Sanofi delivers strong Q1 2019 business EPS growth of 9.4% at CER



Paris, April 26, 2019

Sanofi delivers strong Q1 2019 business EPS growth of 9.4% at CER

  Q1 2019 Change Change
at CER
IFRS net sales reported €8,391m +6.2% +4.2%
IFRS net income reported €1,137m +11.9% -
IFRS EPS reported €0.91 +12.3% -
Business net income(1) €1,765m +10.5% +9.0%
Business EPS(1) €1.42 +10.9% +9.4%

First-quarter sales(2) growth driven by Specialty Care, Vaccines and strong contribution from Emerging Markets

  • Net sales were €8,391 million, an increase of 6.2% on a reported basis, 4.2%(2) at CER and 3.8% at CER/CS(3).
  • Sanofi Genzyme GBU sales were up 30.8% (16.0% at CER/CS(3)), driven by Dupixent® and consolidation of Bioverativ.
  • Vaccines sales up 20.1%, reflecting the recovery and growth of Pentaxim® in China and Menactra® strength in Emerging Markets.
  • CHC sales up 0.6%, as Emerging Markets growth more than offset lower sales in mature markets and non-core divestments.
  • Primary care GBU sales were down 17.0% (-11.8% at CER/CS) impacted by lower diabetes sales and divestiture of EU generics.
  • Emerging Markets sales(4) grew strongly (up 13.6%) across all regions, primarily driven by China.
Q1 2019 business EPS(1) growth reflected sales performance, favorable product mix and cost discipline

  • Q1 2019 business net income increased 10.5% to €1,765 million and 9.0% at CER.
  • Business EPS(1) in the first quarter was up 9.4% at CER to €1.42.
  • IFRS EPS was €0.91 (up 12.3%).
Full-year 2019 business EPS(1) guidance confirmed

  • Sanofi continues to expect 2019 business EPS(1) to grow between 3% and 5% at CER(5) barring unforeseen major adverse events. Applying the average April 2019 exchange rates, the currency impact on 2019 business EPS is estimated to be around 2%.
Key regulatory milestones achieved in R&D
  • Dupixent® approved in the U.S. for atopic dermatitis in adolescent patients.
  • FDA granted Priority Review in the U.S. for Dupixent® in adults with chronic rhinosinusitis with nasal polyps.
  • CHMP recommended approval of Dupixent® in EU for severe asthma in adults and adolescents.
  • Praluent® label extension approved by EMA to include reduction of the risk of cardiovascular events in eligible patients.
  • Libtayo® approved in Canada for cutaneous squamous cell carcinoma.
  • CHMP recommended approval in EU and U.S. FDA issued a CRL(6).regarding ZynquistaTM for type 1 diabetic adult patients.

Sanofi Chief Executive Officer, Olivier Brandicourt, commented:
"I am pleased with the strong start in 2019 as we sustained our new growth phase and delivered business EPS growth of 9.4%. We executed on key launches in Specialty Care led by the impressive uptake of Dupixent® in atopic dermatitis and asthma and also delivered strong growth in Vaccines. At the same time, our new GBU structure enabled us to optimize our growth opportunity in China & Emerging Markets and to adapt to the pressures in Primary Care. Based on our performance in the first quarter, we remain confident in the growth outlook for our business over the rest of the year despite challenging industry dynamics."

(1) In order to facilitate an understanding of operational performance, Sanofi comments on the business net income statement. Business net income is a non-GAAP financial measure (see Appendix 8 for definitions). The consolidated income statement for Q1 2019 is provided in Appendix 3 and a reconciliation of reported IFRS net income to business net income is set forth in Appendix 4; (2) Changes in net sales are expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 8); (3) Constant Structure: Adjusted for Bioverativ acquisition and divestment of European Generics business; (4) See definition page 8; (5) 2018 business EPS was €5.47; (6) Complete Response Letter.

Investor Relations: (+) 33 1 53 77 45 45 - E-mail: IR@sanofi.com - Media Relations: (+) 33 1 53 77 46 46 - E-mail: MR@sanofi.com
Website: www.sanofi.com  Mobile app: SANOFI IR available on the App Store and Google Play

2019 first-quarter Sanofi sales

Unless otherwise indicated, all percentage changes in sales in this press release are stated at CER(7).

In the first quarter of 2019, Company sales were €8,391 million, up 6.2% on a reported basis. Exchange rate movements had a positive effect of 2.0 percentage points mainly driven by the U.S. dollar which largely offset the negative impact from the Argentine Peso, Turkish Lira, Brazilian Real and Russian Ruble. At CER, Company sales increased 4.2%.

Global Business Units

The table below presents sales by Global Business Unit (GBU). Please note that Emerging Markets sales for Specialty Care and Primary Care are included in the China & Emerging Markets GBU.

Net Sales by GBU
(€ million)
Q1 2019 Change
at CER
Sanofi Genzyme (Specialty Care)(a)   2,019   +30.8%(c)
Primary Care(a)   2,285   -17.0%(d)
China & Emerging Markets(b)   1,958   +10.3%
Total Pharmaceuticals   6,262   +3.1%
Consumer Healthcare (CHC)   1,256   +0.6%
Sanofi Pasteur (Vaccines)   873   +20.1%
Total net sales   8,391   +4.2%(e)

(a) Does not include China & Emerging Markets sales - see definition page 8; (b) Includes Emerging Markets sales for Primary Care and Specialty Care; (c)+16.0% at CS; (d)-11.8% at CS; (e)+3.8% at CS.

Global Franchises

The table below presents first-quarter 2019 sales by global franchise, including Emerging Markets sales, to facilitate comparisons. Appendix 1 provides a reconciliation of sales by GBU and franchise.

Net sales by Franchise
(€ million)
Q1 2019 Change
at CER
Developed
Markets
Change
at CER
Emerging
Markets
Change
at CER
Specialty Care franchises 2,327 +31.2%(1) 2,019 +30.8% 308 +33.6%
Rare Disease 766 +10.1% 613 +3.9% 153 +37.2%
Multiple Sclerosis 529 +5.9% 507 +4.6% 22 +41.2%
Oncology 399 +7.8% 273 +2.4% 126 +21.2%
Immunology 359 +186.3% 356 +183.8% 3 -
Rare Blood Disorder 274 +296.9%(2) 270 +290.6% 4 -
Primary Care franchises 3,935 -8.3%(3) 2,285 -17.0%(4) 1,650 +6.6%
Established Rx Products(5) 2,506 -9.3%(6) 1,307 -18.8%(7) 1,199 +3.5%
Diabetes 1,294 -6.9% 849 -15.9% 445 +15.3%
Cardiovascular 135 -0.8% 129 -2.4% 6 +50.0%
Consumer Healthcare 1,256 +0.6% 833 -3.0% 423 +8.1%
Vaccines 873 +20.1% 524 +5.7% 349 +48.3%
Total net sales 8,391 +4.2%(8) 5,661 0.0%(9) 2,730 +13.6%

(1)+18.3 % at CS; (2) +1.2% at CS; (3) -4.7% at CS;(4)-11.8% at CS; (5) including Generics; (6)-3.8% at CS; (7) -9.8% at CS; (8) +3.8% at CS;(9)-0.6% at CS

Pharmaceuticals

First-quarter Pharmaceutical sales were up 3.1% to €6,262 million mainly driven by the Immunology and Rare Blood Disorder franchises which were partially offset by Diabetes and Established Rx Products including the disposal of the European generics business.
(7) See Appendix 8 for definitions of financial indicators.

Specialty Care franchises

Immunology franchise

Net sales (€ million) Q1 2019 Change
at CER
Dupixent® 329 +186.9%
Kevzara® 30 +180.0%
Total Immunology 359 +186.3%

Dupixent® (collaboration with Regeneron) generated sales of €329 million in the first quarter (up 186.9%). In the U.S., Dupixent® sales of €266 million (up 157.9%) were driven by continued growth in adult atopic dermatitis and by the asthma launch. Market access for Dupixent® in asthma reached 90% of commercial lives within the first 5 months of launch. Dupixent® became commercially available for adolescent atopic dermatitis in mid-March in the U.S. In April, Dupixent® was launched in asthma in Japan. First-quarter sales in Europe were €36 million versus €10 million in the first quarter of 2018.

Kevzara® (collaboration with Regeneron) sales were €30 million in the first quarter versus €10 million in the first quarter of 2018, of which €18 million was in the U.S. (versus €8 million in the first quarter of 2018).

Multiple Sclerosis franchise

Net sales (€ million) Q1 2019 Change
 at CER
Aubagio® 437 +11.9%
Lemtrada® 92 -15.2%
Total Multiple Sclerosis 529 +5.9%

First-quarter Multiple Sclerosis (MS) sales were up 5.9% to €529 million, as double-digit Aubagio® sales growth was partially offset by the decline in Lemtrada® sales.

First-quarter Aubagio® sales increased 11.9% to €437 million, driven by the U.S. (up 12.2% to €309 million) and Emerging Markets (up 41.7% to €16 million). In Europe, sales of the product increased 3.2% to €98 million.

In the first quarter, Lemtrada® sales decreased 15.2% to €92 million due to lower U.S. sales (down 21.3% to €41 million) and European sales (down 12.8% to €41 million), reflecting increased competition.

