-------------------------------------------------------------------------
Comparable net sales(1): up 8.4% in Q4, up 4.0% in 2006
Adjusted EPS(1): down 5.6% in Q4, up 10.3% in 2006
Adjusted EPS(1)
excluding
selected items(2): down 1.0% in Q4, up 5.9% in 2006 at (euro)4.88
-------------------------------------------------------------------------PARIS, France, Feb. 13 /CNW Telbec/ - The consolidated income statement
for 2006 is provided in the appendices. Consolidated net income after minority
interests for the period was (euro)4,006 million, compared with
(euro)2,258 million in 2005, after the impact of the accounting treatment of
acquisitions (primarily the acquisition of Aventis) and restructuring costs
for a total amount of (euro)3,034 million after tax in 2006 and
(euro)4,077 million in 2005.
In order to give a better representation of its underlying economic
performance, the group has decided to present and explain an adjusted
consolidated income statement(1) for 2006 and the fourth quarter of 2006, and
to compare them with an adjusted consolidated income statement for 2005 and
the fourth quarter of 2005 respectively. Adjusted net income for 2006 was
(euro)7,040 million, compared with (euro)6,335 million for 2005.
-------------------------------------------------------------------------
Unless otherwise indicated, all sales growth figures in this press
release are stated on a comparable basis(1).
-------------------------------------------------------------------------FOURTH QUARTER: Sustained sales growth
- 8.4% growth (5.0% on a reported basis) in net sales to
(euro)7,356 million, despite the ongoing impact of healthcare reforms
in France and Germany.
- Fourth-quarter sales impacted by a generic of clopidogrel bisulfate in
the United States.
- 12.5% growth in "Operating income - current"
- Adjusted EPS of (euro)1.02, down 5.6%, or (euro)1.01 excluding selected
items(2), down 1.0%.
2006 FULL-YEAR: Demonstrated ability to deliver EPS growth in a year
penalized by generics
- Net sales: (euro)28,373 million, up 4.0% (up 3.9% on a reported basis).
Excluding the impact of generics of 4 products(3) in the United States,
sales growth would have been 8.2%.
- Sustained effort in R&D: up 9.5% to (euro)4,430 million.
- Adjusted EPS of (euro)5.23, up 10.3%.
- 5.9% growth in adjusted EPS excluding selected items(2) (to
(euro)4.88, against (euro)4.61 in 2005).
R&D: Significant progress in pipeline with 46 projects in phase IIb/III
compared to 35 in February 2006
DIVIDEND: 15.1% increase in the dividend to (euro)1.75 per share to be
submitted for approval at the Annual General Meeting of May 31, 2007
2007 GUIDANCE
Barring major adverse events (including events on Lovenox(R) and Plavix(R)
in the US), the Group expects a growth in 2007 adjusted EPS excluding selected
items in the same order of magnitude as 2006 growth, despite the end of
protection for Ambien(R) IR in the United States in April 2007 and generic
competition for Eloxatin(R) in Europe. (see section "2007 Guidance")
2006 fourth-quarter and full-year net sales
In the fourth quarter of 2006, sanofi-aventis recorded net sales of
(euro)7,356 million, a rise of 8.4%. Exchange rate movements (two-thirds
relating to the U.S. dollar) had an unfavorable effect of 3.2 points. Changes
in Group structure had a negative effect of 0.2 of a point. On a reported
basis, net sales increased by 5.0%.
Full-year net sales rose by 4.0% to (euro)28,373 million. Exchange rate
movements had a favorable effect of 0.4 of a point. Changes in Group structure
had a negative effect of 0.5 of a point. On a reported basis, net sales rose
by 3.9%.
Net sales by business segment
Net sales reported by sanofi-aventis comprise net sales generated by the
pharmaceuticals business and net sales generated by the human vaccines
business.
Pharmaceuticals
-------------------------------------------------------------------------
Fourth-quarter net sales for the pharmaceuticals business reached
(euro)6,550 million, up 6.2%. Net sales of the top 15 products were 11.0%
higher at (euro)4,421 million, representing 67.5% of pharmaceuticals net
sales, against 64.6% for the comparable period in 2005.
Over 2006 as a whole, pharmaceuticals net sales, despite being impacted by
generics of 4 products(4) in the United States and the effect of healthcare
reforms in France and Germany, reach (euro)25,840 million up 2.5%. Net sales
of the top 15 products were up 6.4% at (euro)17,289 million, representing
66.9% of pharmaceuticals net sales, compared with 64.4% in 2005. Excluding the
impact of generics of Allegra(R) and Amaryl(R) in the United States, growth in
net sales of the top 15 products would have been 12.4%.
-------------------------------------------------------------------------
(euro) million Q4 2006 Change on a 2006 Change on a
net sales comparable net sales comparable
basis basis
-------------------------------------------------------------------------
Lovenox(R) 614 +11.8% 2,435 +12.9%
Plavix(R) 541 +5.0% 2,229 +9.6%
Stilnox(R)/Ambien(R)/
Ambien CR(TM) 580 +42.5% 2,026 +33.3%
Taxotere(R) 437 +6.6% 1,752 +8.4%
Eloxatin(R) 402 -1.5% 1,693 +7.8%
Lantus(R) 451 +35.8% 1,666 +36.9%
Copaxone(R) 273 +11.0% 1,069 +17.9%
Aprovel(R) 265 +15.7% 1,015 +13.3%
Tritace(R) 271 -3.9% 977 -4.8%
Allegra(R) 163 +7.9% 688 -49.7%
Amaryl(R) 105 -19.8% 451 -33.5%
Xatral(R) 84 -5.6% 353 +7.3%
Actonel(R) 87 -1.1% 351 +6.7%
Depakine(R) 74 -6.3% 301 -5.3%
Nasacort(R) 74 +8.8% 283 +0.7%
-------------------------------------------------------------------------
TOTAL TOP 15 4,421 +11.0% 17,289 +6.4%
TOTAL TOP 15 excl. impact
of Allegra(R) and Amaryl(R)
in the USA(*) 4,325 +11.1% 16,890 +12.4%
-------------------------------------------------------------------------
(*) Excluding net sales of Allegra(R) and Amaryl(R) in the United States
In the fourth quarter, net sales of other pharmaceutical products
decreased by 2.5% to (euro)2,129 million. This decrease reflects varied
performances by geographical region. In Europe, net sales of other
pharmaceutical products were adversely affected by healthcare reforms in
France and Germany, down 4.1% to (euro)1,278 million. In the rest of the world
excluding the United States, net sales of these products rose by 4.4% to
(euro)671 million.
Over 2006 as a whole, net sales of other pharmaceutical products were down
4.6% at (euro)8,551 million. This part of the portfolio showed a 4.1% increase
in net sales to (euro)2,614 million in the rest of the world excluding the
United States, and a 5.3% decrease to (euro)5,170 million in Europe.
Excluding the impact of generics of DDAVP(R) and Arava(R) in the United
States(5), net sales of other pharmaceutical products would have been down
2.4% in 2006.
Human Vaccines
-------------------------------------------------------------------------
Fourth-quarter consolidated net sales for the human vaccines business
increased by 30.0% to (euro)806 million. As expected, sales were helped by the
postponement of US influenza vaccine sales from the third to the fourth
quarter. The Group exceeded its target of delivering 50 million doses of
Fluzone(R) in this territory in 2006 (55 million doses delivered).
Menactra(R) recorded fourth-quarter net sales of (euro)45 million, up
46.9%, and 2006 full-year net sales of (euro)242 million, an increase of
36.3%.
Sales of Adacel(TM) (adult tetanus-diphtheria-pertussis booster), launched
in the United States in July 2005, reached (euro)30 million in the fourth
quarter and (euro)154 million over the full year. A new production facility
was approved by the FDA in August 2006 and should enable sanofi pasteur to
better respond to demand for certain pertussis vaccines from 2007 onwards.
2006 full-year consolidated net sales for the human vaccines business
reached (euro)2,533 million, a rise of 22.7%. Full-year sales of H5N1 vaccines
totaled (euro)151 million. Sanofi pasteur also signed a new contract with the
U.S. government in November 2006 for a stockpile of a new type of H5N1
pre-pandemic vaccine. The value of this contract could reach $117.9 million,
with the exact amount depending on the number of doses that can be produced.
Shipment of the vaccine will take place in 2007.
-------------------------------------------------------------------------
(euro) million Q4 2006 Change on a 2006 Change on a
net sales comparable net sales comparable
basis basis
-------------------------------------------------------------------------
Polio/Whooping Cough/
Hib Vaccines 141 +28.2% 633 +18.5%
-------------------------------------------------------------------------
Adult Booster Vaccines 76 +33.3% 337 +23.4%
-------------------------------------------------------------------------
Influenza Vaccines 439 +36.8% 835 +27.5%
-------------------------------------------------------------------------
Travel Vaccines 48 +2.1% 239 +34.3%
-------------------------------------------------------------------------
Meningitis/Pneumonia Vaccines 57 +26.7% 310 +22.0%
-------------------------------------------------------------------------
Other vaccines 45 +12.5% 179 +5.3%
-------------------------------------------------------------------------
TOTAL 806 +30.0% 2,533 +22.7%
-------------------------------------------------------------------------
Fourth-quarter sales of Sanofi Pasteur MSD, the joint venture with Merck &
Co in Europe, rose by 59.8% on a reported basis to (euro)257 million.
