Sanofi Sa · EURONEXT:SAN
Sanofi Sa — FY2016 Earnings Presentation
45 slides from Sanofi Sa's earnings presentation, Feb 8, 2017
Slide 1: Q4 and Full Year 2016 Results
Q4 and Full Year 2016 Results February 8, 2017
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their under
Slide 3: Agenda
Agenda Key Highlights ● Olivier Brandicourt - Chief Executive Officer Update on Consumer Healthcare ● Alan Main - Executive Vice President, Consumer Healthcare Financial Results ● Jérôme Contamine - Executive Vice President, Chief Financial Officer Additional Participants for Q&A Session ● Olivier C
Slide 4: Key Highlights
KEY HIGHLIGHTS Olivier Brandicourt Chief Executive Officer 4
Slide 5: 2016 Financial Performance Stronger than Initial Expectations
2016 Financial Performance Stronger than Initial Expectations Company Sales(1) Business EPS(2) €34,060m €33,821m(3) €5.68 €5.64 +1.2% +4.1% at CER(4,5) at CER(4,5) FY 2015 FY 2016 FY 2015 FY 2016 (1) FY 2015 Company Sales restated to exclude Animal Health Business (2) FY 2015 and FY 2016 Business EP
Slide 6: All Global Business Units Delivered Growth in Q4 2016
All Global Business Units Delivered Growth in Q4 2016 Q4 2016 Sales by Global Business Unit Growth at CER Company Sales €8,867m +3.4% (1) Sanofi Genzyme (Specialty Care) €1,335m +12.6% (2) Sanofi Pasteur (Vaccines) €1,352m +3.7% €1,710m (1) Diabetes & Cardiovascular +3.8% (3,4,5) General Medicines &
Slide 7: Specialty Care Increased Double Digits and Consumer Healthcare Returned to Growth
Specialty Care Increased Double Digits and Consumer Healthcare Returned to Growth Q4 2016 Sales by Franchise Developed Markets Emerging Markets Total Growth Sales at CER Sales Growth Sales Growth Specialty Care €1,569m +12.9% €1,335m +12.6% €234m +14.3% Vaccines €1,352m +3.7% €831m +1.4% €521m +7.3%
Slide 8: Rare Disease and Multiple Sclerosis Drive Growth in Specialty Care
Rare Disease and Multiple Sclerosis Drive Growth in Specialty Care Global Specialty Care ● Specialty Care franchise up double digits Franchise Sales in developed and emerging markets in Q4 €1,569m ● Multiple Sclerosis franchise continues to gain market share €1,395m €716m +9.7 % at CER ● Aubagio® sa
Slide 9: Vaccines Growth Driven by Pediatric Combination Franchise in Q4
Vaccines Growth Driven by Pediatric Combination(1) Franchise in Q4 Global Growth of AcXim Family(2) ● Vaccines sales up +3.7% at CER in Q4 (sales in €m) ● PPH franchise +16.5% at CER to €544m in Q4 2016 ● Pentacel® supply improving in the U.S. +23% ● Emerging Markets growth +5.1% despite CAGR contin
Slide 10: CHC Business Returned to Growth in Q4 2016
CHC Business Returned to Growth in Q4 2016 CHC Global Sales Growth at CER ● Developed Markets up +7.0%(1) (2) ● U.S. sales grew +4.6% to €209m +2.7% ● Europe up +9.5% to €229m helped by strong cough and cold sales ● Emerging Markets down -3.2% -3.1% -4.3% -1.2% ● Business in Russia starting to recov
Slide 11: Toujeo Gains Share in Several Important Markets While U.S. DCV Environment Remains Challenging
Toujeo® Gains Share in Several Important Markets While U.S. DCV(1) Environment Remains Challenging Market Share(6) ● Global Diabetes franchise sales up +1.9% at CER in Q4 2016 to €1,945m Top EU Countries, Japan and the U.S. 20% ● Toujeo® up 39.3%(2) sequentially to €238m ● Share gains continue in EU
Slide 12: Good Growth in Emerging Markets Partially Offset by China