Oncology franchise

Net sales (€ million) Q1 2019 Change
at CER
Jevtana® 111 +8.1%
Thymoglobulin® 81 +11.4%
Eloxatin® 54 +20.5%
Taxotere® 47 +7.0%
Mozobil® 44 +10.5%
Zaltrap® 22 0.0%
Others 40 -9.5%
Total Oncology 399 +7.8%

First-quarter Oncology sales increased 7.8% to €399 million driven by China as well as Jevtana® performance.

Jevtana® sales were up 8.1% to €111 million in the first quarter supported by growth in all regions. In the first quarter, Thymoglobulin® sales increased 11.4% (to €81 million) driven by the U.S. (up 10.8% to €44 million) and China.

In the first quarter, sales of Eloxatin® (up 20.5% to €54 million) and Taxotere® (up 7.0% to €47 million) were driven by the strong performance in China.

Libtayo® (cemiplimab-rwlc, collaboration with Regeneron) was approved in the U.S. in September 2018, for the treatment of patients with metastatic cutaneous squamous cell carcinoma (CSCC) or locally advanced CSCC who are not candidates for curative surgery or curative radiation. U.S. Libtayo® sales are consolidated by Regeneron. Libtayo® was approved in Brazil at the end of March and in Canada in April.

Rare Disease franchise

Net sales (€ million) Q1 2019 Change
at CER
Myozyme® / Lumizyme® 220 +10.7%
Fabrazyme® 185 +5.9%
Cerezyme® 176 +6.3%
Aldurazyme® 67 +31.4%
Cerdelga® 48 +27.8%
Others Rare Disease 70 +3.0%
Total Rare Disease 766 +10.1%

In the first quarter, Rare Disease sales increased 10.1% to €766 million, driven by Gaucher therapies (Cerezyme® and Cerdelga®), Myozyme®/Lumizyme® and Aldurazyme®. In the U.S. and Europe, first-quarter Rare Disease sales grew 4.5% (to €277 million) and 3.7% (to €255 million), respectively. Emerging Markets sales were up 37.2% to €153 million reflecting strong performance supported by favorable timing of orders.

First-quarter Gaucher (Cerezyme® and Cerdelga®) sales were up 10.0% to €224 million, supported by the increased penetration of Cerdelga® in Europe and the sustained growth of Cerezyme® in Emerging Markets. First-quarter Cerezyme® sales increased 6.3% to €176 million and Cerdelga® sales increased 27.8% to €48 million.

First-quarter Pompe (Myozyme®/Lumizyme®) sales grew 10.7% to €220 million, supported by positive trends in naïve patient accruals. Over the period, Myozyme®/Lumizyme® sales increased 14.1% to €79 million in the U.S. and 1.1% to €94 million in Europe, respectively. In Emerging Markets, sales grew 38.5% to €32 million driven by Latin America.

First-quarter Fabry (Fabrazyme®) sales grew 5.9% to €185 million. First-quarter sales in the U.S. and Europe increased 1.2% (to €94 million) and 7.1% (to €45 million), respectively. In Emerging Markets, sales of the product grew 16.7% to €18 million.

Rare Blood Disorder franchise

Net sales (€ million) Q1 2019 Change
at CER
Eloctate® 174 +274.4%
Alprolix® 95 +319.0%
Cablivi® 5 -
Total Rare Blood Disorder 274 +296.9%

Bioverativ was consolidated in Sanofi's Financial Statements from March 9, 2018. First-quarter sales of the Rare Blood Disorder franchise were €274 million (up 1.2% at CS(8)), including non-U.S. sales of €67 million with Japan as the primary contributor.

Eloctate® sales were €174 million in the first quarter, down 4.2% at CS(9). In the U.S., sales of the product decreased 7.3% at CS(9), as share gains in the factor replacement category were more than offset by the overall increased competitive environment. In Emerging Markets, first-quarter Eloctate® sales were €4 million reflecting the launch in Taiwan. In the rest of the world, Eloctate® sales decreased 3.2% at CS(9) to €33 million, impacted by a decline in sales in Canada following the previously-announced tender loss.

Alprolix® sales were €95 million in the first quarter up 6.0% at CS(9), of which €70 million were generated in the U.S. up 6.6% at CS(9). In the rest of the world, Alprolix® sales were €25 million, an increase of 4.5% at CS(9) as launch in Australia and growth in Japan was partly offset by a decline in sales in Canada following the previously-announced tender loss.

Cablivi® (caplacizumab-yhdp) for the treatment of adults with acquired thrombotic thrombocytopenic purpura (aTTP), generated sales of €5 million in Germany and France in the first quarter. Cablivi® was recently launched in Denmark and Austria. Cablivi® was launched in the U.S. on April 2, 2019.
(8) Growth comparing first-quarter 2019 sales versus full first-quarter 2018 sales at CER. Including Cablivi® sales in 2019. Unaudited data.
(9) Growth comparing first-quarter 2019 sales versus full first-quarter 2018 sales at CER. Unaudited data.

Primary Care franchises

Cardiovascular franchise

Net sales (€ million) Q1 2019 Change
at CER
Praluent® 56 +10.2%
Multaq® 79 -7.6%
Total cardiovascular franchise 135 -0.8%

First-quarter Praluent® (collaboration with Regeneron) sales increased 10.2% to €56 million driven by growth in Europe (up 52.6% to €29 million). In the U.S., sales decreased 26.9% to €20 million, impacted by significantly higher rebates. Continued pressure on average U.S. net pricing for Praluent® is expected as a result of negotiations to further improve patient access and affordability throughout 2019.

First-quarter Multaq® sales decreased 7.6% to €79 million.

Diabetes franchise

Net sales (€ million) Q1 2019 Change
at CER
Lantus® 774 -17.2%
Toujeo® 211 +5.6%
Total glargine 985 -13.2%
Amaryl® 90 +7.2%
Apidra® 89 -2.2%
Admelog® 66 +785.7%
Soliqua® 22 +122.2%
Insuman® 21 -8.3%
Other 21 -44.1%
Total Diabetes 1,294 -6.9%

First-quarter global Diabetes sales decreased 6.9% to €1,294 million, due to lower glargine (Lantus® and Toujeo®) sales in the U.S. First-quarter U.S. Diabetes sales were down 22.8% to €445 million, reflecting the increased contribution to the coverage gap related to Part D and a continued decline in average U.S. glargine net prices. First-quarter sales in Emerging Markets increased 15.3% to €445 million. First-quarter sales in Europe decreased 5.6% to €305 million, despite Toujeo® growth (up 19.4%).

In the first quarter, Lantus® sales were €774 million, down 17.2%. In the U.S., Lantus® sales decreased 36.6% to €284 million, mainly reflecting lower average net price and the increased contribution to the coverage gap related to Part D. In Europe, first-quarter Lantus® sales were €152 million, down 16.0% due to branded and biosimilar competition and patients switching to Toujeo®. In Emerging Markets, first-quarter Lantus® sales were up 14.9% to €281 million.

First-quarter Toujeo® sales were €211 million, up 5.6%. In the U.S., first-quarter Toujeo® sales were €69 million, down 24.7% mainly reflecting lower average net price and the increased contribution to the coverage gap related to Part D. In Europe and Emerging Markets, first-quarter Toujeo® sales were €80 million (up 19.4%) and €44 million (up 64.3%), respectively.

First-quarter Apidra® sales decreased 2.2% to €89 million. Lower sales in the U.S. (down 42.9% to €13 million) offset growth in Emerging Markets (up 33.3% to €34 million).

Amaryl® sales were €90 million, up 7.2% in the first quarter, of which €79 million were generated in Emerging Markets (up 8.3%).

Admelog® (insulin lispro injection) 100 Units/mL generated sales of €66 million in the first quarter of which €63 million were in the U.S. (versus €6 million in the first quarter of 2018) mainly due to access in Managed Medicaid.

First-quarter Soliqua® 100/33 (insulin glargine 100 Units/mL & lixisenatide 33 mcg/mL injection) and Suliqua(TM) sales were €22 million (versus €9 million in the first quarter of 2018). In February, the FDA approved the expanded use of Soliqua® 100/33 which can now also be prescribed for adults with type 2 diabetes uncontrolled on oral antidiabetic medicines.

Established Rx Products

Net sales (€ million) Q1 2019 Change
at CER
Lovenox® 343 -11.8%
Plavix® 404 +2.6%
Aprovel®/Avapro® 201 +15.1%
Renvela®/Renagel® 79 -25.7%
Synvisc® /Synvisc-One® 68 -5.9%
Myslee®/Ambien®/Stilnox® 52 -18.0%
Allegra® 56 0.0%
Generics 282 -33.8%
Other 1,021 -5.3%
Total Established Rx Products 2,506 -9.3%

In the first quarter, Established Rx Products sales decreased 9.3% to €2,506 million, primarily reflecting the divestment of the European generics business Zentiva at the end of the third quarter of 2018. Excluding the generics divestment, Established Rx Products sales decreased 3.8% in the first quarter.

First-quarter Lovenox® sales decreased 11.8% to €343 million, reflecting lower European sales (down 21.3% to €192 million) due to biosimilar competition in several countries. In Emerging Markets, Lovenox® sales grew 10.4% to €125 million.