Quarterly sales benefited from the postponement of Vaxigrip(R) influenza
vaccine sales from the third quarter to the fourth quarter.
Followings its approval by the European Union, Gardasil(R) (Merck & co),
the first vaccine designed to prevent genital warts caused by human
papillomavirus (HPV) types 6, 11, 16 and 18, and in particular cervical
dysplasia and carcinoma was launched by Sanofi Pasteur MSD. Gardasil is now
available in 13 European countries, including France, Germany and the United
Kingdom. Other countries, including Spain and Italy, will follow during 2007.
Rotateq(R) (Merck & Co) was approved by the European authorities in June
2006 for the prevention of rotavirus gastroenteritis in infants. It was
launched by Sanofi Pasteur MSD in Austria, Portugal and Germany in October
2006 and in France in January 2007.
Sanofi Pasteur MSD posted 2006 full-year sales of (euro)724 million, up
5.3% on a reported basis. Excluding Hexavac(R), which was suspended by the
EMEA in September 2005, Sanofi Pasteur MSD would have recorded growth in sales
of 12.3% on a reported basis.
Sanofi Pasteur MSD sales are not consolidated by sanofi-aventis.
Net sales by geographical region
-------------------------------------------------------------------------
(euro) million Q4 2006 Change on a 2006 Change on a
net sales comparable net sales comparable
basis basis
-------------------------------------------------------------------------
Europe 3,062 +1.0% 12,219 +1.1%
United States 2,661 +15.6% 9,966 +3.9%
Other countries 1,633 +12.4% 6,188 +10.5%
-------------------------------------------------------------------------
TOTAL 7,356 +8.4% 28,373 +4.0%
-------------------------------------------------------------------------
In Europe, fourth-quarter net sales were up slightly by 1.0%, in a context
of ongoing healthcare reforms in France and Germany.
The German reforms, especially the pressure on doctors to curb
prescriptions, led to a marked deceleration in the pharmaceutical market and
in sanofi-aventis local sales during the third and fourth quarters. In
addition, some of the Group products continued to be hit by parallel imports.
The reform of the healthcare system in France has involved higher taxes on
reimbursed prescription drugs, reclassification of some products as
non-reimbursable, and greater penetration of generics. The Group local sales,
which are particularly vulnerable because of its position as market leader,
were down significantly.
Over 2006 as a whole, net sales in Europe rose by 1.1%.
In the United States, fourth-quarter sales growth was driven notably by
strong growth in sales of Ambien(R)/Ambien CRTM, Lantus(R) and vaccines.
Over 2006 as a whole, sales grew by a modest 3.9%. Excluding the impact on
sales of generic competition for 4 products(3) in 2005, sales would have risen
by 17.2%.
In "Other Countries", sales growth accelerated in the fourth quarter to
12.4%. Over the full year, sales growth was 10.5%. Latin America and Asia
continue to record strong growth.
Developed sales(1)
Developed sales give an indication of the overall presence of
sanofi-aventis products in the market. Fourth-quarter developed sales were
(euro)7,937 million, a rise of 2.1%, reflecting the situation of Plavix(R) in
the United States (see comments on developed sales of Plavix(R)). Over 2006 as
a whole, developed sales grew by 2.6% to (euro)31,575 million. From the first
quarter of 2007, we will stop reporting developed sales. However, we will
continue to comment on the worldwide presence of Plavix(R) and Aprovel(R).
Developed sales of Plavix(R) / Iscover(R):
-------------------------------------------------------------------------
(euro) million Change on a Change on a
Q4 2006 comparable 2006 comparable
basis basis
-------------------------------------------------------------------------
Europe 436 +4.1% 1,715 +8.4%
United States 273 -61.5% 2,167 -16.4%
Other countries 183 +18.1% 702 +18.8%
-------------------------------------------------------------------------
TOTAL 892 -30.5% 4,584 -3.8%
-------------------------------------------------------------------------
On August 8, 2006, Apotex announced that it had launched a generic version
of clopidogrel bisulfate 75 mg tablets in competition with Plavix(R) in the
United States. On August 31, 2006, the U.S. District Court for the Southern
District of New York granted the motion filed by sanofi-aventis and
Bristol-Myers Squibb for a preliminary injunction and ordered Apotex to halt
sales of its generic version of clopidogrel bisulfate. However, the Court did
not order the recall of products already sold by Apotex.
As a result, sales of Plavix(R) in the United States have been hit hard
since August 8, 2006. Fourth-quarter sales of Plavix(R) in the United States
were (euro)273 million. Growth in total prescriptions (TRx) of clopidogrel
bisulfate remained strong, at 11.8%(6) in the fourth quarter and 13.0%(7) in
2006 as a whole. In the last week of December, the share of total clopidogrel
bisulfate prescriptions taken by Plavix(R) was rising sharply, reaching
44.3%(8), compared with 21.3%(8) in the last week of September.
In August 2006, the Food and Drug Administration approved a new indication
for Plavix(R) in patients suffering from acute ST-segment elevation myocardial
infarction, to reduce the rate of death from any cause and the rate of a
combined endpoint of re-infarction, stroke or death. The same indication was
approved in the European Union in September 2006.
In Europe, fourth-quarter net sales of Plavix(R) rose by 4.1% to (euro)436
million. This low rate of growth was largely due to a decline in sales in
Germany, reflecting a marked slowdown in the local market as well as parallel
imports, plus the effect of a 5% reduction in prices in France on September 1,
2006.
In Japan, the launch of Plavix(R) as a treatment for the reduction of
recurrence after ischemic cerebrovascular disorder continued. The 6-month
Post-Marketing Vigilance Period ended during the fourth quarter, though the
two-week limit on prescriptions also imposed by the Japanese authorities will
remain in force until May 2007. Full-year net sales were (euro)12 million. The
application relating to Plavix(R) as a treatment for acute coronary syndrome
was filed with the Japanese authorities at the end of 2006.
Developed sales of Aprovel(R)/ Avapro(R)/ Karvea(R):
-------------------------------------------------------------------------
(euro) million Change on a Change on a
Q4 2006 comparable 2006 comparable
basis basis
-------------------------------------------------------------------------
Europe 229 +13.4% 878 +11.4%
United States 138 +5.3% 516 +12.7%
Other countries 98 +16.7% 370 +14.9%
-------------------------------------------------------------------------
TOTAL 465 +11.5% 1,764 +12.5%
-------------------------------------------------------------------------
Fourth-quarter developed sales of Aprovel(R)/Avapro(R)/Karvea(R) were up
11.5% at (euro)465 million.
In the United States, the product posted net sales growth of 5.3% in the
fourth quarter. Over the full year, total prescriptions were up 3.9%(7).
Comments by product
Geographical split of consolidated net sales by product (Top 15)
-------------------------------------------------------------------------
Q4 2006
net sales Change Change Change
((euro) on a on a on a
million) comparable United comparable Other comparable
Europe basis States basis countries basis
-------------------------------------------------------------------------
Lovenox(R) 174 +7.4% 379 +14.2% 61 +10.9%
Plavix(R) 415 +7.5% 5 -87.2% 121 +34.4%
Stilnox(R)/
Ambien(R)/
Ambien CR(TM) 23 -14.8% 532 +47.8% 25 25.0%
Taxotere(R) 178 +9.9% 174 +1.2% 85 +11.8%
Eloxatin(R) 124 -11.4% 235 1.7% 43 +16.2%
Lantus(R) 134 +19.6% 277 +42.8% 40 +53.8%
Copaxone(R) 72 +18.0% 186 +8.1% 15 +15.4%
Aprovel(R) 213 +15.1% - - 52 +18.2%
Tritace(R) 122 -17.6% 3 0.0% 146 +11.5%
Allegra(R) 8 -11.1% 93 +12.0% 62 +5.1%
Amaryl(R) 33 -44.1% 3 -66.7% 69 +9.5%
Xatral(R) 45 -26.2% 25 +47.1% 14 +27.3%
Actonel(R) 57 -9.5% - - 30 +20.0%
Depakine(R) 52 -8.8% - - 22 +0.0%
Nasacort(R) 9 0.0% 58 +11.5% 7 0.0%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2006
net sales Change Change Change
((euro) on a on a on a
million) comparable United comparable Other comparable
Europe basis States basis countries basis
-------------------------------------------------------------------------
Lovenox(R) 689 +6.5% 1,502 +16.0% 244 +13.5%
Plavix(R) 1,617 +9.5% 156 -26.1% 456 +32.2%
Stilnox(R)/
Ambien(R)/
Ambien CR(TM) 95 -12.0% 1,838 +38.1% 93 +14.8%
Taxotere(R) 714 +14.2% 708 +1.0% 330 +13.8%
Eloxatin(R) 564 +3.7% 965 7.3% 164 +29.1%
Lantus(R) 520 +26.5% 1,006 +39.7% 140 +62.8%
Copaxone(R) 279 +20.8% 733 +17.5% 57 +9.6%
Aprovel(R) 808 +11.4% - - 207 +21.1%
Tritace(R) 509 -11.5% 16 +100.0% 452 +2.0%
Allegra(R) 51 -1.9% 384 -62.7% 253 -11.2%
Amaryl(R) 174 -31.5% 15 -91.9% 262 +10.1%
Xatral(R) 210 -10.3% 92 +73.6% 51 +21.4%
Actonel(R) 242 +3.4% - - 109 +14.7%
Depakine(R) 210 -10.3% - - 91 +8.3%
Nasacort(R) 41 +7.9% 214 -0.5% 28 0.0%
-------------------------------------------------------------------------
Net sales of Lovenox(R), the leading low molecular weight heparin on the
market, reached (euro)614 million in the fourth quarter, a rise of 11.8%.