Good Growth in Emerging Markets Partially Offset by China(1) Comparisons in the Quarter(2) €2,134m €3,321m EUROPE €329m €810m U.S. -1.7% EURASIA(5) ROW(4) +11.3% +8.4% -11.0% €782m €752m ASIA AMESA(6) -2.8% €710m +11.4% LATAM +4.2% Emerging Markets(3) grew +7.0% in 2016 excluding Venezuela All Growt
Slide 13: Building our Immunology Franchise
Building our Immunology Franchise ● First fully human IL-6 mAb for the treatment of moderately to severely active rheumatoid arthritis (1) ● Recently received first approval in Canada ● Le Trait “fill-finish” plant classified as “acceptable” by FDA based on review of responses to the FDA 483 as well
Slide 14: Expanding our Late Stage Pipeline with Two Potentially Differentiated Assets
Expanding our Late Stage Pipeline with Two Potentially Differentiated Assets Sotagliflozin Isatuximab ● Dual SGLT1 and SGLT2 inhibitor ● Mechanism of action potentially ● Phase 3 program in T2D to explore differentiated by targeting a unique potential benefit of product profile in: epitope on CD38 r
Slide 15: Outlook for 2017
Outlook for 2017 FY 2017 Stable to -3% Business EPS at CER(1,2) FX impact on Business EPS +3% to +4%(3) based on Dec 2016 average exchange rates Guidance based on FY2016 Business EPS of €5.68 (1) Compared to FY2016 and barring major unforeseen adverse events (2) FY 2016 Business EPS of €5.68 (3) Dif
Slide 16: Consumer Healthcare
CONSUMER HEALTHCARE Alan Main Executive Vice President - Consumer Healthcare 16
Slide 17: Integration on Track and Unlocking the Potential of the Iconic BI Brands
Integration on Track(1) and Unlocking the Potential of the Iconic BI Brands BI Brands Lift Sanofi to Leadership Position(2) in Attractive Categories ● Integration on track #1 #2 ● Operating from two geographic hubs in Paris and Frankfurt ● Regional leadership and global marketing heads appointed ● C
Slide 18: Xyzal Approval Broadens OTC Allergy Offering in Important U.S. Market
Xyzal® Approval Broadens OTC Allergy Offering in Important U.S. Market Three Rx-to-OTC Switches Build on Success of U.S. CHC Platform ● Xyzal® offers 24 hour relief to adults and children with seasonal €938m and year-round allergies ● Xyzal® adds to Sanofi’s leading Allergy CHC portfolio (#1 in U.S.
Slide 19: Financial Results
FINANCIAL RESULTS Jérôme Contamine Executive Vice President, Chief Financial Officer 19
Slide 20: Quarterly Sales Growth Progressively Improved While Investing Behind R&D and Launches
Quarterly Sales Growth Progressively Improved While Investing Behind R&D and Launches Quarterly Company Sales Growth(1,2) Quarterly Business EPS Growth(1) +12.4% (3) +3.4% +3.0% +5.3% Q1 2016 Q2 2016 Q2 2016 Q4 2016 Q3 2016 Q4 2016 Q1 2016 Q3 2016 -0.7% -2.1% -0.9% (3) -1.5% Q4 2016 Business Operati
Slide 21: Business Operating Income Growth Offset by Higher Tax Rate
Business Operating Income Growth Offset by Higher Tax Rate (1) % Change % Change €m Q4 2016 Q4 2015 (reported €) (CER) Net Sales 8,867 8,583 +3.3% +3.4% Other revenues 310 235 +31.9% +31.1% Gross Profit 6,221 5,953 +4.5% +4.5% R&D (1,437) (1,364) +5.4% +4.7% SG&A (2,603) (2,482) +4.9% +4.8% Other cu
Slide 22: Continued Improvement in Gross Margin; Opex Growth Lower than Expected
Continued Improvement in Gross Margin; Opex Growth Lower than our Initial Expectations Gross Margin Ratio(1) Operating Expenses +1.3% €4,040m +4.8% at CER €3,846m +0.3% 72.2% +0.2% €1,437m +0.8% +4.7% at R&D 71.0% €1,364m CER 70.4% 70.2% €2,603m €2,482m +4.8% at SG&A CER Q1 Q2 Q3 Q4 Q4 2015 Q4 2016
Slide 23: FX Headwind Eased on Sales but Remained Challenging on EPS