In the first quarter, Plavix® sales increased 2.6% to €404 million, of which €323 million (up 7.1%) were generated in Emerging Markets. In the first quarter, Aprovel®/Avapro® sales increased 15.1% to €201 million, of which €146 million (up 18.0%) were generated in Emerging Markets. In the first quarter, Plavix® and Avapro® sales benefited from continued demand in China ahead of the implementation of the volume based procurement program in key cities at the end of the first quarter which is expected to result in lower growth rates for Plavix® and Avapro® for full-year 2019. First-quarter Plavix® and Avapro® sales in China were €256 million (up 9.1%) and €101 million (up 22.0%), respectively.

First-quarter Renvela®/Renagel® (sevelamer) sales decreased 25.7% to €79 million due to generic competition in the U.S. (down 44.3% to €37 million).

In the first quarter, Generics sales decreased 33.8% to €282 million, reflecting the divestment of the European generics business Zentiva at the end of the third quarter of 2018. At CS, first-quarter Generics sales increased 3.6%. In Emerging Markets, Generics sales decreased 0.6% to €167 million.

Consumer Healthcare

CHC sales by geography and category are provided in Appendix 1.

Net sales (€ million) Q1 2019 Change
at CER
Allergy Cough & Cold 362 +3.5%
  of which Allegra® 138 +0.8%
  of which Mucosolvan® 28 +3.7%
  of which Xyzal® 14 -7.1%
Pain 322 +2.5%
  of which Doliprane® 79 -6.0%
  of which Buscopan® 48 0.0%
Digestive 271 +8.1%
  of which Dulcolax® 56 +3.8%
  of which Enterogermina® 61 +24.5%
  of which Essentiale® 49 +16.3%
  of which Zantac® 32 -3.2%
Nutritionals 152 -7.9%
Other 149 -11.8%
  of which Gold Bond® 52 -2.0%
Total Consumer Healthcare 1,256 +0.6%

In the first quarter, Consumer Healthcare (CHC) sales increased 0.6% to €1,256 million, impacted by non-core brand divestments in Europe and Canada in the course of 2018.

In Europe, first-quarter CHC sales were down 3.9% to €366 million due to a weak cough & cold season and non-core brand divestments in the second quarter of 2018.

In the U.S., first-quarter CHC sales decreased 2.1% to €304 million. This decline mainly reflected the slow start to the allergy season (the Allergy, Cough & Cold category sales decreased 6.7%).

In Emerging Markets, first-quarter CHC sales recorded a strong performance, up 8.1% to €423 million, mainly driven by Latin America, significant volume growth in Russia as well as a solid performance of Essentiale in China.  

Vaccines

Net sales (€ million) Q1 2019 Change
at CER
Polio/Pertussis/Hib vaccines
(incl. Hexaxim® / Hexyon®, Pentacel®, Pentaxim® and Imovax®)
486 +26.1%
Travel and other endemic vaccines 119 +13.7%
Meningitis/Pneumo vaccines
(incl. Menactra®)
112 +21.3%
Adult Booster vaccines (incl. Adacel ®) 100 +5.4%
Influenza vaccines
(incl. Vaxigrip®, Fluzone HD®, Fluzone®, Flublok®)
32 +10.3%
Other vaccines 24 +22.2%
Total Vaccines 873 +20.1%

First-quarter Vaccines sales were €873 million, up 20.1% driven by the performance of Polio/Pertussis/Hib vaccines in Emerging Markets and Japan. In Emerging Markets, first-quarter Vaccines sales increased 48.3% and benefited from Pentaxim® in China and Menactra® performance. In Europe, first-quarter Vaccines sales were up 5.8% to €146 million. In the U.S., first-quarter Vaccines sales were €272 million (down 3.1%) due to lower Pentacel® sales reflecting CDC inventory fluctuation.

In the first quarter, Polio/Pertussis/Hib (PPH) vaccines sales increased 26.1% to €486 million, driven by recovery and strong demand for Pentaxim® in China, good performance in Emerging Markets and favorable sales phasing in Japan. In the U.S., PPH vaccines sales decreased 23.4% to €92 million due to lower sales of Pentacel® reflecting CDC inventory fluctuation.

First-quarter Travel and other endemic vaccines sales increased 13.7% to €119 million, driven by Rabies vaccines sales in U.S. and Europe.

First-quarter Menactra® sales increased 21.3% to €112 million, driven mainly by continued sales expansion in the Middle East. In the U.S., first-quarter Menactra® sales were €74 million (up 1.5%).

First-quarter Adult Booster vaccines sales increased 5.4% to €100 million.

Company sales by geographic region   

Sanofi sales (€ million) Q1 2019 Change
at CER
United States 2,550 +7.1%
Emerging Markets(a) 2,730 +13.6%
  of which Asia 1,206 +17.8%
  of which Latin America 615 +4.6%
  of which Africa, Middle East 556 +12.0%
  of which Eurasia(b) 312 +22.1%
Europe(c) 2,187 -9.4%
Rest of the World(d) 924 +8.3%
  of which Japan 532 +12.6%
Total Sanofi sales 8,391 +4.2%
  1. World excluding U.S., Canada, Western & Eastern Europe (except Eurasia), Japan, South Korea, Australia, New Zealand and Puerto Rico
  2. Russia, Ukraine, Georgia, Belarus, Armenia and Turkey
  3. Western Europe + Eastern Europe except Eurasia
  4. Japan, South Korea, Canada, Australia, New Zealand, Puerto Rico

First-quarter sales in the U.S. were up 7.1% to €2,550 million. This mainly reflected the strong performance of Dupixent®, together with the consolidation of Eloctate® and Alprolix® sales, which were partly offset by lower sales of the Diabetes franchise (down 22.8%).

First-quarter sales in Emerging Markets increased 13.6% to €2,730 million, mainly driven by Vaccines (up 48.3%), Diabetes (up 15.3%), Rare Disease (up 37.2%), and CHC (up 8.1%). In Asia, sales increased  to €1,206 million (up 17.8%) in the first quarter, reflecting strong growth in China (up 22.3% to €798 million). In addition to the recovery and growth in Pentaxim®, sales in China benefited from continued demand for Plavix® and Avapro® ahead of implementation of the volume based procurement program in key cities at the end of the first quarter which is expected to result in lower growth rates for Plavix® and Avapro® for full-year 2019. In Latin America, first-quarter sales increased 4.6% to €615 million. First-quarter sales in Brazil decreased 4.7% to €268 million. In Africa and the Middle East region, first-quarter sales increased 12.0% to €556 million driven by strong performance of the Vaccines and Rare Disease franchises. First-quarter sales in the Eurasia region increased 22.1% to €312 million, driven by growth in Turkey and Russia (€166 million, up 27.3%).

First-quarter sales in Europe were €2,187 million, down 9.4%, reflecting the divestment of the European Generics business. At CS, first-quarter sales were down 3.1% impacted by the decline of Lovenox®.

Sales in Japan increased 12.6% to €532 million in the first quarter, driven by Dupixent® and favorable sales phasing of Vaccines (up 90.3%), together with the consolidation of Eloctate® and Alprolix® sales.

R&D update

Consult Appendix 6 for full overview of Sanofi's R&D pipeline

Regulatory update

Regulatory updates since February 7, 2019 include the following:

  • In March, the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for ZynquistaTM (sotagliflozin, developed by Sanofi and Lexicon), a dual SGLT1 and SGLT2 inhibitor, recommending its approval in the European Union for the treatment of adults with type 1 diabetes. In March, the U.S. Food and Drug Administration (FDA) issued a Complete Response Letter regarding the New Drug Application for Zynquista(TM) for the treatment of adults with type 1 diabetes in combination with insulin.
  • In March, Praluent® (collaboration with Regeneron) was approved in the European Union to reduce the risk of cardiovascular events in patients with established cardiovascular disease
  • In March, the U.S. FDA approved Dupixent® (collaboration with Regeneron) for adolescent patients 12 to 17 years of age with moderate-to-severe atopic dermatitis whose disease is not adequately controlled with topical prescription therapies, or when those therapies are not advisable.
  • In March, the U.S. FDA accepted for Priority Review the supplemental Biologics License Application (sBLA) for Dupixent® as an add-on maintenance treatment for adults with inadequately-controlled severe chronic rhinosinusitis with nasal polyps (CRSwNP). The target action date for the FDA decision is June 26, 2019.
  • In March, the European Medicines Agency's CHMP adopted a positive opinion for Dupixent®, recommending its approval in the European Union for use in adults and adolescents (12 years and older) as add-on maintenance treatment for severe asthma with type 2 inflammation characterized by raised blood eosinophils and/or raised FeNO who are inadequately controlled with high dose inhaled corticosteroid plus another medicinal product for maintenance treatment.
  • In the first quarter, the U.S. FDA accepted for review a supplemental Biologic License Application (sBLA) for Fluzone® HD QIV.

At the end of April 2019, the R&D pipeline contained 84 projects including 32 new molecular entities in clinical development. 35 projects are in phase 3 or have been submitted to the regulatory authorities for approval.

Portfolio update

Phase 3:

  • In February, positive results from two phase 3 trials evaluating Dupixent® in patients with recurring severe CRSwNP were presented at the 2019 Annual Meeting of the American Academy of Allergy, Asthma & Immunology.