Growth of the product continues to be driven by its increasing use in medical
prophylaxis. Sales in Europe increased by 12.9%.
Filing for approval of Lovenox(R) as a treatment for patients suffering
from acute ST-segment elevation myocardial infarction (ExTRACT study) took
place in the fourth quarter in both Europe and the United States (priority
review granted by the FDA). This new indication is expected to further enhance
the superiority of Lovenox over non-fractioned heparins.
The results of the PREVAIL study were presented at the 48th annual
congress of the American Society of Hematology (ASH) in Orlando in December
2006. The results demonstrated a significant 43% reduction in venous
thromboembolism (VTE) events with enoxaparin versus unfractionated heparin
(UFH) in medically-ill patients hospitalized for acute ischemic stroke.
Sales of Plavix(R) raw materials to the United States, which are
consolidated by sanofi-aventis, fell by 87.2% to (euro)5 million during the
fourth quarter due to the launch of a generic version of clopidogrel bisulfate
75 mg tablets by Apotex. Excluding this effect, consolidated net sales of
Plavix(R) would have risen by 12.6% in the quarter and by 13.3% over the full
year.
Net sales of Ambien(R)/Ambien CR(TM) in the United States rose by 47.8% in
the quarter to (euro)532 million. The products had a market share of 46.2%(9)
in December, versus 45.2% in September (IMS NPA-3 channels - September 2006).
At end December, prescriptions of Ambien CR(TM) represented 31.8% of
prescriptions of Ambien(R) brand products (IMS NPA Retail and Mail order).
At end November 2006, the FDA granted pediatric exclusivity to Ambien(R)
and AmbienCR(TM). One effect of this decision is to delay the introduction of
generics of Ambien(R) IR until April 2007.
In Japan, sales of Myslee(R) (developed sales) reached (euro)119 million
in 2006, an increase of 15.7%.
Taxotere(R) recorded strong fourth-quarter growth of 11.8% in "Other
Countries" and 9.9% in Europe. In the United States, the competitive
environment remains difficult, and the product posted sales growth of 1.2% to
(euro)174 million.
On December 14, 2006, results from the second interim efficacy and safety
analysis from the BCIRG 006 Phase III breast cancer study were presented at
the 29th Annual San Antonio Breast Cancer Symposium. These results confirmed,
at a 3-year median follow-up, that Herceptin(R) (trastuzumab) combined with
Taxotere(R) (docetaxel) based regimens significantly improved disease-free
survival for women with early HER2-positive breast cancer.
In 2006, Taxotere(R) was approved in the United States and Europe for two
new indications:
- advanced stage gastric cancer in combination with the standard
treatment (cisplatin and 5-fluorouracil)
- as induction treatment for patients with head and neck cancer in
combination with a classic regimen (cisplatin and 5-fluorouracil).
The FDA has granted a pediatric extension for Eloxatin(R) in the United
States, extending the data protection period by six months until February
2007, as well as the other regulatory exclusivity periods.
Fourth-quarter net sales of Eloxatin(R) in Europe were down 11.4% at
(euro)124 million due to the introduction of generics in Germany and the
United Kingdom.
Lantus(R), the world's leading insulin brand, continues to record
excellent performances, with net sales up 35.8% in the fourth quarter to
(euro)451 million. Net sales of the product in 2006 reached
(euro)1,666 million, up 36.9%. The new disposable pen, Solostar(R), was
approved in Europe in September 2006, and the application is currently under
review in the United States. The first launch of Solostar(R) took place in the
final quarter of 2006.
Acomplia(R) has been launched in the United Kingdom (end June 2006),
Denmark (August), Germany, Ireland, Norway, Finland (all in September),
Austria and Argentina (both in October), Sweden (November) and Greece
(December). Fourth-quarter net sales were (euro)20 million, and full-year net
sales (euro)31 million. The product was launched in Chile and Mexico in
January 2007.
Acomplia(R) has been very favorably received by specialists and general
practitioners for obese patients presenting cardiometabolic risk factors.
On January 12, 2007, the German Ministry of Health published its decision
to ratify the recommendation of the Federal Joint Committee ("G-BA") to
classify Acomplia(R) as a "comfort" or "lifestyle" drug, not available for
reimbursement under the German compulsory health insurance scheme.
Sanofi-aventis believes that this classification is unjustified given the
profile of the drug, and is challenging it in court.
The results of the SERENADE study were presented on December 5, 2006 at
the World Diabetes Congress of the International Diabetes Federation held in
Cape Town, South Africa. The SERENADE results showed that patients receiving
rimonabant showed significant improvements in blood sugar control and weight,
as well as in other risk factors such as HDL-cholesterol (good cholesterol)
and triglycerides, when compared to placebo in type 2 diabetes patients not
currently treated with anti-diabetic medications. SERENADE is the second
study, following RIO-DIABETES, to demonstrate that rimonabant significantly
improves blood sugar control in type 2 diabetes patients.
The SERENADE dossier was filed with the European healthcare authorities in
December 2006.
Regarding the ongoing review of rimonabant in the United States, a
complete response to the approvable letter received from the FDA on February
17, 2006 was submitted by sanofi-aventis on October 26, 2006. The FDA has
accepted this as a complete class 2 response, and set a user fee goal date of
April 26, 2007.
An application for Sculptra(R) for volume restoration and/or correction of
facial wrinkles and folds was filed with the FDA in the second half of 2006.
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.
Fourth quarter of 2006
Net sales generated by sanofi-aventis in the fourth quarter of 2006 rose
by 5.0% on a reported basis to (euro)7,356 million.
Gross profit was (euro)5,627 million. The gross margin ratio was 76.5%,
against 77.7% in the comparable period of 2005. This reduction was mainly due
to two factors:
- A fall in other revenues (royalties) from (euro)336 million to
(euro)228 million due to the marked drop in sales of Plavix(R) in the
United States because of competition from a generic version.
- A 0.5 point improvement (to 26.6%) in the ratio of cost of sales to net
sales. In the fourth quarter, the ratio of cost of sales to net sales
was in line with the ratio for the first 9 months of 2006.
Research and development expenses were 5.3% higher at (euro)1,211 million.
Selling and general expenses were 5.7% lower than in the fourth quarter of
2005 at (euro)2,153 million, equivalent to 29.3% of net sales. There was a
continuation in the quarter of the slowdown in selling expenses in the United
States, Germany and France as sanofi-aventis adapted to the changing market
environment. In the "Other Countries" zone, the group strengthened its
marketing efforts. There was again a reduction in general expenses relative to
the fourth quarter of 2005.
Operating income - current was up 12.5% at (euro)2,272 million, and
represented 30.9% of net sales as opposed to 28.8% in the fourth quarter of
2005.
The charge relating to sanofi-aventis' efforts to adapt to the changing
market environment was (euro)176 million.
The (euro)214 million charge for asset impairment relates notably to the
impairment of industrial assets associated with Ketek(R), for which potential
sales ((euro)155 million in 2006) are affected by the restriction on
indications in June 2006 and the recommendation of the FDA Joint Advisory
Committee in December 2006.
Operating income was down 7.7% at (euro)1,898 million.
Net financial income was (euro)66 million, against net expense of (euro)21
million for the comparable period of 2005. In 2006, the figure includes the
(euro)101 million capital gain arising on the divestment of the holding in
Rhodia.
The interest charge on debt reached (euro)36 million, against
(euro)79 million in the fourth quarter of 2005. In the fourth quarter, this
figure included the full-year positive impact ((euro)34 million) of the
hedging of US commercial paper drawdowns using euro swaps. This amount was
previously recorded in exchange gains and losses, a different component of
financial income and expense.
Income tax expense was (euro)534 million, against (euro)643 million in the
fourth quarter of 2005. The tax rate was 27.2%, against 31.6% for the
comparable period of 2005. The fourth quarter of 2006 benefited from a net
reduction in provisions for tax exposures.
The share of profits from associates was (euro)50 million, compared with
(euro)140 million in the fourth quarter of 2005. This item was hit by the
situation affecting Plavix(R) in the United States, and reflects the decline
in the share of after-tax profits from territories managed by BMS (primarily
the United States) under the Plavix(R) and Avapro(R) alliance
((euro)12 million, against (euro)109 million in the fourth quarter of 2005).
