19th CLSA Investors Forum 2012 - Sept. 11, 2012 - Fabrice

19th CLSA Investors Forum 2012
Fabrice Baschiera, General Manager, Sanofi China
September 11th, 2012
Forward Looking Statements
This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act
of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements
include 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 labeling 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, the Group's ability to benefit
from external growth opportunities, trends in exchange rates and prevailing interest rates, the impact of cost
containment policies 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, 2011. Other than as required by applicable law,
Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.
2
2008-2011
Repositioning Sanofi for Sustainable Growth
2005-2008
Focusing on
Rx Blockbusters
• Blockbuster drugs
• Patents challenged
• R&D setbacks
2009-2011
Transforming
• Investing in growth platforms
• Increasing diversification
• Managing patent cliff
2012 onwards
Generating
Sustainable Growth
• Growing recurring sales
• Improving risk profile
3
Sanofi Grew Sales in 2011 due to Genzyme Acquisition
and Growth Platforms
Sales
€33,389m
€32,367m
€29,306m
€27,568m
+5.3%
at CER
2008
(1)
2009
(1)
2010
(2)
CER : Constant Exchange Rates
(1) In 2008 and 2009, Merial Joint Venture sales were not consolidated by Sanofi
(2) In 2010, excluding non-consolidated sales from Merial, Sanofi reported sales of €30,384m
2011
4
H1 2012 Performance Was In-Line With Our Expectations
Total Sales (€m)
Business EPS (€)
€17,381m
€3.30
€3.32
€16,128m
-5.2%
at CER(1)
+3.6%
at CER(1)
H1 2011
H1 2012
H1 2011
H2 2012
(1) On a reported basis, total sales were up +7.8% and business EPS was up +0.6% in H1 2012
5
Limited Patent Cliff(1) Exposure on Sales
after Eloxatin® Loss of Exclusivity in the U.S. in Aug 2012
Key Genericized Products Sales
(€m and % of Total Sales)
(2)
Growth Platforms Sales
(€m and % of Total Sales)
€5,753m
4.9%
€3,341m
when excluding
€314m of
64.9%
Eloxatin® U.S.
€2,207m
44.9%
€752m
29.7%
8.5%
Q2 2009
Q2 2010
Q2 2011
Q2 2012
Q2 2009
Q2 2010
(1) The patent cliff is the effect of the loss of exclusivity of key genericized products.
(2) Key genericized products include Lovenox® U.S., Plavix® Western EU, Taxotere® Western EU & U.S.,
Eloxatin® U.S., Ambien® family U.S., Allegra® U.S., Aprovel® Western EU, Xyzal® U.S., Xatral® U.S.,
Nasacort® U.S. and BMS Alliance (active ingredients of Plavix® and Avapro® sold to BMS)
Q2 2011
Q2 2012
6
Growth Platforms Accounted for 64.9% of Group Sales
and Grew by +7.6% in Q2 2012
Growth at CER
Emerging Markets
€2,823m
+9.8%
Diabetes Solutions
€1,436m
+13.7%
Vaccines
€783m
+3.0%
Consumer Health Care
€738m
+11.3%
Animal Health
€576m
+9.1%
New Genzyme(1)
€434m
+9.1%
Innovative Products(2)
€152m
+4.5%
(1) New Genzyme perimeter includes Rare Diseases and Multiple Sclerosis franchises
(2) Multaq®, Jevtana® and Mozobil®
7
A Strong Leadership Position in Emerging Markets
Emerging Markets Sales
In 2011,
Emerging Markets Sales(1)
+16%
€10.1bn
+10.1%
€10.1bn
+9%
(2)
€5.0bn
30.3%
of Group Sales
2005
2006
2007
2008
2009
2010
2011
(1) World less North America (USA, Canada), Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg,
Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark), Japan, Australia and New Zealand
(2) CER (Constant Exchange Rate)
8
Emerging Markets - Record Sales and Strong Growth
in Q2 2012 Confirm our Leadership
● Q2 2012 Emerging Markets sales of €2,823m, up +9.8% at CER
Q2 2012 Geographic Sales Split
24.1%
31.5%
12.6%
31.8%
(1)
(1) World excluding North America (USA, Canada), Western Europe (France,
Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg,
Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway,
Iceland, Denmark), Japan, Australia and New Zealand
9
Non-BRIC Accounted for 65% of Emerging Markets Sales
in Q2 2012 Highlighting our Broad Geographic Scope
● Q2 2012 BRIC sales of €995m, up +15.2% at CER (1)