Phase 2:

  • A phase 2b/3 study evaluating Dupixent® in Chronic Obstructive Pulmonary Disease (COPD) is in the process of being initiated.
  • A phase 2b study evaluating SAR442168, a BTK inhibitor (collaboration with Principia), in multiple sclerosis was initiated.
  • A phase 2 study evaluating isatuximab in combination with chemotherapy in pediatric patients with relapsed refractory acute lymphoblastic leukemia or acute myeloid leukemia was initiated.

Phase 1:

  • SAR441169, a RORC (ROR gamma T) antagonist entered phase 1 for the treatment of psoriasis.

Collaboration

In April, Sanofi and Alnylam agreed to conclude the research and option phase of the companies' 2014 RNAi therapeutics alliance in rare genetic diseases. The material collaboration terms for patisiran, vutrisiran (ALN-TTRsc02) and fitusiran, as previously announced, will continue unchanged. As part of this agreement, Alnylam will advance an additional investigational asset in an undisclosed rare genetic disease through the end of IND-enabling studies. Sanofi will be responsible for any potential further development or commercialization of such asset. In addition, Alnylam and Sanofi have agreed to amend certain terms of the companies' equity agreement, with Sanofi obtaining a release of its lock-up of Alnylam stock holdings, subject to certain trading restrictions, among other provisions.

2019 first-quarter financial results(10)

Business Net Income(10)

In the first quarter of 2019, Sanofi generated net sales of €8,391 million, an increase of 6.2% (up 4.2% at CER).

First-quarter other revenues increased 41.2% (up 31.6% at CER) to €322 million, reflecting the VaxServe sales contribution of non-Sanofi products (€241 million, up 32.0% at CER) and the royalties received from Swedish Orphan Biovitrum AB.

First-quarter Gross Profit increased 8.7% to €6,097 million (up 6.3% at CER). The gross margin ratio was 72.7% (72.4% at CER) versus 71.0% in the first quarter of 2018 and benefited from the strong performance of Vaccines and Pharmaceuticals in China, the growth in Specialty Care including the contribution from Bioverativ as well as the end of royalty payments to Bristol-Myers Squibb on Plavix® and Avapro® sales(11). These positive drivers more than offset the negative impact from U.S. Diabetes net price evolution and Established Rx Products decrease in mature markets. In the first quarter of 2019, the gross margin ratio of segments was 76.0% for Pharmaceuticals (up 1.7 percentage points), 68.5% for CHC (up 0.7 percentage points) and 62.2% for Vaccines (up 5.1 percentage points). In 2019, Sanofi expects its gross margin ratio to be around 70% at CER.

Research and Development (R&D) expenses increased 8.2% to €1,385 million in the first quarter of 2019. At CER, R&D expenses increased 4.9%, mainly reflecting the acquisitions of Bioverativ and Ablynx together with investments in diabetes, rare blood disorder and immunology programs. Excluding the impact of acquisitions and Generics in Europe(12), R&D expenses would have risen by 1.9% at CER in the quarter.

First-quarter selling general and administrative expenses (SG&A) increased 3.0% to €2,380 million. At CER, SG&A expenses were up 0.6% mainly reflecting consolidation of Bioverativ and Ablynx. Excluding the impact of acquisitions and Generics in Europe(12), SG&A expenses were stable at CER, reflecting investments in Specialty Care offset by cost efficiency measures notably in Primary Care. In the first quarter, the ratio of SG&A to sales decreased 0.8 percentage points to 28.4% compared to the first quarter of 2018.

First-quarter operating expenses were €3,765 million, an increase of 4.9% and 2.1% at CER. Excluding the impact of acquisitions and Generics in Europe(12), operating expenses would have risen by 0.7% at CER in the first quarter of 2019.


First-quarter other current operating income net of expenses was -€102 million versus -€31 million in the first quarter of 2018. This line included the share of profit/loss to Regeneron of the monoclonal antibodies Alliance net of associated marketing expenses incurred by Regeneron. In the first quarter of 2019, this line also included a legal contingency provision of €56 million.

The share of profits from associates was €71 million in the first quarter, down 4.1%. This line included the contribution of the share of profits in Regeneron.

In the first quarter, non-controlling interests were -€10 million versus -€30 million and reflected the restructuring of the Alliance with Bristol-Myers Squibb related to Plavix® and Avapro®.

First-quarter business operating income increased 12.6% to €2,291 million. At CER, business operating income increased 11.3%. The ratio of business operating income to net sales increased 1.5 percentage points to 27.3% versus the first quarter of 2018. Over the period, the business operating income ratio of segments was 38.2% for Pharmaceuticals (up 0.7 percentage points), 34.9% for CHC (up 0.7 percentage points) and 27.1% for Vaccines (up 9.1 percentage points).

Net financial expenses were -€45 million in the first quarter versus €2 million in the same period of 2018. Net financial expenses included a gain of €76 million in the first quarter of 2018. In the first quarter of 2019, net financial expenses included the cost associated with the Bioverativ and Ablynx acquisitions. A €26 million financial gain was also recognized in connection with contingent payments on future regulatory milestones.


The first-quarter effective tax rate was stable at 22%. Sanofi expects its effective tax rate to be around 22% in 2019.

First-quarter business net income(10) increased 10.5% to €1,765 million and 9.0% at CER. The ratio of business net income to net sales was 21.0%, up 0.8 percentage points compared with the first quarter of 2018.

(10) See Appendix 3 for 2019 first-quarter consolidated income statement; see Appendix 8 for definitions of financial indicators, and Appendix 4 for reconciliation of IFRS net income reported to business net income.
(11) Excluding the U.S. and Puerto Rico
(12) Excluding  Bioverativ and Ablynx acquisitions and European Generics business

In the first quarter of 2019, business earnings per share(10) (EPS) increased 10.9% to €1.42 and 9.4% at CER. The average number of shares outstanding was 1,245.8 million in the first quarter of 2019 versus 1,248.2 million in the first quarter of 2018.

Reconciliation of IFRS net income reported to business net income (see Appendix 4)

In Q1 2019, the IFRS net income was €1,137 million. The main items excluded from the business net income were:

  • An amortization charge of €557 million related to fair value remeasurement on intangible assets of acquired companies (primarily Genzyme: €186 million, Bioverativ: €135 million, Boehringer Ingelheim CHC business: €61 million, Aventis: €54 million) and to acquired intangible assets (licenses/products: €30 million). These items have no cash impact on the Company.
  • An income of €60 million mainly reflecting a contingent price adjustment on the disposal of the joint venture Sanofi Pasteur MSD investment.

             

  • Restructuring costs and similar items of €321 million mainly related to streamlining initiatives in Europe.

             

  • A charge of €4 million related to the effects of IFRS 16 on Lease accounting(11).

             

  • A €227 million tax effect arising from the items listed above, mainly comprising €138 million of deferred taxes generated by amortization and impairments of intangible assets, and €95 million associated with restructuring costs and similar items. (see Appendix 4).
  • An income of €25 million net of tax related to restructuring costs of associates and joint ventures, and expenses arising from the impact of acquisitions on associates and joint ventures.

Capital Allocation

In the first quarter of 2019, net cash generated by operating activities increased 49.0% to €1,234 million after capital expenditures of €381 million and an increase in working capital of €651 million. In the first quarter of 2019, restructuring costs and similar items were €491 million and disposals net of acquisitions and partnerships were €74 million. As a consequence, net debt decreased from €17,628 million at December 31, 2018, to €16,767 million at March 31, 2019 (amount net of €9,095 million in cash and cash equivalents).

(10) See Appendix 3 for 2019 first-quarter consolidated income statement; see Appendix 8 for definitions of financial indicators, and Appendix 4 for reconciliation of IFRS net income reported to business net income.
(11) Impact of new lease standard IFRS 16, is effective January 1, 2019 using the modified retrospective transition method (no restatement of prior periods), since Business Net Income remains reported as previously under IAS 17 and related interpretations for comparison purposes.

Forward-Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include 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 labelling 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, Sanofi's ability to benefit from external growth opportunities, to complete related transactions and/or obtain regulatory clearances, risks associated with intellectual property and any related pending or future litigation and the  ultimate outcome of such litigation,  trends in exchange rates and prevailing interest rates, volatile economic conditions, the impact of cost containment initiatives 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, 2018. Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.