Minority interests totaled (euro)103 million, against (euro)88 million in
the fourth quarter of 2005. This line includes the share of pre-tax profits
paid over to BMS from territories managed by sanofi-aventis ((euro)98 million,
versus (euro)80 million in the fourth quarter of 2005).
Adjusted net income was down 4.6% at (euro)1,377 million.
Adjusted earnings per share (EPS) was (euro)1.02, 5.6% lower than the 2005
fourth-quarter figure of (euro)1.08, based on an average number of shares
outstanding of 1,348.8 million in the fourth quarter of 2006 and
1,338.5 million in the fourth quarter of 2005.
After excluding selected items, adjusted net income was
(euro)1,368 million, up 0.6% on the 2005 fourth-quarter figure of (euro)1,360
million (see Appendix 6).
After excluding selected items, adjusted EPS was (euro)1.01, 1.0% lower
than the 2005 fourth-quarter figure of (euro)1.02 (see Appendix 6).
2006 full-year
Net sales generated by sanofi-aventis in 2006 were (euro)28,373 million,
an increase of 3.9% on a reported basis.
Gross profit was (euro)21,934 million. The gross margin ratio was 77.3%,
versus 78.1% in 2005. Other revenues were down 7.2% at (euro)1,116 million,
against (euro)1,202 million in 2005, due to the drop in royalties generated by
Plavix(R) in the United States since the third quarter. The ratio of cost of
sales to net sales deteriorated by 0.3 of a point to 26.6%, with the impact of
generics of Allegra(R), Amaryl(R), Arava(R) and DDAVP(R) in the United States
over the first 9 months of 2006 not totally offset by the improvement in
product mix
Research and development expenses were 9.5% higher than in 2005 at
(euro)4,430 million, representing 15.6% of net sales (versus 14.8% in 2005).
The increase reflects the stepping up of phase III clinical trials during the
year in pharmaceuticals and higher R&D spend in vaccines.
Selling and general expenses decreased 2.8% in 2005 to
(euro)8,020 million, or 28.3% of net sales, reflecting the rapid and selective
adaptation of our resources.
Other current operating income and expenses totaled (euro)275 million,
against (euro)137 million in 2005. The improvement was mainly due to the
income generated by the agreement with Prasco on the marketing of authorized
generics in the United States, plus a better foreign exchange result (net loss
of (euro)13 million in 2006, against a net loss of (euro)79 million in 2005).
Operating income - current advanced by 6.1% to (euro)9,627 million, and
represented 33.9% of net sales, an improvement of 0.7 of a point on 2005.
The (euro)176 million restructuring charge relates to the Group's efforts
to adapt to changes in its market environment. The (euro)217 million charge
for the impairment of property, plant and equipment and intangibles relates
notably to the impairment of industrial assets associated with Ketek(R).
Other operating income and expenses totaled (euro)536 million. This line
includes gains on disposals of (euro)550 million, of which (euro)460 million
((euro)384 million after tax) relates to Exubera(R) and (euro)45 million to
the sale of the residual 30% interest in an Animal Nutrition business.
Operating income was up 7.1% at (euro)9,770 million.
Net financial expense came to (euro)80 million, compared with
(euro)245 million in 2005. The reduction in net financial expense was mainly
attributable to a reduction in debt due to the cash flow generated by
sanofi-aventis. Interest charge on debt was (euro)286 million, versus
(euro)418 million in 2005. In 2006, net financial expense benefited from the
reclassification of the (euro)34 million gain on hedging of US commercial
paper drawdowns. Net financial expense was also helped by gains on financial
instruments ((euro)68 million, versus (euro)49 million in 2005). Gains on
disposals of investments in 2006 ((euro)108 million, mainly Rhodia) were
slightly ahead of those recorded in 2005 ((euro)94 million).
Income tax expense was (euro)2,816 million, compared with
(euro)2,774 million for 2005, giving a tax rate of 29.1%, against 31.3% for
2005. The effective tax rate was 30.6% in 2006.
The share of profit from associates totaled (euro)559 million, compared
with (euro)584 million in 2005. This line includes the share of after-tax
profits from territories managed by BMS (primarily the United States) under
the Plavix(R) and Avapro(R) alliance ((euro)320 million, compared with
(euro)404 million in 2005). These profits have been negatively impacted since
third quarter by a generic of clopidogrel bisulfate in the United States.
There was a significant increase in the contribution from Merial in 2006.
Minority interests amounted to (euro)393 million, compared with
(euro)349 million in 2005. This line includes the share of pre-tax profits
paid over to BMS from territories managed by sanofi-aventis ((euro)375
million, versus (euro)300 million in 2005).
Adjusted net income was up 11.1% at (euro)7,040 million.
Adjusted earnings per share (EPS) was (euro)5.23, 10.3% higher than in
2005 ((euro)4.74), based on an average number of shares outstanding of
1,346.8 million in 2006 and 1,336.5 million in 2005.
Excluding selected items, adjusted net income was (euro)6,571 million,
6.6% up on 2005 ((euro)6,167 million) (see Appendix 6).
Excluding selected items, adjusted EPS was (euro)4.88, 5.9% higher than in
2005 ((euro)4.61) (see Appendix 6).
2006 consolidated statement of cash flows and balance sheet
Operating cash flow before changes in working capital totaled
(euro)7,610 million, against (euro)6,637 million in 2005.
Working capital needs increased by (euro)1,006 million, compared with
(euro)239 million in 2005. Operating working capital needs rose at a slightly
higher rate than net sales: the usual time delay between the accounting
recognition and payment of taxes had an adverse effect in 2006, as opposed to
2005 when these timing differences had a positive effect.
Investing activities generated net cash outflows of (euro)790 million.
Acquisitions of property, plant and equipment and intangibles amounted to
(euro)1,454 million, while acquisitions of investments totaled
(euro)509 million, the main item being the acquisition of a 24.87% interest in
Zentiva ((euro)433 million). Disposals generated (euro)1,174 million net of
taxes, the main items being the Exubera(R) rights ((euro)821 million) and the
interest in Rhodia ((euro)182 million).
After the dividend payout of (euro)2 billion, net cash generated during
2006 was (euro)4.1 billion, enabling consolidated net debt to be cut from
(euro)9.9 billion at December 31, 2005 to (euro)5.8 billion et December 31,
2006. Gearing stood at 12.6% at December 31, 2006, compared with 21.4% at
December 31, 2005.
2007 Guidance
Barring major adverse events (including events on Lovenox(R) and Plavix(R)
in the US), the Group expects a growth in 2007 adjusted EPS excluding selected
items in the same order of magnitude as 2006 growth, despite the end of
protection for Ambien(R) IR in the United States in April 2007 and generic
competition for Eloxatin(R) in Europe.
This guidance is prepared using an exchange rate of 1 euro = 1.25 dollar,
with sensitivity to the euro/dollar exchange rate estimated at 0.6% of growth
for a 1-cent movement in the exchange rate.
2006 Dividend
Sanofi-aventis Board of Directors in its meeting of February 12, 2007,
decided to ask the Shareholders' Annual General Meeting of May 31, 2007 to
approve a dividend of (euro)1.75 per share, an increase of 15.1% on the
previous year ((euro)1.52).
The dividend payment date will be June 7, 2007.
Research and Development
Sanofi-aventis research and development portfolio has made significant
strides in the last one year. It currently has 46 projects in Phase IIb /
Phase III compared to 35 in February 2006.
Since February 2006, the following projects entered either phase IIb or
phase III:
- Three projects in oncology entered phase III
(VEGF Trap, S-1 and XRP6258).
- Seven projects entered phase IIb:
-AVE1625, a CB1 antagonist in obesity and related lipid disorders;
-AVE 5530, a cholesterol absorption inhibitor;
-AVE 5026, an indirect Xa/IIa inhibitor in thrombosis;
-SSR149415, a VIB receptor antagonist in depression;
-Surinabant (SR14778), a CB1 antagonist in smoking cessation.
-Icatibant, a bradykinin B2 receptor antagonist in osteoarthritis;
-Ferroquine in malaria.
- Five projects in vaccines entered phase III: Flu Micro-injection, Flu
infants, Flu new formulation, Menactra(R) toddler 1-2 years,
Unifive(TM) (combination vaccine). The project for pandemic flu is in
phase IIb.
Two projects were discontinued; tirapazamine in head and neck cancer and
SR31747 in prostate cancer.
The highlights of the progress made in the R&D projects are as follows:
Metabolic disorders:
--------------------
Acomplia(R) (rimonabant): Results of a 526-patient phase IIb study
conducted in Japan provided the first data in an Asian patient population. The
study demonstrated an impressive consistency in terms of benefits on
cardiometabolic risk factors with results of previous studies. In addition, a
reduction in visceral fat was observed in patients who underwent a CT-scan.
Rimonabant demonstrated a good safety profile. Phase III trials are currently
in progress for two indications: diabetes and weight management. The company
intends to submit the registration file in 2009 in Japan.
AVE2268, a new renal SGLT2 inhibitor, demonstrated proof of concept in a
phase I study. Phase IIb trials with AVE 2268 have been initiated. Results are
expected in Q4 2007.