● Q2 2012 Other Emerging Markets sales of €1,828m, up +7.1% at CER
Emerging Markets Q2 2012 Sales Split
BRIC Q2 2012 Sales
(Growth at CER)
(Growth at CER)
Growth +12.7%
+12.7%
-0.1%
Brazil:
€405m
+14.0%
Russia:
€203m
+9.0%
India:
€66m
+20.2%
China:
€320m
+20.9%
+16.5%
+9.8%
(1) BRIC: Brazil, Russia, India and China
10
Agenda
Sanofi – A Leading Presence in China
Outlook on the Healthcare Market in China
Focusing on Diabetes
Conclusion
11
Greater China: Growing Contributor to Sanofi’s
Leadership Position in Emerging Markets
Sanofi Sales in Emerging Markets (in EUR)
10.133m
Other Emerging Countries
Greater China(1)
CAGR
13%
9.075m
7.356m
6.540m
6.280m
7%
8%
9%
10%
12%
2007
2008
2009
2010
2011
(1) Greater China: Mainland China, Hong Kong, Taiwan
12
Sanofi achieved Annual Sales in China of ~€1bn in 2011
Total Sanofi Sales in China(1) (in EUR)
981m
CAGR
38%
699m
512m
374m
273m
2007
(1) Mainland China
2008
2009
2010
2011
13
Sanofi Is Progressively Developing its Key Growth
Platforms in China
Breakdown of Sales in China(1) by Business
2011
2007
Vaccines
12%
Animal Health
4%
Vaccines
22%
6%
12% Diabetes
Diabetes
72%
63%
Pharmaceuticals
9%
CHC
Pharmaceuticals
Total Sales EUR 273m
(1) Mainland China
Total Sales EUR 981m
14
Sanofi Has Grown Faster than its Peers in China
2007(1)
2009(2)
June 2012(3)
1
ASTRAZENECA
1
PFIZER
1 PFIZER
2
BAYER
2
ASTRAZENECA
2
3
PFIZER
3
BAYER
3 BAYER
4
JS.YANGZIJIANG FTY
4
5
ROCHE
5
JS. YANGZIJIANG FTY
5 SHANDONG QILU FTY
6
ROCHE
6 KE LUN
6
4 ASTRAZENECA
7
SINO-SWED
7
KE LUN
7 JS. YANGZIJIANG FTY
8
JS.L.Y.G.HENGRUI
8
SHANDONG QILU FTY
8 ROCHE
9 HLJ.HAERBIN PHARM.
9
JS.L.Y.G. HENGRUI
9 JS.L.Y.G. HENGRUI
10 NOVARTIS
10 HLJ. HAERBIN PHARM.
Source data: Ranked by sales value in LC RMB.
(1) IMS CHPA Dec 2007 .
(2) IMS CHPA Dec 2009
(3) IMS MTH June 2012
10 MSD
15
Sanofi: Well Established in Greater China
with a Fully Integrated Presence
Sanofi’s Presence in China
● Present since 1982
● 11 regional offices with ~7,000
employees in Greater China
Wulumuqi
● Of which >4,000 sales force
Beijing
Jinan
● Network of 6 manufacturing sites
Wuhan
● Newly established CHC platform
Chengdu
● Vaccines with local production
● Animal Health with local production
● Integration of Genzyme
● Regional R&D platform
 Sales of EUR 606m in H1 2012
Shenyang
Tangshan
Tianjin
Nanjing
Shanghai HQ
Hangzhou
Nanchang
Guangzhou
Shenzhen
Taipei
Hong Kong
Greater China offices
Regional offices
Manufacturing site Pharmaceuticals
Manufacturing site Consumer Healthcare
Manufacturing site Vaccines
Manufacturing site Animal Health (Merial)
16
A Large Portfolio of Flagship Brands Across our Growth
Platforms that Fits the Local Needs in China
Diabetes
Solutions
Human
Vaccines
The #1 Rx Pharmaceutical
product in China(1)
Addressing disease
burden of 90m people
with diabetes
The #1 brand in the ARB class
in China(2)
Branded oncology portfolio
covers top cancer types in
China
(1)
(2)
(3)
Consumer
Health Care
A leading MNC(2) player in
the OTC market through
strategic acquisitions &
Joint Venture
IMS CHPA MAT June 2012, value
IMS CHPA June 2012 , volume; ARB – Angiotensin Receptor Blockers
MNC = Multi National Company
Portfolio to immunize
pediatric and adult
population in China
Animal
Health
Strong position in the
Avian Biologics market
17
A Broad Healthcare Offering in China’s Counties
Reaching out to China’s ~2,000 counties
China with 31 provinces
Ex.: Zhejiang province
Strategy
 Primary Care Business Unit
implemented in 2011
 A successful business
model supported by a
dedicated sales force
 Portfolio approach to fully
leverage our broad product
offering
283 Cities(1)
1,950 Counties(2)
Population
~900m
1. Huge base
Characteristics
2. Lower affordability, higher
out-of-pocket spend
 Cover key Provinces with
several hundred Counties
 Addressing the medical
needs of a huge population
 Diversify geographic
concentration
3. Geographically broad
(1) Defined as prefectural level cities (PLCs).