Appendices

List of appendices

Appendix 1:  2019 first-quarter net sales by GBU, franchise, geographic region and product
Appendix 2: 2019 first-quarter business net income statement
Appendix 3: 2019 first-quarter consolidated income statement
Appendix 4: Reconciliation of IFRS net income reported to business net income
Appendix 5:

Appendix 6:

Appendix 7:
Currency sensitivity

R&D pipeline

Expected R&D milestones
Appendix 8: Definitions of non-GAAP financial indicators

Appendix 1: 2019 first-quarter net sales by GBU, franchise, geographic region and product

Q1 2019
(€ million)
Total
GBUs
% CER % reported Europe % CER United States % CER Rest of the World % CER Emerging Markets % CER Total
Franchises
% CER % reported
Aubagio 421 10 .9% 17 .3% 98 3 .2% 309 12 .2% 14 50 .0% 16 41 .7% 437 11 .9% 17 .8%
Lemtrada 86 -18 .0% -14 .0% 41 -12 .8% 41 -21 .3% 4 -33 .3% 6 40 .0% 92 -15 .2% -12 .4%
Total MS 507 4 .6% 10 .5% 139 -2 .1% 350 7 .0% 18 18 .8% 22 41 .2% 529 5 .9% 11 .1%
Cerezyme 113 -5 .2% -2 .6% 63 -4 .5% 43 -4 .9% 7 -11 .1% 63 28 .8% 176 6 .3% 0 .6%
Cerdelga 47 22 .2% 30 .6% 16 60 .0% 28 8 .3% 3 0 .0% 1 - 48 27 .8% 33 .3%
Myozyme 188 6 .5% 10 .6% 94 1 .1% 79 14 .1% 15 7 .7% 32 38 .5% 220 10 .7% 12 .2%
Fabrazyme 167 4 .6% 9 .9% 45 7 .1% 94 1 .2% 28 12 .5% 18 16 .7% 185 5 .9% 8 .8%
Aldurazyme 39 8 .8% 14 .7% 20 5 .3% 12 10 .0% 7 20 .0% 28 76 .5% 67 31 .4% 31 .4%
Total Rare Disease 613 3 .9% 8 .3% 255 3 .7% 277 4 .5% 81 2 .7% 153 37 .2% 766 10 .1% 10 .2%
Jevtana 105 6 .4% 11 .7% 42 5 .0% 47 4 .9% 16 15 .4% 6 40 .0% 111 8 .1% 12 .1%
Mozobil 42 11 .1% 16 .7% 11 -8 .3% 26 14 .3% 5 66 .7% 2 0 .0% 44 10 .5% 15 .8%
Thymoglobulin 58 5 .9% 13 .7% 9 0 .0% 44 10 .8% 5 -20 .0% 23 26 .3% 81 11 .4% 15 .7%
Taxotere 7 -12 .5% -12 .5% 1 0 .0% 0 - 6 -14 .3% 40 11 .4% 47 7 .0% 9 .3%
Eloxatine 6 -14 .3% -14 .3% 0 -100 .0% 0 - 6 0 .0% 48 27 .0% 54 20 .5% 22 .7%
Total Oncology 273 2 .4% 7 .5% 88 -1 .1% 137 3 .3% 48 7 .0% 126 21 .2% 399 7 .8% 11 .5%
Dupixent 326 184 .1% 204 .7% 36 260 .0% 266 157 .9% 24 - 3 - 329 186 .9% 207 .5%
Kevzara 30 180 .0% 200 .0% 8 300 .0% 18 112 .5% 4 - 0 - 30 180 .0% 200 .0%
Total immunology 356 183 .8% 204 .3% 44 266 .7% 284 154 .4% 28 - 3 - 359 186 .3% 206 .8%
Alprolix 95 319 .0% 352 .4% 0 - 70 306 .3% 25 360 .0% 0 - 95 319 .0% 352 .4%
Eloctate 170 265 .1% 295 .3% 0 - 137 262 .9% 33 275 .0% 4 - 174 274 .4% 304 .7%
Cablivi 5 - - 5 - 0 - 0 - 0 - 5 - -
Total Rare Blood Disorder 270 290 .6% 321 .9% 5 - 207 276 .5% 58 307 .7% 4 - 274 296 .9% 328 .1%
Sanofi Genzyme (Specialty Care) 2,019 30 .8% 38 .3% 531 8 .6% 1,255 40 .8% 233 48 .6% 308 33 .6% 2,327 31 .2% 36 .1%
Lantus 493 -29 .3% -25 .6% 152 -16 .0% 284 -36 .6% 57 -20 .3% 281 14 .9% 774 -17 .2% -15 .0%
Toujeo 167 -4 .1% -1 .2% 80 19 .4% 69 -24 .7% 18 5 .9% 44 64 .3% 211 5 .6% 7 .1%
Apidra 55 -17 .2% -14 .1% 33 -5 .7% 13 -42 .9% 9 0 .0% 34 33 .3% 89 -2 .2% -2 .2%
Amaryl 11 0 .0% 0 .0% 4 0 .0% 0 - 7 0 .0% 79 8 .3% 90 7 .2% 8 .4%
Admelog 66 785 .7% 842 .9% 3 200 .0% 63 883 .3% 0 - 0 - 66 785 .7% 842 .9%
Total Diabetes 849 -15 .9% -11 .9% 305 -5 .6% 445 -22 .8% 99 -12 .1% 445 15 .3% 1,294 -6 .9% -4 .6%
Praluent 52 6 .4% 10 .6% 29 52 .6% 20 -26 .9% 3 0 .0% 4 100 .0% 56 10 .2% 14 .3%
Multaq 77 -7 .8% 0 .0% 10 -9 .1% 66 -7 .6% 1 - 2 0 .0% 79 -7 .6% 0 .0%
Total Cardiovascular 129 -2 .4% 4 .0% 39 30 .0% 86 -13 .0% 4 0 .0% 6 50 .0% 135 -0 .8% 5 .5%
Plavix 81 -12 .2% -10 .0% 34 -10 .5% 0 - 47 -13 .5% 323 7 .1% 404 2 .6% 4 .4%
Lovenox 218 -21 .0% -21 .0% 192 -21 .3% 9 -25 .0% 17 -15 .0% 125 10 .4% 343 -11 .8% -12 .3%
Renagel / Renvela 58 -37 .2% -32 .6% 13 -18 .8% 37 -44 .3% 8 -22 .2% 21 40 .0% 79 -25 .7% -21 .8%
Aprovel 55 8 .0% 10 .0% 27 -3 .6% 7 200 .0% 21 5 .0% 146 18 .0% 201 15 .1% 16 .9%
Synvisc / Synvisc one 53 -10 .9% -3 .6% 6 16 .7% 44 -11 .1% 3 -50 .0% 15 15 .4% 68 -5 .9% 0 .0%
Allegra 56 0 .0% 7 .7% 2 0 .0% 0 - 54 0 .0% 0 - 56 0 .0% 7 .7%
Stilnox 35 -23 .3% -18 .6% 8 -27 .3% 7 -40 .0% 20 -13 .6% 17 -5 .6% 52 -18 .0% -14 .8%
Depakine 43 -4 .4% -4 .4% 40 -4 .8% 0 - 3 0 .0% 77 11 .6% 120 5 .3% 5 .3%
Tritace 35 -2 .7% -5 .4% 34 -5 .6% 0 - 1 100 .0% 18 -10 .0% 53 -5 .3% -7 .0%
Generics 115 -57 .0% -55 .1% 30 -83 .7% 37 47 .8% 48 -6 .1% 167 -0 .6% 282 -33 .8% -35 .2%
Other other Rx 558 -5 .9% -5 .9% 414 -7 .1% 47 -14 .0% 97 4 .2% 290 -8 .0% 848 -6 .7% -7 .5%
Total Established Rx Products 1,307 -18 .8% -17 .4% 800 -23 .9% 188 -15 .3% 319 -4 .3% 1,199 3 .5% 2,506 -9 .3% -9 .0%
Primary Care 2,285 -17 .0% -14 .5% 1,144 -18 .5% 719 -19 .9% 422 -6 .2% 1,650 6 .6% 3,935 -8 .3% -7 .2%
China and Emerging Markets 1,958 10 .3% 7 .7%             1,958 10 .3%      
                             
Total Pharmaceuticals 6,262 3 .1% 5 .3% 1,675 -11 .5% 1,974 10 .4% 655 7 .7% 1,958 10 .3% 6,262 3 .1% 5 .3%
                             
Allergy, Cough and Cold 362 3 .5% 6 .2% 101 1 .0% 107 -6 .7% 60 7 .4% 94 17 .1% 362 3 .5% 6 .2%
Pain 322 2 .5% -0 .6% 129 -1 .5% 45 10 .8% 29 3 .7% 119 3 .9% 322 2 .5% -0 .6%
Digestive 271 8 .1% 9 .3% 85 1 .2% 49 -6 .3% 13 0 .0% 124 21 .4% 271 8 .1% 9 .3%
Nutritional 152 -7 .9% -7 .3% 33 3 .0% 10 0 .0% 52 -13 .8% 57 -9 .4% 152 -7 .9% -7 .3%
Consumer Healthcare 1,256 0 .6% 1 .5% 366 -3 .9% 304 -2 .1% 163 -2 .5% 423 8 .1% 1,256 0 .6% 1 .5%
                             
Polio / Pertussis / Hib 486 26 .1% 27 .9% 73 1 .4% 92 -23 .4% 77 80 .5% 244 58 .0% 486 26 .1% 27 .9%
Adult Booster Vaccines 100 5 .4% 8 .7% 36 -2 .7% 51 14 .6% 6 0 .0% 7 0 .0% 100 5 .4% 8 .7%
Meningitis/ Pneumonia 112 21 .3% 25 .8% 0 - 74 1 .5% 3 -25 .0% 35 105 .6% 112 21 .3% 25 .8%
Influenza Vaccines 32 10 .3% 10 .3% 1 0 .0% 2 -50 .0% 3 -40 .0% 26 36 .8% 32 10 .3% 10 .3%
Travel and other Endemic Vaccines 119 13 .7% 16 .7% 34 25 .9% 33 40 .9% 14 -13 .3% 38 0 .0% 119 13 .7% 16 .7%
Vaccines 873 20 .1% 22 .8% 146 5 .8% 272 -3 .1% 106 36 .0% 349 48 .3% 873 20 .1% 22 .8%
Total Company 8,391 4 .2% 6 .2% 2,187 -9 .4% 2,550 7 .1% 924 8 .3% 2,730 13 .6% 8,391 4 .2% 6 .2%
                             