FX Headwind Eased on Sales but Remained Challenging on EPS Currency Impact Company Sales(1) Business EPS FY 2016 FY 2016 -€661m -€0.19 -1.9% -3.4% -€10m -0.1% -€83m -€0.02 -1.0% -1.2% -€215m -€0.04 -2.6% -€0.05 -3.1% -3.8% -€353m -€0.07 +€0.05 -4.2% -5.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (1) Main currency im
Slide 24: Creating a More Agile Sanofi Through a Strategic Cost Savings Program
Creating a More Agile Sanofi Through a Strategic Cost Savings Program Progression of Cost Savings ● Primary sources of cost savings in €1.5bn 2016/2017: ~€1.3bn ● Simplification via new GBU structure and creation of global functions(1) ● Manufacturing operational improvement ~€650m and productivity
Slide 25: Proposal for 23rd Consecutive Increase in Annual Dividend
Proposal for 23rd Consecutive Increase in Annual Dividend Evolution of Dividend (1) €2.96 €2.93 €2.85 ● Commitment to progressive dividend €2.80 growth remains a key value proposition to our shareholders ● €0.03 per share increase over 2015 ● Implies a dividend yield of 3.9%(2) 2013 2014 2015 2016 (
Slide 26: Returning Cash to Shareholders in Anticipation of BI Cash Received in 2017
Returning Cash to Shareholders in Anticipation of BI Cash Received in 2017 Evolution of Share Buyback €680m €1,801m €573m €1,784m €306m €2,908m €1,121m €1,211m €2,602m Net SBB Net SBB Net SBB Issuance Buyback Issuance Buyback Issuance Buyback 2014 2015 2016 (1) Share Count (m) 1,309.9 1,301.7 1,271.
Slide 27: Sanofi Exceeded its Key 2016 Financial Objectives
Sanofi Exceeded its Key 2016 Financial Objectives Results including Initial Objectives Animal Health Gross Margin 68-69% 70.7%(1) OpEx Growth Rate at CER ~ +4.5% +2.7%(2) Tax Rate 24-25% 23.9%(3) Business EPS Guidance at CER Broadly stable +4.1% Dividend growth Progressive 3 cent increase (1) Gross
Slide 28: Closing Remarks
CLOSING REMARKS Olivier Brandicourt Chief Executive Officer 28
Slide 29: Q&A Session
Q&A SESSION SANOFI %
Slide 30: Appendices: R&D Pipeline
APPENDICES R&D Pipeline SANOFI %
Slide 31: R&D Pipeline – Pharma & Vaccines
R&D Pipeline – Pharma & Vaccines Phase I Phase II Phase III Registration SAR440340 N SAR438335 N SAR100842 N dupilumab sarilumab N dupilumab Anti-IL33 mAb GLP-1R/GIPR dual agonist Anti-IL4Rα mAb LPA1 receptor antagonist Anti-IL4Rα mAb Anti-IL6R mAb Asthma & COPD Type 2 diabetes Eosinophilic oesophag
Slide 32: R&D Pipeline Summary Table
R&D Pipeline Summary Table(1) Phase I Phase II Phase III Registration TOTAL Oncology 3 1 1 0 5 Diabetes 2 2 1 1 6 Cardiovascular Diseases 2 2 0 0 4 Immuno-inflammation 2 2 0 2 6 31 Infectious Diseases 0 1 0 0 1 Rare Diseases 1 2 2 0 5 Multiple Sclerosis, Neurology, Ophthalmology 3 1 0 0 4 Vaccines 3
Slide 33: Expected 2017 Late-Stage Pipeline Events
Expected 2017 Late-Stage Pipeline Events Expected Regulatory Decisions Q1 Q2 Q3 Q4 ● Dengvaxia® in endemic countries ● Suliqua® in Diabetes (EU) ● Dupixent®(1) in Atopic Dermatitis (U.S.) ● Kevzara® in Rheumatoid Arthritis (U.S.) ● Kevzara® in Rheumatoid Arthritis (EU) Expected Regulatory Submis
Slide 34: Expected R&D Milestones in 2017
Expected R&D Milestones in 2017 Products Expected milestones Timing Dengvaxia® Regulatory decisions in endemic countries Throughout 2017 Kevzara®(1) U.S. regulatory resubmission in Rheumatoid Arthritis Q1 2017 Dupixent®(1) Japan regulatory submission in Atopic Dermatitis Q1 2017 Dupixent®(1) U.S. re
Slide 35: Appendices: Finance
APPENDICES FINANCE SANOFI %