(2) Defined as county-level cities (CLCs) or counties
18
Agenda
Sanofi – A Leading Presence in China
Outlook on the Healthcare Market in China
Focusing on Diabetes
Conclusion
19
China: Main Macro Economic Indicators Point Toward
Continued and Superior Growth
Population in 2011(1)
Estimated Real GDP Growth 2012-2017(2)
Healthcare Expenditures as % of GDP(3)
Middle-class and Affluent Population in 2015(4)
Pharma Market Growth 2011-2016 (CAGR)(5)
(1) China 2010 population census
(2) IMF World Economic Outlook,April 2012; internal analysis (CAGR)
(3) WHO 2011, Global Health Expenditure Database; country data 2009
(4) Annual house hold income > US$10,000; BCG and internal analysis
(5) IMS Market Prognosis China 2012-2016 (2012)
1.34bn
7-8%
7-8%
4.5-5%
5%
52%
52%
5.7
16.1%
20
China Healthcare Reform
Opportunities
Challenges
● Better and broader basic
medical insurance coverage
● Improving medical services and
patient care by CHCs(1) and
rural health centers
● Increasing government funding
for chronic diseases and
vaccination
● Improving quality of medical
services
(1) CHC – Community Healthcare Centers
Key
Healthcare
Reform
Activities
● Implementation of payment
reform by the government,
such as global budget and
pay by disease
● Cost containment with price cuts
● Essential Drug Lists (EDL)
policies to favor usage of local
cheap generics in CHCs(1) and
township hospitals
21
The 2009 - 2011 Healthcare Reform Has Led
to a Significant Increase in Healthcare Investment
Significant Incremental
Healthcare Investment(3)
Health Care Expenditure(1, 2, 3)
RMB bn
HC expenditure as % of GDP
2,000
16
1,720
1,500
866
4.1%
14
Original plan
503
4.6%
4.7%
5.1%
10
10.5%
8
8.4%
850 RMB bn
0
2001
(1)
(2)
(3)
2005
1,134 RMB bn
5.1%
4
320
1997
Updated report
6
2
0
15.8%
12
1,000
500
2009-2011:
Investment into county healthcare
system, both infrastructure and
insurance
2009
Health care expenditure reflects the total expenditure on medical and health care services, which includes government expenditure, social
expenditure and individual cash expenditure. –
WHO 2011: ‘Total expenditure on health as % of Gross National Product’ (GDP): U.S. = 15.8%; Germany = 10.5%; Brazil = 8.4%; China = 5.1%
Source: China National Bureau of Statistics, Ministry of Finance, 2011
22
China Expected to Become a ~150bn USD Pharma
Market by 2016
nd
China expected to be the 2 largest
Pharmaceutical market by 2015(1)
● Market growth driven by increasing
demand in Cities and Counties
● Market growth also driven by
increasing “middle class” and aging
population
Projected China Market Growth(2)
1,200
16.2% 16.4% 16.1% 16.0% 16.1% 15.9%
1,000
18.0
910
785
800
676
● Impact from healthcare policies to
reduce drug prices expected to
continue
600
● China is projected to generate 27%
of the world’s pharmaceutical market
growth over 2011-2015
200
(1) IMS consulting, China 2015 study (September 2011)
(2) IMS Market Prognosis China 2012-2016 (2012)
Growth (%)
RMB bn
10.0
583
502
431
400
0
0.0
2011
2012
2013
2014
2015
2016
23
Agenda
Sanofi – A Leading Presence in China
Outlook on the Healthcare Market in China
Focusing on Diabetes
Conclusion
24
Diabetes Remains One of the Largest Opportunities
in the Healthcare Space
Adults with diabetes worldwide(1)
350m
% of patients not achieving glycemic control target
values in the U.S. and EU(2)
>50%
Patients remaining undiagnosed in BRIC countries(3)
~2/3
Expected CAGR growth of global diabetes market
between 2011 and 2015(4)
4-7%
Expected size of global diabetes market in 2015(4)
$43-48bn
(1) G. Danaei, Lancet 2011; 378: 31-40
(2) Adelphi Disease Specific Program (DSP) III and VII (sample of over 10,000 diabetic patient records)