Thrombosis:
-----------
Biotinylated idraparinux (SSR126517) is a neutralizable selective
inhibitor of coagulation factor Xa. SSR126517 is a long-acting synthetic
pentasaccharide, with the addition of biotin hook allows quick and efficient
neutralization following the infusion of avidin. This unique profile provides
SSR126517 potentially with a competitive advantage over current oral
anticoagulants. The clinical development program was designed to bridge
clinical results obtained with idraparinux. In Deep Vein Thrombosis, a
bioequipotency study, EQUINOX, was initiated in 2006. Another study was also
initiated in pulmonary embolism, CASSIOPEA. A Phase III trial to demonstrate
the efficacy of biotinylated idraparinux in the prevention of stroke in Atrial
Fibrillation patients is scheduled to start in H2 2007.
SR123781 is a synthetic short-acting hexadecasaccharide which exhibit
highly potent indirect factor Xa and factor IIa inhibition properties.
SR123781 is currently being studied in two phase IIb studies: the DRIVE trial
in patients undergoing total hip replacement surgery, and the SHINE study in
patients with non-ST elevated acute coronary syndrome. Results of both studies
are expected in H2 2007.
AVE5026 is a ultra low molecular weight heparin with a high ratio of
anti-factor Xa activity to anti-factor IIa activity, as compared to
low-molecular-weight heparins. This once-a-day antithrombotic agent is being
developed primarily in the prevention of venous thromboembolic events in
cancer patients. Phase IIb results are expected in H2 2007.
Otamixaban (XRP0673) is a synthetic, short-acting, direct and selective
factor Xa inhibitor displaying a quick onset/offset (short initial half-life)
designed for use in acute coronary syndrome patients undergoing invasive
treatment. The primary targeted indication is the treatment of acute coronary
syndrome. SEPIA-PCI, a phase IIa study showed a good safety profile with
predictable and dose proportional anticoagulant activity. SEPIA-ACS, a phase
IIb study, is being initiated.
Cardiovascular:
---------------
Multaq (dronedarone) is a new anti-arrhythmic agent developed for the
treatment of atrial fibrillation. The ATHENA morbi-mortality study has
completed enrollment of 4,600 patients. Results of ATHENA will be available
early 2008. Depending upon the results of this study, the company's intention
is to submit a new marketing authorization application in 2008.
Celivarone (SSR149744C) is a new anti-arrhythmic once-a-day drug developed
for the treatment of atrial fibrillation. The 673-patient MAIA study showed a
trend towards reduction in recurrences of atrial fibrillation events at a dose
of 50mg/day vs. placebo. It also demonstrated a good safety profile at all
tested doses (i.e. 50 to 300mg/day) and absence of dose-effect relationship. A
new study is under preparation to evaluate lower doses.
NV1FGF (XRP0038) is an injectable non-viral DNA plasmid and gene
therapy-based approach for the promotion of angiogenesis in CLI (Critical Limb
Ischemia). This innovative approach may have the potential to reduce the
number of amputations and potentially to replace invasive methods like
angioplasty and surgery. NV1FGF will enter Phase III of development in
Q2 2007.
Central nervous system:
-----------------------
Saredutant (SR48968) is a NK2 receptor antagonist in phase III for the
treatment of Major Depressive Disorder (MDD) and General Anxiety Disorder
(GAD). Four phase III studies (two studies statistically significant, two
studies not statistically significant versus placebo) evaluating saredutant in
the treatment of MDD demonstrated a statistically significant overall efficacy
versus placebo on depressive symptoms. Saredutant was very well tolerated in
these studies.
In addition, results of four other phase III studies are expected in
2007/2008.
Amibegron (SR58611) is a selective beta 3 agonist also in phase III in MDD
and GAD. The company is currently conducting six phase III trials in MDD as
well as five trials in GAD. The total number of patients enrolled exceeds
4,500. Initial results will become available in H2 2007.
Internal medicine:
------------------
Icatibant (HOE140), bradykinin B2 receptor antagonist, demonstrated
effective, quick and sustained pain relief for osteoarthritis of the knee in a
phase II trial. Results of the on-going phase IIb study are expected in
Q2 2007.
Satavaptan (SR121463), a vasopressin V2 receptor antagonist, confirms in
study DFI4522 that a pure aquaretic agent has therapeutic interest in the
reduction in the number of paracentesis in recurrent ascites.
Ferroquine (SR97193), studied in the treatment of malaria entered into
phase IIb.
Oncology:
---------
S-1 (agreement with Taiho) is a novel oral 5-FU derivative which delivers
improvements on current fluoropyrimidine-based cancer therapies. In
collaboration with Taiho, sanofi-aventis is conducting a registration seeking
Phase III study, the FLAGS study, in first line advanced gastric cancer.
Recruitment of the 1,050-patient targeted population is expected to complete
in Q2 2007. Sanofi-aventis is also evaluating further development activities
of S-1 in colorectal cancer, breast cancer and other 5-FU sensitive tumors.
Larotaxel (XRP9881) is a new taxane derivative. In a phase II study,
larotaxel in monotherapy has proved to be active in metastatic breast cancer
progressing after anthracycline/taxane, but did not reach superiority in a
phase III study versus capecitabine in the same population. Following these
results showing potential better efficacy and safety than Taxotere, a large
phase III program in association with other cytotoxic agents is being
implemented in breast and pancreas cancer.
XRP6258 is another new taxane derivative. It entered phase III development
in the treatment of hormone refractory metastatic prostate cancer previously
treated with a Taxotere containing regimen.
VEGF Trap (AVE0005) (agreement with Regeneron) is a new antiangiogenic
agent to prevent neo-vascularization processes in tumors. Five Phase III
studies in combination with chemotherapy in patients with several solid tumors
are scheduled to start in 2007.
The first potential regulatory submission is planned in 2008.
Vaccines:
---------
Menactra(R), a conjugate vaccine to protect against Meningitis A/C/Y/W, is
currently licensed in the USA as a single dose product for 11-55 years. A
supplement for 2-10 years in under FDA review with licensure expected in 2007.
Menactra(R) Toddler, which would be targeted at toddlers between 1-2 years,
has moved to Phase III (following successful Phase IIB) and this development
project has been give a "fast track" designation by the FDA. The expected
filing date for Menactra(R) Toddler is 2009.
The advisory committee to the U.S. Food and Drug Administration (FDA)
voted unanimously that Pentacel(R) (DTaP-IPV-Hib), company's pentavalent
combination vaccine for use in pediatric patients, is both safe and
efficacious. Pentacel vaccine protects against diphtheria, tetanus, pertussis,
polio, and Haemophilus influenzae type b (Hib). According to the current
Recommended Childhood and Adolescent Immunization Schedule from the Advisory
Committee on Immunization Practices (ACIP) of the U.S. Centers for Disease
Control and Prevention (CDC), up to 23 injections are needed through 18 months
of age. The use of Pentacel(R) could reduce that number of shots by seven.
Sanofi Pasteur expects Pentacel(R) to be licensed by the FDA soon.
Two other combination vaccines, Hexaxim(TM) and Unifive(TM), tailored for
the International markets, are in extensive Phase III clinical testing.
Flu micro-injection, providing superior immune response in the elderly,
has entered Phase III and will be filed this year. A new formulation of flu
vaccine and a flu vaccine for infants (6 weeks to 6 months age) entered also
in phase III in the US.
Phase I studies with a cell culture flu vaccine have been initiated.
Sanofi Pasteur has submitted a BLA supplement for a pre pandemic H5N1
vaccine without adjuvant with the US FDA. In Europe, results obtained in a
Phase II study in 600 healthy adults and elderly persons will allow Sanofi
Pasteur to file a "mock up" dossier in 2007. The company has also initiated
phase 1 study with H5N1 and a novel adjuvant.
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 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 sanofi-aventis' annual report on Form 20-F for
the year ended December 31, 2005. 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
-------------------------------------------------------------------------
October 25, 2006 Presentation of a reorganization plan for the
commercial subsidiary of sanofi-aventis in France.
-------------------------------------------------------------------------
November 9, 2006 Marketing authorization granted for Acomplia(TM) in
Mexico.
-------------------------------------------------------------------------
November 10, 2006 Announcement of reimbursement of Acomplia(TM) in
Sweden for overweight patients with associated risk
factors
-------------------------------------------------------------------------
November 13, 2006 Announcement of a collaborative agreement with
Inserm and Innogenetics in Alzheimer's disease.
-------------------------------------------------------------------------
November 20, 2006 Signature of a contract between the U.S. government
and sanofi pasteur for a stockpile of new type of
H5N1 pre-pandemic vaccine.
-------------------------------------------------------------------------
November 27, 2006 Announcement of the successful completion of the
shipment of 50 million doses of influenza vaccine
in the United States.
-------------------------------------------------------------------------
November 29, 2006 Granting of pediatric exclusivity for Ambien(R) and
Ambien CR- in the United States.
-------------------------------------------------------------------------
December 5, 2006 Presentation of the results of the SERENADE study
at the World Diabetes Congress of the International
Diabetes Federation, showing significant
improvements in blood sugar control and weight when
compared to placebo in type 2 diabetes patients not
currently treated with anti-diabetic medications.