Slide 36: Net Debt Evolution in 2016
Net Debt Evolution in 2016 Net Debt -€1,453m -€3,759m €8,206m €7,254m FCF €7,798m €9,284m -€936m -€2,602m -€1,486m (1) (4) (1) Net Debt Net Cash from CapEx Net Share Acquisitions, Dividends Other Net Debt Dec 31, 2015 Operating Repurchase Licensing, Net Dec 31, 2016 Activities(2) of Disposals(3) FCF
Slide 37: 2017 Currency Sensitivity
2017 Currency Sensitivity 2017 Business EPS Currency Sensitivity Currency Variation Business EPS Sensitivity U.S. Dollar - 0.05 USD/EUR + EUR 0.13 Japanese Yen + 5 JPY/EUR - EUR 0.02 Chinese Yuan + 0.2 CNY/EUR - EUR 0.02 Brazilian Real + 0.4 BRL/EUR - EUR 0.02 Russian Ruble + 10 RUB/EUR - EUR 0.03 C
Slide 38: Business Net Income Statement
Business Net Income Statement Fourth-quarter 2016 Pharmaceuticals Vaccines Others Total Group € million Q4 2016 Q4 2015 Change Q4 2016 Q4 2015 Change Q4 2016 Q4 2015 Q4 2016 Q4 2015 Change Net sales 7,515 7,277 3.3% 1,352 1,306 3.5% 8,867 8,583 3.3% (1) Other revenues 83 91 (8.8%) 227 144 57.6% 310
Slide 39: Business Net Income Statement
Business Net Income Statement 2016 Pharmaceuticals Vaccines Others Total Group € million 2016 2015 Change 2016 2015 Change 2016 2015 2016 2015 Change Net sales 29,244 29,799 (1.9%) 4,577 4,261 7.4% 33,821 34,060 (0.7%) (1) Other revenues 274 288 (4.9%) 613 513 19.5% 887 801 10.7% Cost of Sales (8,34
Slide 40: Reconciliation of Business Net Income to Consolidated Net Income
Reconciliation of Business Net Income to Consolidated Net Income Attributable to Equity Holders of Sanofi € million Q4 2016 (1) Q4 2015 (1) Change Business net income 1,606 1,709 (6.0%) (2) Amortization of intangible assets (412) (695) Impairment of intangible assets (119) (533) Fair value remeasure
Slide 41: Reconciliation of Business Net Income to Consolidated Net Income
Reconciliation of Business Net Income to Consolidated Net Income Attributable to Equity Holders of Sanofi € million 2016 (1) 2015 (1) Change Business net income 7,308 7,371 (0.9%) Amortization of intangible assets (2) (1,692) (2,137) Impairment of intangible assets (192) (767) Fair value remeasureme
Slide 42: Consolidated Income Statements
Consolidated Income Statements € million Q4 2016 (1) Q4 2015 (1)(2) 2016 (1) 2015 (1)(2) Net sales 8,867 8,583 33,821 34,060 Other revenues 310 235 887 801 Cost of sales (2,956) (2,865) (10,702) (10,919) Gross profit 6,221 5,953 24,006 23,942 Research and development expenses (1,437) (1,364) (5,172)
Slide 43: Animal Health Segment Results
Animal Health Segment Results € million Q4 2016 Q4 2015 Change 2016 2015 Change Net sales 599 559 7.2% 2,708 2,515 7.7% Other revenues 12 9 33.3% 39 41 (4.9%) Cost of sales (230) (217) 6.0% (937) (885) 5.9% As % of net sales (38.4%) (38.8%) (34.6%) (35.2%) Gross profit 381 351 8.5% 1,810 1,671 8.3%
Slide 44: Change in Net Debt
Change in Net Debt € million 2016 2015 Business net income 7,308 7,371 Depreciation, amortization and impairment of property, plant and equipment and software 1,355 1,333 Net gains and losses on disposals of non-current assets, net of tax (33) (137) Other non-cash items 44 (19) Operating cash flow b
Slide 45: Simplified Consolidated Balance Sheet
Simplified Consolidated Balance Sheet ASSETS Dec 31, Dec 31, LIABILITIES & EQUITY Dec 31, Dec 31, € million 2016 2015 € million 2016 2015 Equity attributable to equity holders of Sanofi 57,554 58,049 Equity attributable to non-controlling interests 170 161 Total equity 57,724 58,210 Long-term debt 1