(3) Internal estimates based on multiple sources
(4) The Global Use of Medicines: Outlook through 2015, IMS Institute for Healthcare Informatics, May 2011
25
Lantus® #1 Insulin Brand Worldwide – A Growth Story
€3.916bn
€3.510bn
€3.080bn
2007-2011
€2.450bn
CAGR
+17.8%
€2.031bn
2007
2008
2009
2010
2011
26
Diabetes is a Fast Growing Disease in China
Adults with diabetes in China(1)
>90m
Patients not diagnosed(2)
~2/3
Insulinized patients in China in 2010(3)
4.6m
Expected growth of China diabetes market between
2012 and 2017 (CAGR)(4)
14.4%
Expected size of Chinese diabetes market in 2020(4)
$3.2bn
(1) Yang et al., 2010
(2) Internal estimates based on multiple sources
(3) IMS data and internal patient model
(4) IMS Therapy Prognosis 2011-2020 China Diabetes
27
Sanofi’s Share in the Diabetes Market in China
Almost Tripled over the Last 4 Years
China Diabetes Market Share by Diabetes Player (Value)
Market Share (%)
MAT Q2 2012(2)
2007(1)
+85.3%
Lilly
(1) IMS CHPA MAT Dec 2007 .
(2) IMS CHPA MAT June 2012
Novo
Bayer
Others
28
Insulins Are the Fastest Growing Diabetes Segment in China Representing Already Half of the Diabetes Market
Sales Value of Diabetes Therapy Segments
RMB million
10,554
9,882
49%
Insulins:
CAGR 2007-2011 at + 32%
MAT June 2012, Growth +20.8%
52%
51%
Oral Anti-Diabetics (OADs):
CAGR 2007-2011 at + 23%
MAT June 2012 Growth, +11.3%
2011
MAT 2012
RMB ‘mil
8,326
48%
6,768
46%
5,231
3,752
45%
44%
41%
59%
2007
56%
2008
55%
2009
54%
2010
GLP-1 share 0.43%
Source data : IMS CHPA MAT June 2012
29
Sanofi Has Reached the #3 Position in the Chinese
Diabetes Market
Companies in the Chinese Diabetes
Market Ranked by Market Share(3)
● Disease burden increasing
dramatically
● Diabetes patient population up
4-fold from 2001 to 2008(1)
● Healthcare expenditures on
diabetes are estimated to have
reached $6.9bn in 2010(2)
● Sanofi Diabetes BU created in
2009 in China
●
Sanofi now #3 in the Diabetes market
in China(3)
● Sanofi’s diabetes franchise
outpacing market growth
(1) New England Journal of Medicine 2010;362:1090-101
(2) IDF press statement, March 2010
(3) IMS CHPA 2007; MAT 06/2012
2007
June 2012
RK
CORP
MS%
RK
CORP
MS%
1
NOVO
NORDISK
34.1%
1
NOVO
NORDISK
35.4%
2
Bayer HC
16.8%
2
Bayer HC
14.1%
3
ELI LILLY
5.7%
3
4
SERVIER
4.2%
4
ELI LILLY
6.5%
5
BMS
3.9%
5
BMS
4.1%
6
GSK
3.7%
6
HUADONG
3.1%
3.5%
7
SERVIER
2.5%
7
9.9%
30
Lantus® Has Reached 16.5% of Total Insulin Market in
China in June 2012(1)
®
Lantus Qtr. Value Market Share(2)
in Insulin (%)
●
Lantus® launched in China in 2004
●
●
SoloStar® launched in 2009
14
Recent improved market access in
China's two largest insulin markets
●
●
Launch
SoloStar®
16
Shanghai (December 2010)
Beijing (July 2011)
Enter
NRDL
15.8%
14.7%
13.1%
15.4%
14.9%
15.7%
12.4%
12
10.5%
10
8.5%
8
●
Leading insulin in several big
ahead of Novo Nordisk
●
Only available in disposable pens
4
●
Low average daily dosing per patient
2
cities(3)
6
7.1%
Enter ~70%
provincial RDL
6.6%
3.5%
2.7%
1.4%
0.7%
0.3%
0
04- 05- 05- 06- 06- 07- 07- 08- 08- 09- 09- 10- 10- 11- 11- 12Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2
(1) IMS CHPA June 2012
(2) MS CHPA Q2-2012
(3) IMS CHPA MAT 06/12; Cities where Lantus is the #1 insulin include Guangzhou, Suxi, Nanjing, Chengdu, Xi’an, Dalian, Shenzhen, Ningbo, Shijiazhuang
31
Amaryl® is Gaining Market Share in Value and Volume
against Generics in the Oral Anti-Diabetics Market
A
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Value Share in Glimepiride
Generic
50%
51%
57%
65%
69%
Amaryl
MAT ~ 05/2008 MAT ~ 05/2009 MAT ~ 05/2010 MAT ~ 05/2011 MAT ~ 05/2012
● In June, Amaryl®
reached 6.5% market
share of the total
OAD market in China,