-------------------------------------------------------------------------
December 8, 2006 Announcement that the resubmission to the FDA
relating to the new drug application for rimonabant
had been accepted as a complete class 2 response.
The user fee goal date is April 26, 2007.
-------------------------------------------------------------------------
December 8, 2006 Announcement that the Federal Court of Appeal had
upheld the preliminary injunction issued against
Apotex on August 31, 2006 by the U.S. District
Court for the Southern District of New York.
-------------------------------------------------------------------------
December 10, 2006 Announcement of encouraging results for Idraparinux
in the Van Gogh clinical trials program.
-------------------------------------------------------------------------
December 12, 2006 Presentation of positive results from the PREVAIL
study at the 48th Congress of the American Society
of Hematology, showing that Lovenox(R) is more
effective than unfractionated heparin for
preventing the risk of venous thromboembolism in
patients with acute ischemic stroke.
-------------------------------------------------------------------------
December 14, 2006 Presentation at the 29th Annual San Antonio Breast
Cancer Symposium of results from the second interim
efficacy and safety analysis from the BCIRG 006
Phase III breast cancer study, which confirm at a
3-year median follow-up that Herceptin(R) combined
with Taxotere(R)-based regimens significantly
improved disease-free survival for women with early
HER2-positive breast cancer.
-------------------------------------------------------------------------
December 15, 2006 Statement from sanofi-aventis regarding the FDA
Joint Advisory Committee recommendation for Ketek-.
-------------------------------------------------------------------------
December 20, 2006 Announcement by sanofi pasteur that it had produced
over 170 million doses of influenza vaccine during
2006.
-------------------------------------------------------------------------
December 28, 2006 Announcement that the Canadian Federal Court of
Appeals had ruled in sanofi-aventis' favor in the
Canadian Plavix(R) Notice of Compliance
Proceedings.
-------------------------------------------------------------------------
January 12, 2007 Publication in the official journal of the German
government of the decision by the German Ministry
of Health to classify Acomplia(R) as a non-
reimbursable "comfort" drug. Sanofi-aventis
believes this classification to be unjustified
given the profile of the drug, and intends to
challenge it in court.
-------------------------------------------------------------------------
January 19, 2007 Presentation of results of a phase III study
(ACTS-GC) at the 2007 Gastrointestinal Cancers
Symposium in Orlando, USA, showing that the oral
anticancer agent S-1 reduced significantly the
relative risk of death in early stage gastric
cancer patients by a significant 32 % as compared
to curative surgery alone
-------------------------------------------------------------------------
January 25, 2007 FDA advisory committee recommends licensure of
Pentacel(R)
-------------------------------------------------------------------------
February 6, 2007 Announcement that the FDA grants priority review to
Lovenox(R) supplemental new drug application for
additional type of heart attack
-------------------------------------------------------------------------
February 6, 2007 Positive recommendation for Acomplia(R) from the
Transparency Committee in France
-------------------------------------------------------------------------
February 9, 2007 Announcement that the Court ruled against
sanofi-aventis in its Lovenox(R) suit against
Amphastar and Teva
-------------------------------------------------------------------------
Financial Timetable
-------------------------------------------------------------------------
-------------------------------------------------------------------------
May 3, 2007 2007 first-quarter sales and results
-------------------------------------------------------------------------
May 31, 2007 Shareholders' Annual General Meeting
-------------------------------------------------------------------------
August 1, 2007 2007 second-quarter sales and results
-------------------------------------------------------------------------
September 17, 2007 Research and Development meeting
-------------------------------------------------------------------------
October 31, 2007 2007 third-quarter sales and results
-------------------------------------------------------------------------
----------------------------------
(1) Refer to the Appendices for definitions of financial indicators
(2) Refer to Appendix 6
(3) Excluding net sales in the United States of Allegra(R), Amaryl(R),
Arava(R) and DDAVP(R) (generics introduced in the second half of
2005)
(4) Allegra(R), Amaryl(R), Arava(R), DDAVP(R)
(5) Excluding net sales of Arava(R) and DDAVP(R) in the United States
(6) IMS NPA 3 channels-Q4 2006
(7) IMS NPA 3 channels- YTD 2006
(8) IMS NPA 2 channels
(9) IMS NPA 3 channels-December 2006
Appendices
List of appendices
-------------------------------------------------------------------------
Appendix 1: Explanatory notes
Appendix 2: 2006 fourth-quarter and full-year net sales by product
Appendix 3: 2006 fourth-quarter and full-year adjusted consolidated
financial statements
Appendix 4: 2006 fourth-quarter and full-year reconciliations of
consolidated income statement to adjusted consolidated
income statement
Appendix 5: Simplified consolidated balance sheet/consolidated
statement of cash flows
Appendix 6: Trends in selected adjusted income statement items
Appendix 1: Explanatory notes
-------------------------------------------------------------------------
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 2005 fourth-quarter net sales to 2005 fourth-quarter
comparable net sales
-------------------------------------------------------------------------
(euro) million Q4 2005
-------------------------------------------------------------------------
Q4 2005 net sales 7,007
-------------------------------------------------------------------------
Impact of changes in Group structure (15)
-------------------------------------------------------------------------
Impact of exchange rates (205)
-------------------------------------------------------------------------
Q4 2005 comparable net sales 6,787
-------------------------------------------------------------------------
Reconciliation of 2005 full-year net sales to 2005 full-year comparable
net sales
-------------------------------------------------------------------------
(euro) million 2005
-------------------------------------------------------------------------
2005 full-year net sales 27,311
-------------------------------------------------------------------------
Impact of changes in Group structure (151)
-------------------------------------------------------------------------
Impact of exchange rates 116
-------------------------------------------------------------------------
2005 full-year comparable net sales 27,276
-------------------------------------------------------------------------
Developed sales
When we refer to "developed sales" of a product, we mean our consolidated
net sales minus sales of products 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) and Fujisawa on Stilnox(R)/Myslee(R) (zolpidem). Our alliance
partners provide us with information regarding their sales in order to allow
us to calculate developed sales.
We believe that developed sales are a useful measurement tool because they
demonstrate trends in the overall presence of our products in the market.
Reconciliation of net sales to developed sales
-------------------------------------------------------------------------
(euro) million Q4 2006
-------------------------------------------------------------------------
Net sales 7,356
-------------------------------------------------------------------------
Non-consolidated sales of Plavix(R)/Iscover(R),
net of sales of product to BMS 351
-------------------------------------------------------------------------
Non-consolidated sales of Aprovel(R)/Avapro(R)/
Karvea(R), net of sales of product to BMS 200
-------------------------------------------------------------------------
Non-consolidated sales of Stilnox(R)/Myslee(R),
net of sales of product to Fujisawa 30
-------------------------------------------------------------------------
Developed sales 7,937
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(euro) million 2006 full-year
-------------------------------------------------------------------------
Net sales 28,373
-------------------------------------------------------------------------
Non-consolidated sales of Plavix(R)/Iscover(R),
net of sales of product to BMS 2,355
-------------------------------------------------------------------------
Non-consolidated sales of Aprovel(R)/Avapro(R)/
Karvea(R), net of sales of product to BMS 749
-------------------------------------------------------------------------
Non-consolidated sales of Stilnox(R)/Myslee(R),
net of sales of product to Fujisawa 98
-------------------------------------------------------------------------
Developed sales 31,575
-------------------------------------------------------------------------
Adjusted net income
We define "adjusted net income" as accounting net income after minority
interests (determined under IFRS) 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 that are specific to the acquisition of Aventis by
sanofi-aventis.