Appendix 2: Business net income statement

First quarter 2019 Pharmaceuticals Consumer Healthcare Vaccines Others (1) Total Group
€ million Q1 2019 Q1 2018 Change Q1 2019 Q1 2018 Change Q1 2019 Q1 2018 Change Q1 2019 Q1 2018 Change Q1 2019 Q1 2018 Change
Net sales 6 ,262 5 ,949 5 .3% 1 ,256 1 ,238 1 .5% 873 711 22 .8% - - - 8 ,391 7 ,898 6 .2%
Other revenues 80 58 37 .9% - - - 242 170 42 .4% - - - 322 228 41 .2%
Cost of sales (1 ,581) (1 ,587) (0 .4%) (396) (399) (0 .8%) (572) (475) 20 .4% (67) (54) 24 .1% (2 ,616) (2 ,515) 4 .0%
As % of net sales (25 .2%) (26 .7%)   (31 .5%) (32 .2%)   (65 .5%) (66 .8%)         (31 .2%) (31 .8%)  
Gross profit 4 ,761 4 ,420 7 .7% 860 839 2 .5% 543 406 33 .7% (67) (54) 24 .1% 6 ,097 5 ,611 8 .7%
As % of net sales 76 .0% 74 .3%   68 .5% 67 .8%   62 .2% 57 .1%         72 .7% 71 .0%  
Research & Development expenses (1 ,073) (978) 9 .7% (35) (28) 25 .0% (133) (126) 5 .6% (144) (148) (2 .7%) (1 ,385) (1 ,280) 8 .2%
As % of net sales (17 .1%) (16 .4%)   (2 .8%) (2 .3%)   (15 .2%) (17 .7%)         (16 .5%) (16 .2%)  
Selling and general expenses (1 ,275) (1 ,254) 1 .7% (394) (389) 1 .3% (173) (153) 13 .1% (538) (514) 4 .7% (2 ,380) (2 ,310) 3 .0%
As % of net sales (20 .4%) (21 .1%)   (31 .4%) (31 .4%)   (19 .8%) (21 .5%)         (28 .4%) (29 .2%)  
Other current operating income/ expenses (87) (7)   11 5   - 2   (26) (31)   (102) (31)  
Share of profit/loss of associates* and joint-ventures 71 75   - -   - (1)   - -   71 74  
Net income attributable to non-controlling interests (6) (26)   (4) (4)   - -   - -   (10) (30)  
Business operating income 2 ,391 2 ,230 7 .2% 438 423 3 .5% 237 128 85 .2% (775) (747) 3 .7% 2 ,291 2 ,034 12 .6%
As % of net sales 38 .2% 37 .5%   34 .9% 34 .2%   27 .1% 18 .0%         27 .3% 25 .8%  
              Financial income and expenses (45) 2  
              Income tax expenses (481) (438)  
              Tax rate** 22 .0% 22 .0%  
              Business net income 1 ,765 1 ,598 10 .5%
              As % of net sales 21 .0% 20 .2%  
 

 

 
            Business earnings / share (in euros) *** 1 .42 1 .28 10 .9%

*      Net of tax.
**     Determined on the basis of Business income before tax, associates and non-controlling interests.
***    Based on an average number of shares outstanding of 1,245.8 million in the first quarter of 2019 and 1,248.2 million in the first quarter of 2018.
(1)      Other includes the cost of global support functions (Medical Affairs, External Affairs, Finance, Human Resources, Information Solution & Technologies, Sanofi Business Services, etc).

Appendix 3: Consolidated income statements

€ million Q1 2019 Q1 2018
Net sales 8,391 7,898
Other revenues 322 228
Cost of sales (2,618) (2,545)
Gross profit 6,095 5,581
Research and development expenses (1,385) (1,280)
Selling and general expenses (2,376) (2,312)
Other operating income 64 25
Other operating expenses (166) (56)
Amortization of intangible assets (557) (458)
Impairment of intangible assets (5) (3)
Fair value remeasurement of contingent consideration 60 (56)
Restructuring costs and similar items (321) (191)
Other gains and losses and litigation(1) - (49)
Operating income 1,409 1,201
Financial expenses (106) (95)
Financial income 52 97
Income before tax and associates and joint ventures 1,355 1,203
Income tax expense (255) (187)
Share of profit/loss of associates and joint ventures 47 30
Net income excluding the held for exchange Animal Health business 1,147 1,046
Net income from the held for exchange Animal Health business - (1)
Net income 1,147 1,045
Net income attributable to non-controlling interests 10 29
Net income attributable to equity holders of Sanofi 1,137 1,016
Average number of shares outstanding (million) 1,245.8 1,248.2
Earnings per share (in euros) excluding the held for exchange Animal Health business 0.91 0.81
IFRS earnings per share (in euros) 0.91 0.81
  1. In 2018, separation costs for the European Generics business divestiture.

Appendix 4: Reconciliation of Net income attributable to equity holders of Sanofi to Business net income

€ million Q1 2019 Q1 2018 Variation  
Net income attributable to equity holders of Sanofi 1,137 1,016 11.9%  
Amortization of intangible assets(1) 557 458    
Impairment of intangible assets 5 3    
Fair value remeasurement of contingent consideration (60) 56    
Expenses arising from the impact of business combinations on inventories 3 30    
Other expenses related to business combinations - 2    
Restructuring costs and similar items 321 191    
Other gains and losses, and litigation (2) - 49    
Effects of IFRS 16 on Lease accounting (3) 4 -    
Tax effect of items listed above: (227) (185)    
Amortization & impairment of intangible assets (138) (122)    
Fair value remeasurement of contingent consideration (4) (6)    
Expenses arising from the impact of business combinations on inventories - (6)    
Other expenses related to business combinations - (1)    
Restructuring costs and similar items (95) (52)    
Other tax effects 10 2    
Other tax ítems (4) - (66)    
Share of items listed above attributable to non-controlling interests - (1)    
Restructuring costs of associates and joint-ventures, and expenses arising from the impact of acquisitions on associates and joint-ventures 25 44    
Animal Health items - 1    
Business net income 1,765 1,598 10.5%  
IFRS earnings per share(5) (in euros) 0.91 0.81  
  1. Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations:  €527 million in the first quarter of 2019 and €425 million in the first quarter of 2018.
  2. In 2018, separation costs for the European Generics business divestiture.
  3. Impact of new lease standard IFRS 16, is effective January 1, 2019 using the modified retrospective transition method (no restatement of prior periods), since Business Net Income remains reported as previously under IAS 17 and related interpretations for comparison purposes.
  4. In 2018, mainly due to US tax reform.
  5. Based on an average number of shares outstanding of 1,245.8 million in the first quarter of 2019 and 1,248.2 million in the first quarter of 2018.

Appendix 5 : currency sensitivity

2019 Business EPS currency sensitivity

Currency Variation Business EPS Sensitivity
U.S. Dollar +0.05 USD/EUR -EUR 0.10
Japanese Yen +5 JPY/EUR -EUR 0.02
Chinese Yuan +0.2 CNY/EUR -EUR 0.02
Brazilian Real +0.4 BRL/EUR -EUR 0.01
Russian Ruble +10 RUB/EUR -EUR 0.03

Currency exposure on Q1 2019 sales

Currency Q1 2019
US $ 31.5%
Euro € 23.0%
Chinese Yuan 9.4%
Japanese Yen 6.1%
Brazilian Real 3.1%
Russian Ruble 1.9%
British Pound 1.8%
Canadian $ 1.5%
Australian $ 1.3%
Mexican Peso 1.2%
Others 19.2%

Currency average rates

  Q1 2018 Q1 2019 Change
€/$ 1.23 1.14 -7.6%
€/Yen 133.16 125.12 -6.0%
€/Yuan 7.81 7.67 -1.8%
€/Real 3.99 4.28 +7.2%
€/Ruble 69.93 74.91 +7.1%

Appendix 6: R&D Pipeline

  Immuno-inflammation   Rare Blood Disorders   Cardiovascular & metabolism
  Oncology   MS & Neuro   Vaccines
  Rare Diseases   Diabetes    

New Molecular Entities(*)