growing at 11.2%(1)
Am Volume Share in Glimepiride
100%
80%
60%
Generic
40%
20%
Amaryl
25%
27%
30%
37%
41%
0%
MAT ~ 05/2008 MAT ~ 05/2009 MAT ~ 05/2010 MAT ~ 05/2011 MAT ~ 05/2012
1)IMS CHPA June 2012
● Despite generic
competition, Amaryl®
is a growth driver for
the OAD market in
China
● Amaryl® expected to
remain an important
driver in our diabetes
portfolio in China
32
“China Initiative for Diabetes Excellence” A Major Public-Private Partnership in Diabetes
5
years program
Train 500
emerging KOLs
Cascade to 10,000
country doctors
Educate millions
of patients
● First public-private partnership to develop a patient-centric, integrated diabetes
management program in China
● Landmark program for the prevention and control of diabetes announced in
May 2011
● 5-years initiative led by the Bureau of Disease Prevention and Control of the Ministry of
Health
● Collaboration with the Chinese Diabetes Society
● Train 500 emerging experts, followed by 10,000 community and county doctors
● Enhancing patients’ self-management capabilities through education and
organized peer support groups
33
Continuous Commitment to Fighting Diabetes in China
● Local Manufacturing of Lantus® SoloSTAR®
Pen in Beijing Facility inaugurated in
May 2012
● A strategic decision to manufacture
Lantus® SoloSTAR® locally in China
● Capacity of 48m units
● Second phase of the US$90m project
to install a high-tech cartridge aseptic
production line announced
34
Delivering the Full Value of Other Portfolio Assets in the
Chinese Diabetes Market
Established Insulins
● From Lantus® to Lantus® -based solutions
● Further expand basal insulin treatment
paradigm
Optimized Devices
● Expand leadership position with Amaryl®
● Grab untapped opportunities with Apidra®,
Insuman® and Blood Glucose Monitoring
devices
Innovative Blood
Glucose Monitoring
● Local clinical development ongoing for
Lyxumia®
35
Agenda
Sanofi – A Leading Presence in China
Outlook on the Healthcare Market in China
Focusing on Diabetes
Conclusion
36
Sanofi Is Poised to Sustain Significant Growth
in China
● Solid historical presence and fully-integrated structure
● Strong socio-economic drivers underpinning growth
● Well-suited portfolio for China’s medical needs
(Rx, CHC, Vaccines, Diabetes, Animal Health, Genzyme)
● Growing position in Diabetes by maximizing the value of the entire portfolio
● Increasing access to new market segments at the county level
● Significant investments in local production facilities serving all Growth Platforms
and accelerated investment in R&D
● Industry lead in talent attraction, development and retention
37
Continued Execution of Strategy Expected to Deliver
Sustainable Growth Over 2012-2015
Expected 2012-2015 Sales CAGR
At least 5%
Diversified sources of growth and scale in businesses with
significant barriers to entry

Low small molecule patent exposure in mature markets(1)
~6%
Large Emerging Markets presence(2)
Potential new product launches(3)
Operating margin evolution
38-40%
18
Rebounding
2012-2015 Business EPS CAGR
> Sales CAGR
Increased dividend payout ratio(4)
50% of 2013 results
Corporate Social Responsibility
(1)
(2)
(3)
(4)

2012 sales from chemical products exposed to patent expiry in the U.S., Japan and Western Europe over 2012/2015
Based on 2015 internal estimates
Over 2012-2015
Dividend to be paid in 2014
38
The Dividend Remains a Key Element of Shareholder
Value Creation
Evolution of Dividend
Dividend
● Dividend of €2.65
per share for 2011
● Progressive increase of
payout target to 50% for 2013
Business Net Income(1)
Payout
35%
€2.40
2009
€2.65
+6%
€2.20
2008
(1) Dividend to be paid in 2014
€2.50
Payout
40%
2010
2011
39