aprovel®/Avapro®/Karvea®: geographic split

 

(millions of euros)

Q1 2011

Change at constant exchange rates

 

Europe

207

-15.6%

 

United States

117

-13.5%

 

Other Countries

158

+4.0%

 

TOTAL

482

-9.7%

 
       


 

Other Pharmaceutical Products

Net sales of the Ambien® family totaled euro 116 million in the first quarter, down 52.0%, reflecting generic competition of Ambien®CR in the U.S. Over the period, Ambien®CR sales decreased by 93%. In Japan, Myslee®, the leading hypnotic on the market, continued to record double digit growth (+14.7%) to euro 64 million.

First-quarter net sales of Allegra® as a prescription drug were euro 216 million, an increase of 12.9% led by 41.1% growth in Japan (euro 186 million) sustained by a strong allergy season.

First-quarter net sales of Copaxone® were euro 114 million (down 13.7%) reflecting the impact of the return to Teva at the end of 2010 of sales generated in the UK and in some Eastern European countries.  

Net sales of Xyzal® in the U.S. were euro 3 million, down 90.1% due to generic competition.

(1) See Appendix 9 for definitions of financial indicators

Consumer Health Care

First-quarter sales of the Consumer Health Care (CHC) business were euro 712 million, an increase of 40.3%. This strong performance reflected dynamic organic growth (+23.0% on a constant structure basis and at constant exchange rates) and includes sales of Allegra® OTC which was successfully launched by Chattem in the U.S. in the first quarter and reached sales of euro 80 million.

CHC sales in Emerging markets grew by 30.3% to euro 301 million. At the end of the quarter, the Group completed the acquisition of BMP Sunstone.

Generics

First-quarter net sales for the generics business were euro 414 million, up 16.9% led by Emerging Markets and the U.S. where the Group launched authorized generics of Ambien®CR (sales of euro 12 million for Zolpidem/Zolpidem CR) and Taxotere® (sales euro 12 million). Sales in Emerging Markets grew by 23.4% (euro 258 million) over the period and showed strong organic growth in Latin America as well as in Russia supported by the recent acquisitions of Medley in Brazil and Zentiva in Eastern Europe.

Human Vaccines

First-quarter consolidated net sales for the Human Vaccines business were euro 602 million, an increase of 9.6% excluding A/H1N1 influenza vaccine sales booked in the first quarter of 2010, or a decline of 38.3% including A/H1N1 vaccines sales. In Emerging Markets, sales grew 37.1% (euro 277 million) excluding A/H1N1 sales.

Seasonal influenza vaccine net sales in the first quarter were euro 101 million, up 175.5%, reflecting dynamic demand in the Southern hemisphere and an earlier delivery compared to 2010. The first quarter of 2010 included euro 413 million of A/H1N1 influenza vaccine sales of which euro 355 million were sold in Emerging Markets (mainly in Latin America).

First-quarter net sales of Polio/Pertussis/Hib vaccines totaled euro 227 million, an increase of 7.4% led by a good performance of Pentacel® (total sales: +28.4% to euro 73 million) in the U.S. and Pentaxim® (total sales: +22.0% to euro 56 million) in Emerging Markets.

Adult boosters recorded a strong quarter with net sales of euro 96 million, up +24.3% and led by Adacel® (+46.5% to euro 63 million).

Menactra® net sales reached euro 42 million, a decrease of 39.9% which reflected a declining catch-up cohort in the U.S. adolescent population. Menactra® maintained its high public market share despite competition. In April, the FDA has granted licensure to expand the indication for Menactra® to include a two-dose schedule for infants and children 9 months through 23 months of age.

Net sales of Travel and other endemic vaccines were euro 81 million, down 14.1% impacted notably by lower rabies vaccines sales.

Consolidated vaccines sales

 

(millions of euros)

Q1 2011

Change at constant exchange rates

 

Influenza Vaccines (incl. Vaxigrip® and Fluzone®)

101

-77.8%

 

         of  which seasonal vaccines

101

+175.5%

 

         of  which pandemic vaccines

0

-100.0%

 

Polio/Pertussis/Hib Vaccines (incl. Pentacel® and Pentaxim®)

227

+7.4%

 

Meningitis/Pneumonia Vaccines (incl. Menactra®)

62

-32.2%

 

Adult Booster Vaccines (incl. Adacel ®)

96

+24.3%

 

Travel and Other Endemics Vaccines

81

-14.1%

 

Other Vaccines

35

-8.3%

 

TOTAL

602

-38.3%

 
       


 

First-quarter net sales of Sanofi Pasteur MSD (not consolidated by sanofi-aventis), the joint venture with Merck & Co. in Europe, were euro 139 million, down 22.6% on a reported basis, reflecting lower sales of Gardasil® (euro 43 million, down 27.7% on a reported basis) and pediatric vaccines.

Animal Health

As a result of the mutual decision of sanofi-aventis and Merck to terminate their agreement to form a new animal health joint venture in animal health business and in accordance with IFRS 5.36, Merial assets / liabilities are no longer classified as "Assets held for sale or exchange / Liabilities related to assets held for sale or exchange" and Merial result is included in income from continuing operations. Consequently sales generated by Merial are consolidated in Group sales.

First-quarter net sales of Merial totaled euro 594 million, an increase of 11.5%. Sales of companion animals were sustained by the Frontline® family which reached sales of euro 270 million, up +15.1% led by the success of the spring campaign in the U.S. The good performance of this brand in the U.S. (Frontline® family sales in the U.S. were up 24.5%) largely offset the impact of Frontline® branded generics in Europe. Sales of production animals were driven by the avian segment boosted by the success of the vaccine Vaxxitex® (up 62%). Veterinary Public Health recorded a strong quarter due to sales of foot-and-mouth disease and rabies vaccines. First-quarter sales of Merial were up 13.5% in the U.S. (euro 259 million) and up 24.7% in Emerging Markets (euro 116 million).

A new combination product, Certifect®, which eliminates fleas and ticks within 24h on dogs is expected to be launched in the U.S. in Q2 2011.

Net sales by geographic region

 

(millions of euros)

Q1 2011

Change at constant exchange rates

   
   
 
   
 
   
 
   
 
   
 
   
 
   

Posted: April 2011


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