-------------------------------------------------------------------------
2006
(euro) million Q4 2006 2006 full-year
Q4 2006 Adjusted full-year Adjusted
Consolidated consolidated consolidated consolidated
financial financial financial financial
statements statements statements statements
(unaudited) (unaudited)
-------------------------------------------------------------------------
Net sales 7,356 7,356 28,373 28,373
-------------------------------------------------------------------------
Net income(*) 575 1,377 4,006 7,040
-------------------------------------------------------------------------
Basic EPS 0.42 1.02 2.97 5.23
-------------------------------------------------------------------------
(*) After minority interests
Appendix 2: 2006 fourth-quarter and full-year net sales by product
2006 fourth-quarter net sales by product
-------------------------------------------------------------------------
Q4 2005 Q4 2005
(euro) million Q4 2006 comparable reported
net sales net sales net sales
-------------------------------------------------------------------------
Lovenox(R) 614 549 572
Plavix(R) 541 515 518
Stilnox(R)/Ambien(R)/Ambien CR(TM) 580 407 430
Taxotere(R) 437 410 425
Eloxatin(R) 402 408 423
Lantus(R) 451 332 345
Copaxone(R) 273 246 256
Aprovel(R) 265 229 231
Tritace(R) 271 282 285
Allegra(R) 163 151 160
Amaryl(R) 105 131 135
Xatral(R) 84 89 91
Actonel(R) 87 88 89
Depakine(R) 74 79 80
Nasacort(R) 74 68 72
-------------------------------------------------------------------------
TOTAL 4,421 3,984 4,112
-------------------------------------------------------------------------
Other products 2,129 2,183 2,252
-------------------------------------------------------------------------
TOTAL Pharmaceuticals 6,550 6,167 6,364
Vaccines 806 620 643
TOTAL Net sales 7,356 6,787 7,007
-------------------------------------------------------------------------
2006 full-year net sales by product
-------------------------------------------------------------------------
2005 2005
full-year full-year
(euro) million 2006 full-year comparable reported
net sales net sales net sales
-------------------------------------------------------------------------
Lovenox(R) 2,435 2,157 2,143
Plavix(R) 2,229 2,033 2,026
Stilnox(R)/Ambien(R)/Ambien CR(TM) 2,026 1,520 1,519
Taxotere(R) 1,752 1,616 1,609
Eloxatin(R) 1,693 1,570 1,564
Lantus(R) 1,666 1,217 1,214
Copaxone(R) 1,069 907 902
Aprovel(R) 1,015 896 892
Tritace(R) 977 1,026 1,009
Allegra(R) 688 1,367 1,345
Amaryl(R) 451 678 677
Xatral(R) 353 329 328
Actonel(R) 351 329 364
Depakine(R) 301 318 318
Nasacort(R) 283 281 278
-------------------------------------------------------------------------
TOTAL 17,289 16,244 16,188
-------------------------------------------------------------------------
Other products 8,551 8,968 9,061
-------------------------------------------------------------------------
TOTAL Pharmaceuticals 25,840 25,212 25,249
Vaccines 2,533 2,064 2,062
TOTAL Net sales 28,373 27,276 27,311
-------------------------------------------------------------------------
Appendix 3: 2006 fourth-quarter and full-year adjusted consolidated
financial statements
-------------------------------------------------------------------------
2006 fourth-quarter adjusted consolidated financial statements
(unaudited)
-------------------------------------------------------------------------
Q4 2006 Q4 2005
Adjusted Adjusted
consolidated as % of consolidated as % of
(euro) income net income net %
million statement sales statement sales change
(unaudited) (unaudited)
-------------------------------------------------------------------------
Net sales 7,356 100.0% 7,007 100% +5.0%
Other revenues 228 3.1% 336 4.8% -32.1%
Cost of sales (1,957) (26.6%) (1,901) (27.1%) +2.9%
-------------------------------------------------------------------------
Gross profit 5,627 76.5% 5,442 77.7% +3.4%
-------------------------------------------------------------------------
Research and
development
expenses (1,211) (16.5%) (1,150) (16.4%) +5.3%
Selling and
general
expenses (2,153) (29.3%) (2,283) (32.6%) -5.7%
Other current
operating
income 69 - 69 - -
Other current
operating
expenses (30) - (30) - -
Amortization of
intangibles (30) - (28) - +7.1%
-------------------------------------------------------------------------
Operating income
- current 2,272 30.9% 2,020 28.8% +12.5%
-------------------------------------------------------------------------
Restructuring
costs (176) - 5 - -
Impairment of
PP&E and
intangibles (214) - (4) - -
Other operating
income and
expenses 16 - 35 - -54.3%
-------------------------------------------------------------------------
Operating income 1,898 25.8% 2,056 29.3% -7.7%
-------------------------------------------------------------------------
Financial
expenses (56) - (104) - -46.2%
Financial income 122 - 83 - +47.0%
-------------------------------------------------------------------------
Income before
tax and
associates 1,964 26.7% 2,035 29.0% -3.5%
-------------------------------------------------------------------------
Income tax
expense (534) (7.3%) (643) (9.1%) -17.0%
Effective tax
rate 27.2% - 31.6% - -
Share of profit/
loss of
associates 50 - 140 - -64.3%
-------------------------------------------------------------------------
Consolidated net
income 1,480 20.1% 1,532 21.9% -3.4%
-------------------------------------------------------------------------
Minority
interests 103 - 88 - +17.0%
-------------------------------------------------------------------------
Net income after
minority
interests 1,377 18.7% 1,444 20.6% -4.6%
-------------------------------------------------------------------------
Average number
of shares
outstanding
(millions) 1,348.8 1,338.5
-------------------------------------------------------------------------
Earnings per
share
(in euros) 1.02 1.08 -5.6%
-------------------------------------------------------------------------
2006 full-year adjusted consolidated financial statements
-------------------------------------------------------------------------
2006 2005
full-year full-year
(euro) Adjusted Adjusted
million consolidated consolidated
income as % of income as % of %
statement net sales statement net sales change
-------------------------------------------------------------------------
Net sales 28,373 100.0% 27,311 100% +3.9%
-------------------------------------------------------------------------
Other revenues 1,116 3.9% 1,202 4.4% -7.2%
Cost of sales (7,555) (26.6%) (7,172) (26.3%) +5.3%
-------------------------------------------------------------------------
Gross profit 21,934 77.3% 21,341 78.1% +2.8%
-------------------------------------------------------------------------
Research and
development
expenses (4,430) (15.6%) (4,044) (14.8%) +9.5%
Selling and
general
expenses (8,020) (28.3%) (8,250) (30.2%) -2.8%
Other current
operating
income 391 - 261 - +49.8%
Other current
operating
expenses (116) - (124) - -6.5%
Amortization of
intangibles (132) - (112) - +17.9%
-------------------------------------------------------------------------
Operating income
- current 9,627 33.9% 9,072 33.2% +6.1%
-------------------------------------------------------------------------
Restructuring
costs (176) - (25) - -
Impairment of
PP&E and
intangibles (217) - (7) - -
Other operating
income and
expenses 536 - 79 - -
-------------------------------------------------------------------------
Operating
income 9,770 34.4% 9,119 33.4% +7.1%
-------------------------------------------------------------------------
Financial
expenses (455) - (532) - -14.5%
Financial income 375 - 287 - +30.7%
-------------------------------------------------------------------------
Income before tax
and associates 9,690 34.2% 8,874 32.5% +9.2%
-------------------------------------------------------------------------
Income tax
expense (2,816) (9.9%) (2,774) (10.1%) +1.5%
Effective tax
rate 29.1% - 31.3% - -
Share of
profit/loss
of associates 559 - 584 - -4.3%
-------------------------------------------------------------------------
Consolidated net
income 7,433 26.2% 6,684 24.5% +11.2%
-------------------------------------------------------------------------
Minority
interests 393 - 349 - +12.6%
-------------------------------------------------------------------------
Net income
after minority
interests 7,040 24.8% 6,335 23.2% +11.1%
-------------------------------------------------------------------------
Average number
of shares
outstanding
(millions) 1,346.8 1,336.5
-------------------------------------------------------------------------
Earnings per share
(in euros) 5.23 4.74 +10.3%
-------------------------------------------------------------------------
Appendix 4: 2006 fourth-quarter and full-year reconciliations of
consolidated income statement to adjusted consolidated income statement
-------------------------------------------------------------------------
2006 fourth-quarter reconciliation of consolidated income statement to
adjusted consolidated income statement (unaudited)
The adjustments to the income statement reflect the elimination of
material impacts of the application of purchase accounting to acquisitions,
primarily the acquisition of Aventis, amounting to (euro)802 million net of
deferred taxes (with no cash impact for the Group).
-------------------------------------------------------------------------
Q4 2006
Adjusted
(euro) million Q4 2006 Adjust- conso-
Consolidated ments lidated
(unaudited) (unaudited)
-------------------------------------------------------------------------
Net sales 7,356 7,356
-------------------------------------------------------------------------
Other revenues 228 228
Cost of sales (1,976) 19(a) (1,957)
-------------------------------------------------------------------------
Gross profit 5,608 19 5,627
-------------------------------------------------------------------------
Research and development expenses (1,211) (1,211)
Selling and general expenses (2,153) (2,153)
Other current operating income 69 69
Other current operating expenses (30) (30)
Amortization of intangibles (974) 944(b) (30)
-------------------------------------------------------------------------
Operating income - current 1,309 963 2,272
-------------------------------------------------------------------------
Restructuring costs (176) (176)
Impairment of PP&E and intangibles (785) 571(c) (214)
Other operating income and expenses 16 16
-------------------------------------------------------------------------
Operating income 364 1,534 1,898
-------------------------------------------------------------------------
Financial expenses (56) (56)
Financial income 122 122
-------------------------------------------------------------------------
Income before tax and associates 430 1,534 1,964
-------------------------------------------------------------------------
Income tax expense 218 (752)(d) (534)
Share of profit/loss of associates 30 20(e) 50
-------------------------------------------------------------------------
Consolidated net income 678 802 1,480
-------------------------------------------------------------------------
Minority interests 103 103
-------------------------------------------------------------------------
Net income after minority interests 575 802 1,377
-------------------------------------------------------------------------
Average number of shares
outstanding (millions) 1,348.8 1,348.8
-------------------------------------------------------------------------
Earnings per share (in euros) 0.42 0.60 1.02
-------------------------------------------------------------------------
The material impacts of the application of purchase accounting to
acquisitions (primarily the acquisition of Aventis) and of restructuring
charges on the 2006 fourth-quarter consolidated income statement are:
a) A charge of (euro)19 million arising from the workdown of acquired
inventories remeasured at fair value. This adjustment has no cash
impact on the Group
b) An amortization charge of (euro)944 million against intangible
assets. This adjustment has no cash impact on the Group.
c) An impairment loss of (euro)571 million, relating primarily to Ketek
and to the launch of a generic of Ramipril in Canada. This
adjustment has no cash impact on the Group.
d) The tax impact primarily comprises:
1. Deferred taxes of (euro)662 million generated mainly by the
amortization charge of (euro)944 million taken against intangible
assets, impairment losses on intangibles of (euro)571 million, and
the (euro)19 million charge arising from the workdown of acquired
inventories remeasured at fair value. This adjustment has no cash
impact on the Group.