Phase 1
(Total : 17)
Phase 2
(Total : 8)
Phase 3
(Total : 7)
Registration
(Total : 2)
SAR441344(**) (1)
Anti-CD40L mAb
Multiple Sclerosis
BIVV001(**) (5)
rFVIIIFc - vWF - XTEN(6)
Hemophilia A
SAR440340(**) (12)
Anti-IL33 mAb
Atopic Dermatitis
SAR422459(**) (14)
ABCA4 gene therapy
Stargardt Disease
isatuximab
Anti-CD38 mAb
3L RRMM (ICARIA)
cemiplimab(**) (12)
PD-1 inhibitor mAb
Advanced CSCC (EU)
SAR408701
Maytansin-loaded anti-CEACAM5 mAb, Solid Tumors
ST400(**) (7)
Ex Vivo ZFN Gene-Edited Cell Therapy, Beta thalassemia
SAR156597
 IL4/IL13 bispecific mAb
Systemic Scleroderma
SAR442168(**) (15)
BTK inhibitor
Multiple Sclerosis
avalglucosidase alfa
Neo GAA
Pompe Disease
ZynquistaTM(**) (20)
Oral SGLT-1&2 inhibitor
Type 1 Diabetes (U.S./EU)
SAR439459
anti-TGFb mAb
Advanced Solid Tumors
BIVV003(**) (7)
Ex Vivo ZFN Gene-Edited Cell Therapy, Sickle Cell Disease

R

olipudase alfa
rhASM
AS Deficiency(13)
HIV
Viral vector prime & rgp120 boost vaccine
venglustat
Oral GCS inhibitor
ADPKD(17)
 
 

O

REGN5458(**) (2)
Anti-BCMA-CD3 bispecific mAb
Relapsing Refractory MM
SAR443060(**) (8)
 RIPK1 inh(9)
Amyotrophic Lateral Sclerosis
SAR339375
miRNA-21
Alport Syndrome
SP0232(**) (16)
Respiratory syncytial virus
Monoclonal Antibody
fitusiran
RNAi targeting anti-thrombin
Hemophilia A and B
 
 

O

REGN4018(**) (2)
Anti-MUC16-CD3 bispecific mAb
Ovarian Cancer
Next Gen PCV(**) (10)
Pneumococcal Conjugate
Vaccines
    sutimlimab(18)
Anti Complement C1s mAb
Cold Agglutinin Disease
 
 
SAR439859
SERD
Metastatic Breast Cancer
Herpes Simplex Virus Type 2
HSV-2 therapeutic vaccine
    SAR341402
Rapid acting insulin
Type 1/2 Diabetes
 
SAR442720(**) (3)
SHP2 inhibitor
Solid Tumors
Respiratory syncytial virus
Infants 4-month and older
Vaccines
    efpeglenatide(**) (19)
Long-acting GLP-1 agonist
Type 2 Diabetes
 
SAR440234
T cell engaging multi spe mAb
Leukemia
SAR441169(**) (11)
RORC (ROR gamma T) antagonist, Psoriasis
       
SAR441000(**) (4)
Cytokine mRNA
Solid tumor
         

: Opt-in rights products for which rights have not been exercised yet  
: Registrational Study (other than Phase 3)
 (*) Phase of projects determined by clinicaltrials.gov disclosure timing
             
  1. Developed in collaboration with Immunext
  2. Regeneron product for which Sanofi has opt-in rights
  3. Developed in collaboration with REVOLUTION Medicines
  4. Developed in collaboration with BioNtech
  5. Sanofi product for which Sobi has opt-in rights in SOBI territories
  6. Recombinant Coagulation Factor VIII Fc - von Willebrand Factor - XTEN Fusion protein
  7. Developed in collaboration with Sangamo
  8. Developed in collaboration with Denali
  9. Receptor-interacting serine/threonine-protein kinase 1
  10. Developed in collaboration with SK
  11. Developed in collaboration with Lead Pharma
  12. Developed in collaboration with Regeneron
  13. Acid Sphingomyelinase Deficiency also known as Niemann Pick type B
  14. Identification of out-licensing partner ongoing
  15. Developed in collaboration with Principia
  16. Developed in collaboration with AstraZeneca
  17. Autosomal Dominant Polycystic Kidney Disease
  18. Also known as BIVV009
  19. Developed in collaboration with Hanmi
  20. Developed in collaboration with Lexicon
  (**)   Partnered and/or in collaboration - Sanofi may have limited or shared rights on some of these products

Additional Indications(*)

Phase 1
(Total : 5)
Phase 2
(Total : 19)
Phase 3
(Total : 21)
Registration
(Total : 5)
SAR439459 + cemiplimab(**) (1)
Anti-TGFb mAb + PD-1 inh mAb
Advanced Solid Tumors
dupilumab(**) (1)
Anti-IL4Ralpha mAb
 Grass Immunotherapy
isatuximab + cemiplimab(**) (1)
Anti-CD38 mAb + PD-1 inh mAb
Relapsing Refractory MM
dupilumab(**) (1)
Anti-IL4Ralpha mAb
Asthma 6 - 11 years old
isatuximab
Anti-CD38 mAb
Newly Diag. MM Te(9) (GMMG)
dupilumab(**) (1)
Anti-IL4Ralpha mAb
Asthma 12y+ (EU)

O

cemiplimab(**) (1) + REGN4018(2)
PD-1 inh mAb + Anti-MUC16-CD3 bispe mAb - Ovarian Cancer

R

sarilumab(**) (1)
Anti-IL6R mAb
Polyarticular JIA(6)
isatuximab + cemiplimab(**) (1)
Anti-CD38 mAb + PD-1 inh mAb
 Advanced Malignancies
dupilumab(**) (1)
Anti-IL4Ralpha mAb
Eosinophilic Esophagitis
isatuximab
Anti-CD38 mAb
1-3L RRMM (IKEMA)
Dupixent®(**) (1)
dupilumab
AD 12 - 17 years old (EU)
   
SAR439859 + palbociclib
SERD + CDK4/6 inh
Metastatic Breast Cancer
sarilumab(**) (1)
Anti-IL6R mAb
Systemic Juvenile Arthritis
isatuximab + cemiplimab(**) (1)
Anti-CD38 mAb + PD-1 inh mAb
Lymphoma
Dupixent®(**) (1)
dupilumab
AD 6 - 11 years old
Aubagio®
teriflunomide
RMS - Pediatric
dupilumab(**) (1)
Anti-IL4Ralpha mAb
CRSwNP
sutimlimab(3)
Anti Complement C1s mAb
ImmuneThrombocytopenic Purpura
SAR440340(**) (1)
Anti-IL33 mAb
COPD
isatuximab + atezolizumab(7)
Anti-CD38 mAb + PD-L1 inh mAb
mCRC
Dupixent®(**) (1)
dupilumab
AD 6 months - 5 years old
Lemtrada®
alemtuzumab
RRMS - Pediatric
Praluent®(**) (1)
alirocumab
CV events reduction (U.S.)
SAR443060(4)
 RIPK1 inh(5)
Alzheimer's Disease
dupilumab(**) (1) + AR101
Anti-IL4Ralpha mAb + Immunotherapy
Peanut Allergy - Pediatric
isatuximab + atezolizumab(7)
Anti-CD38 mAb + PD-L1 inhibitor mAb
Solid Tumors
 sarilumab(**) (1)
Anti-IL6R mAb
Giant Cell Arteritis
ZynquistaTM(**) (10)
Oral SGLT-1&2 inh.
Worsening Heart Failure in Diabetes
Fluzone® QIV HD
Quadrivalent inactivated
Influenza vaccine - High dose
  SAR440340(**) (1)
Anti-IL33 mAb
Asthma
venglustat
Oral GCS inhibitor
Fabry Disease
sarilumab(**) (1)
Anti-IL6R mAb
Polymyalgia Rheumatica
ZynquistaTM(**) (10)
Oral SGLT-1&2 inhibitor
Type 2 Diabetes
 
  dupilumab(**) (1)
Anti-IL4Ralpha mAb
COPD
venglustat
Oral GCS inhibitor
Gaucher Type 3
cemiplimab(**) (1)
PD-1 inh mAb
1L NSCLC
Cerdelga®
eliglustat
Gaucher T1, ERT switch Pediatric
 
 

R

cemiplimab(**) (1)
PD-1 inhibitor mAb
Advanced Basal Cell Carcinoma
venglustat
Oral GCS inhibitor
Gaucher related Parkinson's Dis.
cemiplimab(**) (1)+ chemotherapy
PD-1 inh mAb + chemotherapy
1L NSCLC
Praluent® (**) (1)
alirocumab
LDL-C reduction - Pediatric
 
 
  isatuximab
Anti-CD38 mAb
1-2L AML / ALL pediatrics
VerorabVax® (VRVg)
Purified vero rabies vaccine
cemiplimab(**) (1)
PD-1 inhibitor mAb
2L Cervical Cancer
Men Quad TT
Advanced generation meningococcal
ACYW conjugate vaccine
 
    SP0173 
Tdap booster US
isatuximab
Anti-CD38 mAb
1L Newly Diag. MM Ti(8) (IMROZ)
Pediatric pentavalent vaccine
DTP-Polio-Hib
Japan
 
 

 

 

 
      Shan 6
DTP-HepB-Polio-Hib
Pediatric hexavalent vaccine
 
  1. Developed in collaboration with Regeneron
  2. Regeneron product for which Sanofi has opt-in rights
  3. Also known as BIVV009
  4. Developed with Denali
  5. Receptor-interacting serine/threonine-protein kinase 1
  6. JIA: Juvenile Idiopathic Arthritis
  7. Studies in collaboration with Roche (atezolizumab) 
  8. Transplant ineligible
  9. Transplant eligible
  10. Developed in collaboration with Lexicon