2. Reversal of deferred tax liabilities of (euro)90 million due to
the tax exemption of some internal capital gains on investments.
e) In "Share of profit/loss from associates", a (euro)20 million charge
corresponding to amortization and impairment of intangibles (net of
tax). This adjustment has no cash impact on the Group.
2006 full-year reconciliation of consolidated income statement to
adjusted consolidated income statement
The adjustments to the income statement reflect the elimination of
material impacts of the application of purchase accounting to acquisitions,
primarily the acquisition of Aventis, amounting to (euro)2,969 million net of
deferred taxes (with no cash impact for the Group) and restructuring charges
((euro)65 million net of tax), i.e. a total impact of (euro)3,034 million.
-------------------------------------------------------------------------
2006 Adjust- 2006
Consolidated ments Adjusted
(euro) million conso-
lidated
-------------------------------------------------------------------------
Net sales 28,373 28,373
-------------------------------------------------------------------------
Other revenues 1,116 1,116
Cost of sales (7,587) 32(a) (7,555)
-------------------------------------------------------------------------
Gross profit 21,902 32 21,934
Research and development expenses (4,430) (4,430)
Selling and general expenses (8,020) (8,020)
Other current operating income 391 391
Other current operating expenses (116) (116)
Amortization of intangibles (3,998) 3,866(b) (132)
-------------------------------------------------------------------------
Operating income - current 5,729 3,898 9,627
-------------------------------------------------------------------------
Restructuring costs (274) 98(c) (176)
Impairment of PP&E and intangibles (1,163) 946(d) (217)
Other operating income and expenses 536 536
-------------------------------------------------------------------------
Operating income 4,828 4,942 9,770
-------------------------------------------------------------------------
Financial expenses (455) (455)
Financial income 375 375
-------------------------------------------------------------------------
Income before tax and associates 4,748 4,942 9,690
-------------------------------------------------------------------------
Income tax expense (800) (2,016)(e) (2,816)
Share of profit/loss of associates 451 108(f) 559
-------------------------------------------------------------------------
Consolidated net income 4,399 3,034 7,433
-------------------------------------------------------------------------
Minority interests 393 393
-------------------------------------------------------------------------
Net income after minority interests 4,006 3,034 7,040
-------------------------------------------------------------------------
Average number of shares outstanding (millions) 1,346.8 1,346.8
-------------------------------------------------------------------------
Earnings per share (in euros) 2.97 2.26 5.23
-------------------------------------------------------------------------
The material impacts of the application of purchase accounting to
acquisitions (primarily the acquisition of Aventis) and of restructuring
charges on the 2006 full-year consolidated income statement are as follows:
a) A charge of (euro)32 million arising from the workdown of acquired
inventories remeasured at fair value. This adjustment has no cash
impact on the Group.
b) An amortization charge of (euro)3,866 million against intangible
assets. This adjustment has no cash impact on the Group.
c) A pre-tax restructuring charge of (euro)98 million.
d) Impairment losses of (euro)946 million, relating mainly to Ketek and
Ramipril. This adjustment has no cash impact on the Group.
e) The tax impact primarily comprises:
a. Deferred taxes of (euro)1,888 million generated primarily by the
amortization charge of (euro)3,866 million taken against
intangible assets, impairment losses on intangibles of
(euro)946 million, and the (euro)32 million charge arising from
the workdown of acquired inventories remeasured at fair value.
This adjustment has no cash impact on the Group.
b. Reversal of deferred tax liabilities of (euro)95 million due to
the tax exemption of some internal capital gains on investments.
c. A tax saving of (euro)33 million related to the (euro)98 million
of restructuring charges.
f) In "Share of profit/loss from associates", a charge of
(euro)108 million corresponding to amortization and impairment of
intangibles (net of tax) and the workdown of acquired inventories.
This adjustment has no cash impact on the Group.
Appendix 5: Simplified consolidated balance sheet/consolidated statement
of cash flows
-------------------------------------------------------------------------
Simplified consolidated statement of cash flows (unaudited)
-------------------------------------------------------------------------
(euro) million 2006 2005
full-year full-year
-------------------------------------------------------------------------
Adjusted net income 7,040 6,335
-------------------------------------------------------------------------
Depreciation, amortization and impairment of
property, plant & equipment and intangibles 1,296 983
-------------------------------------------------------------------------
Impact of restructuring costs(*), net of tax (34) (530)
-------------------------------------------------------------------------
Net gain/loss on disposals of non-current assets,
net of tax (558) (125)
-------------------------------------------------------------------------
Other items (134) (26)
-------------------------------------------------------------------------
Operating cash flow before changes in working capital 7,610 6,637
-------------------------------------------------------------------------
Changes in working capital (1,006) (239)
-------------------------------------------------------------------------
Net cash provided by operating activities 6,604 6,398
-------------------------------------------------------------------------
Acquisitions of property, plant & equipment and
intangibles (1,454) (1,143)
-------------------------------------------------------------------------
Acquisitions of investments in consolidated
undertakings, net of cash acquired (509) (692)
-------------------------------------------------------------------------
Proceeds from disposals of property, plant &
equipment and intangibles, net of tax 1,174 733
-------------------------------------------------------------------------
Other items (1) 1
-------------------------------------------------------------------------
Net cash used in investing activities (790) (1,101)
-------------------------------------------------------------------------
Issuance of sanofi-aventis shares 307 314
-------------------------------------------------------------------------
Proceeds from sale of own shares on exercise of
stock options 50 105
-------------------------------------------------------------------------
Dividends (2,050) (1,614)
-------------------------------------------------------------------------
Other items 14 174
-------------------------------------------------------------------------
Change in net debt 4,135 4,276
-------------------------------------------------------------------------
(*) relating to the Aventis acquisition
Simplified consolidated balance sheet
(euro) million
-------------------------------------------------------------------------
ASSETS 31/12/06 31/12/05 LIABILITIES & EQUITY 31/12/06 31/12/05
-------------------------------------------------------------------------
Property, Equity attributable
plant and to equity-holders
equipment 6,219 6,184 of the company 45,600 46,128
Intangible
assets
(including Minority
goodwill) 52,210 60,463 interests 220 189
Non-current
financial
assets,
investments
in associates
and deferred Total shareholders'
taxes 7,174 7,177 equity 45,820 46,317
Long-term debt 4,499 4,750
Provisions and other
Non-current non-current
assets 65,603 73,824 liabilities 7,920 8,250
Deferred taxes 9,246 12,208
Inventories,
accounts
receivable
and current
financial Non-current
assets 11,007 11,872 liabilities 21,665 25,208
Cash &
equivalents,
short-term Accounts payable
investments and other current
and deposits 1,153 1,249 liabilities 7,833 8,995
Short-term debt 2,445 6,425
Current
assets 12,160 13,121 Current liabilities 10,278 15,420
-------------------------------------------------------------------------
Total LIABILITIES
Total ASSETS 77,763 86,945 & EQUITY 77,763 86,945
-------------------------------------------------------------------------
Appendix 6: Trends in selected adjusted income statement items (after
tax)
-------------------------------------------------------------------------
(euro) million Q4 2006 Q4 2005 2006 2005
full-year full-year
-------------------------------------------------------------------------
Restructuring costs (122) 4 (122) (17)
Net gains/(losses) on disposals 106 34 553(1) 135(3)
Provisions for financial
instruments, litigation, tax
inspections and other items 25 46 38(2) 50(4)
-------------------------------------------------------------------------
TOTAL after tax 9 84 469 168
-------------------------------------------------------------------------
(1) including:
- Exubera(R): (euro)384 million
- Rhodia: (euro)101 million
- Animal Nutrition: (euro)31 million
(2) including:
- tax exposures/settlement of tax disputes: (euro)105 million
- impairment of Ketek(R) industrial assets: -(euro)79 million
- CSL: (euro)43 million
- provision for investment portfolio: -(euro)26 million
(3) including:
- Oral Health: (euro)48 million
- Transkaryotic: (euro)26 million
- Viropharma: (euro)22 million
(4) including:
- Bayer litigation: (euro)41 million
- CSL: (euro)34 million
- provision for investment portfolio: -(euro)23 million
For further information: Michel Labie, Senior Vice President, Corporate
Communications; Jean-Marc Podvin, Vice President, Media Relations, +33
1.53.77.42.23; Salah Mahyaoui, Vice President, Product Communications, +33
1.53.77.40.31