 (*)     Phase of projects determined by clinicaltrials.gov disclosure timing
(**)    Partnered and/or in collaboration - Sanofi may have limited or shared rights on some of these products 

:    Opt-in rights products for which rights have not been exercised yet
:    Registrational Study (other than Phase 3)

Expected Submission Timeline(1)


NMEs
isatuximab
anti-CD38 mAb
3L RRMM (ICARIA)
fitusiran
RNAi anti-thrombin
Hemophilia A/B
avalglucosidase alfa NeoGAA
Pompe Disease
venglustat
Oral GCS inhibitor
ADPKD(8)
SAR341402
Rapid acting insulin
Type 1/2 Diabetes EU(3)
sutimlimab(4)
Anti Comp C1s mAb
Cold Agglutinin Disease
olipudase alfa
rhASM
ASD(6)
efpeglenatide(**)(9)
LA GLP1-R agonist
Type 2 Diabetes
  2019(2) 2020(2) 2021(2)
ADDITIONAL INDICATIONS Men Quad TT
Adv. meningococcal
U.S.: 2y+ & EU: 12m+
sarilumab(**)(5)
Anti-IL6R mAb
Polyarticular JIA
Aubagio®
teriflunomide
Relapsing MS - Pediatric
isatuximab
Anti-CD38 mAb
1L Newly Diag MM Ti (IMROZ)
Fluzone® QIV HD
Quadrivalent inactivated
Influenza vaccine - HD
Dupixent®(**)(5)
dupilumab
AD 6 - 11 years old
ZynquistaTM(**)(7)
Oral SGLT-1&2 inhibitor
Type 2 Diabetes
cemiplimab(**)(5)
PD-1 inhibitor mAb
2L Cervical Cancer
  isatuximab
Anti-CD38 mAb
1-3L RRMM (IKEMA)
Shan 6
DTP-HepB-Polio-Hib
Ped hexavalent vaccine
ZynquistaTM(**)(7)
Oral SGLT 1/2 inh
Worsening HF in Diab
  cemiplimab(**)(5)
PD-1 inhibitor mAb
Advanced BCC
  cemiplimab(**)(5)
PD-1 inhibitor mAb
1L NSCLC
       
      SAR156597
 IL4/IL13 bispecific mAb
Systemic Scleroderma
SP0232 (10)(**)
Respiratory Syncytial Virus mAbs
      SAR440340(**)(5)
Anti-IL33 mAb
Atopic Dermatitis
HIV
Viral vector prime & rgp120 boost vaccine
  2022(2) 2023(2) and beyond
  Dupixent®(**)(5)
dupilumab
AD 6 m - 5 y old
sarilumab(**)(5)
Anti-IL6R mAb
Giant Cell Arteritis
SAR440340(**)(5)
Anti-IL33 mAb
COPD
isatuximab
Anti-CD38 mAb
Newly Diag MM Te (GMMG)
  dupilumab(**)(5)
Anti-IL4Ralpha mAb
Asthma 6 - 11 y old
sarilumab(**)(5)
Anti-IL6R mAb
Polym.Rheumatica
SAR440340(**)(5)
Anti-IL33 mAb
Asthma
venglustat
Oral GCS inhibitor
GrPD(11)
  venglustat
Oral GCS inhibitor
Gaucher Type 3
sarilumab(**)(5)
Anti-IL6R mAb
SJA
dupilumab(**)(5) +AR101
Anti-IL4Ralpha mAb +
Peanut Allergy - Ped
venglustat
Oral GCS inhibitor
Fabry Disease
  SP0173
Tdap booster US
Cerdelga®
Eliglustat, Gaucher T1, ERT switch, Ped
Pediatric pentavalent vaccine
DTP-Polio-Hib (Japan)
VerorabVax® (VRVg)
Purified vero rabies vaccine
  isatuximab
Anti-CD38 mAb
1-2L AML / ALL ped
Praluent®(**)(5)
alirocumab
LDL-C reduction - Ped
Men Quad TT
Adv. Gen meningococcal
U.S.& EU 6w+
dupilumab(**)(5)
Anti-IL4Ra mAb
Eosinophilic Esophagitis
      Lemtrada®
alemtuzumab
RRMS ped
 
  1. Excluding Phase 1
  2. Projects within a specified year are not arranged by submission timing 
  3. Submission strategy for the U.S. under evaluation
  4. Also known as BIVV009
  5. Developed in collaboration with Regeneron
  6. Acid Sphingomyelinase Deficiency
  7. Developed in collaboration with Lexicon
  8. Autosomal Dominant Polycystic Kidney Disease
  9. Developed in collaboration with Hanmi
  10. Developed in collaboration with AstraZeneca
  11. Gaucher related Parkinson's Disease

(**)      Partnered and/or in collaboration - Sanofi may have limited or shared rights on some of these products

Pipeline Movements Since Q4 2018

  Additions Removals
Registration dupilumab(**) (1)
Anti-IL4Ralpha mAb
CRSwNP
   

 
Fluzone® QIV HD
Quadrivalent inactivated
Influenza vaccine - High dose
Phase 3      
Phase 2 isatuximab
Anti-CD38 mAb
1-2L AML / ALL pediatrics
dupilumab(**) (1)
Anti-IL4Ralpha mAb
COPD
   
SAR442168(**) (2)
BTK inhibitor
Multiple Sclerosis
     
Phase 1 SAR441169(**) (3)
RORC (ROR gamma T) antagonist
Psoriasis
     
       
  1. Developed in collaboration with Regeneron
  2. Developed in collaboration with Principia
  3. Developed in collaboration with Lead Pharma

      (**)      Partnered and/or in collaboration - Sanofi may have limited or shared rights on some of these products

Appendix 7: Expected R&D milestones

Products Expected milestones Timing
Dupixent®(**) (1) EU regulatory decision in Asthma in Adult and Adolescent patients Q2 2019
ZynquistaTM(**) (2) (sotagliflozin) EU regulatory decision in Type 1 Diabetes Q2 2019
cemiplimab(**) (1) EU regulatory decision in Advanced Cutaneous Squamous Cell Carcinoma Q2 2019
Praluent®(**) (1) U.S. regulatory decision in CV events reduction ODYSSEY OUTCOMES Q2 2019
Dupixent®(**) (1) U.S. regulatory decision in Chronic Rhinosinusitis with Nasal Polyps Q2 2019
SAR440340(**) (1) (Anti-IL33 mAb) Proof of concept study read-out in asthma Q2 2019
SAR439859 (SERD) Proof of concept study read-out in metastatic Breast Cancer Q3 2019
sutimlimab Proof of concept study read-out in refractory Immune Thrombocytopenic Purpura Q4 2019
Fluzone® QIV HD U.S. regulatory decision for >= 65-year old age group Q4 2019
sutimlimab Pivotal trial read-out in Cold Agglutinin Disease Q4 2019
Dupixent®(**) (1) Pivotal trial read-out in Atopic Dermatitis in 6-11 years Q4 2019
ZynquistaTM(**) (2) (sotagliflozin) Expected pivotal trial read-out in Type 2 Diabetes Q4 2019 - Q1 2020
Dupixent®(**) (1) EU regulatory decision in Atopic Dermatitis in Adolescent patients Q1 2020
Dupixent®(**) (1) EU regulatory decision in Chronic Rhinosinusitis with Nasal Polyps Q1 2020
isatuximab Pivotal trial read-out in 1-3L RRMM (IKEMA) Q1 2020
SAR440340(**) (1) (Anti-IL33 mAb) Proof of concept study read-out in Chronic Obstructive Pulmonary Disease Q1 2020
  1. Developed in collaboration with Regeneron
  2. Developed in collaboration with Lexicon

      (**)      Partnered and/or in collaboration - Sanofi may have limited or shared rights on some of these products

Appendix 8: Definitions of non-GAAP financial indicators

Company

"Company" corresponds to Sanofi and its subsidiaries

Company sales at constant exchange rates (CER)

When we refer to changes in our net sales "at constant exchange rates" (CER), this means that we exclude the effect of changes in exchange rates.

We eliminate the effect of exchange rates by recalculating net sales for the relevant period at the exchange rates used for the previous period.

Reconciliation of net sales to Company sales at constant exchange rates for the first quarter of 2019

€ million Q1 2019
Net sales 8,391
Effect of exchange rates (158)
Company sales at constant exchange rates 8,233

Business net income

Sanofi publishes a key non-GAAP indicator.
Business net income is defined as net income attributable to equity holders of Sanofi excluding:

  • amortization of intangible assets,
  • impairment of intangible assets,
  • fair value remeasurement of contingent consideration related to business combinations or to disposals,
  • other impacts associated with acquisitions (including impacts of acquisitions on associates and joint ventures),
  • restructuring costs and similar items(1),
  • other gains and losses (including gains and losses on disposals of non-current assets(1)),
  • effects of IFRS 16 on lease accounting,
  • costs or provisions associated with litigation(1),
  • tax effects related to the items listed above as well as effects of major tax disputes,
  • net income attributable to non-controlling interests related to the items listed above.
  1. Reported in the line items Restructuring costs and similar items and Gains and losses on disposals, and litigation, which are defined in Notes B.19 and B.20. to our consolidated financial statements.