2012 - 19th clsa investors forum
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2012 - 19th CLSA Investors ForumTRANSCRIPT
September 11th, 2012
19th CLSA Investors Forum 2012 Fabrice Baschiera, General Manager, Sanofi China
Forward Looking Statements
2
This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act
of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements
include projections and estimates and their underlying assumptions, statements regarding plans, objectives,
intentions and expectations with respect to future financial results, events, operations, services, product
development and potential, and statements regarding future performance. Forward-looking statements are
generally identified by the words "expects", "anticipates", "believes", "intends", "estimates", "plans" and similar
expressions. Although Sanofi's management believes that the expectations reflected in such forward-looking
statements are reasonable, investors are cautioned that forward-looking information and statements are subject
to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of
Sanofi, that could cause actual results and developments to differ materially from those expressed in, or implied
or projected by, the forward-looking information and statements. These risks and uncertainties include among
other things, the uncertainties inherent in research and development, future clinical data and analysis, including
post marketing, decisions by regulatory authorities, such as the FDA or the EMA, regarding whether and when
to approve any drug, device or biological application that may be filed for any such product candidates as well
as their decisions regarding labeling and other matters that could affect the availability or commercial potential of
such product candidates, the absence of guarantee that the product candidates if approved will be commercially
successful, the future approval and commercial success of therapeutic alternatives, the Group's ability to benefit
from external growth opportunities, trends in exchange rates and prevailing interest rates, the impact of cost
containment policies and subsequent changes thereto, the average number of shares outstanding as well as
those discussed or identified in the public filings with the SEC and the AMF made by Sanofi, including those
listed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in Sanofi's
annual report on Form 20-F for the year ended December 31, 2011. Other than as required by applicable law,
Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.
2008-2011
Repositioning Sanofi for Sustainable Growth
2005-2008 2009-2011 2012 onwards
Focusing on
Rx Blockbusters Transforming
Generating
Sustainable Growth
• Investing in growth platforms
• Increasing diversification
• Managing patent cliff
• Growing recurring sales
• Improving risk profile
• Blockbuster drugs
• Patents challenged
• R&D setbacks
3
Sanofi Grew Sales in 2011 due to Genzyme Acquisition
and Growth Platforms
4
CER : Constant Exchange Rates
(1) In 2008 and 2009, Merial Joint Venture sales were not consolidated by Sanofi
(2) In 2010, excluding non-consolidated sales from Merial, Sanofi reported sales of €30,384m
2011
€33,389m
2010
€32,367m
2009
€29,306m
2008
€27,568m
Sales
+5.3%
at CER
(1) (1) (2)
H1 2012 Performance Was In-Line With Our Expectations
H1 2011 H2 2012
Total Sales (€m)
H1 2011 H1 2012
Business EPS (€)
€3.32 €17,381m
(1) On a reported basis, total sales were up +7.8% and business EPS was up +0.6% in H1 2012 5
-5.2%
at CER(1)
+3.6%
at CER(1)
€16,128m
€3.30
Growth Platforms Sales (€m and % of Total Sales)
64.9%
44.9%
Q2 2009 Q2 2010 Q2 2011 Q2 2012
€5,753m
€3,341m
Limited Patent Cliff(1) Exposure on Sales
after Eloxatin® Loss of Exclusivity in the U.S. in Aug 2012
(1) The patent cliff is the effect of the loss of exclusivity of key genericized products.
(2) Key genericized products include Lovenox® U.S., Plavix® Western EU, Taxotere® Western EU & U.S.,
Eloxatin® U.S., Ambien® family U.S., Allegra® U.S., Aprovel® Western EU, Xyzal® U.S., Xatral® U.S.,
Nasacort® U.S. and BMS Alliance (active ingredients of Plavix® and Avapro® sold to BMS) 6
8.5%
29.7%
Q2 2009 Q2 2010 Q2 2011 Q2 2012
4.9% when excluding
€314m of
Eloxatin® U.S. €2,207m
€752m
Key Genericized Products Sales
(€m and % of Total Sales) (2)
6
Growth Platforms Accounted for 64.9% of Group Sales
and Grew by +7.6% in Q2 2012
7
(1) New Genzyme perimeter includes Rare Diseases and Multiple Sclerosis franchises
(2) Multaq®, Jevtana® and Mozobil®
+13.7%
+3.0%
+11.3%
+9.1%
+9.1%
Innovative Products(2) €152m +4.5%
+9.8%
Vaccines €783m
Diabetes Solutions €1,436m
Consumer Health Care €738m
Animal Health €576m
Emerging Markets €2,823m
New Genzyme(1) €434m
Growth at CER
A Strong Leadership Position in Emerging Markets
8
In 2011,
Emerging Markets Sales(1)
€10.1bn
+10.1%(2)
30.3% of Group Sales
(1) World less North America (USA, Canada), Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg,
Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark), Japan, Australia and New Zealand
(2) CER (Constant Exchange Rate)
+16%
+9%
2011
€10.1bn
2010 2009 2008 2007 2006 2005
€5.0bn
Emerging Markets Sales
Emerging Markets - Record Sales and Strong Growth
in Q2 2012 Confirm our Leadership
9
(1) World excluding North America (USA, Canada), Western Europe (France,
Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg,
Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway,
Iceland, Denmark), Japan, Australia and New Zealand
● Q2 2012 Emerging Markets sales of €2,823m, up +9.8% at CER
Q2 2012 Geographic Sales Split
31.8% 31.5%
24.1% 12.6%
9
(1)
Non-BRIC Accounted for 65% of Emerging Markets Sales
in Q2 2012 Highlighting our Broad Geographic Scope
● Q2 2012 BRIC sales of €995m, up +15.2% at CER (1)
● Q2 2012 Other Emerging Markets sales of €1,828m, up +7.1% at CER
+12.7% +12.7% -0.1% +16.5%
Emerging Markets Q2 2012 Sales Split (Growth at CER)
(1) BRIC: Brazil, Russia, India and China
Brazil: €405m +14.0%
Russia: €203m +9.0%
India: €66m +20.2%
China: €320m +20.9%
BRIC Q2 2012 Sales (Growth at CER)
10
+9.8%
Growth
10
11
Agenda
11
Sanofi – A Leading Presence in China
Focusing on Diabetes
Conclusion
Outlook on the Healthcare Market in China
12
Greater China: Growing Contributor to Sanofi’s
Leadership Position in Emerging Markets
12
2008
6.540m
8%
2007
6.280m
7% 9% 10%
10.133m
12%
2009 2010
9.075m
7.356m
2011
CAGR 13%
Sanofi Sales in Emerging Markets (in EUR)
Greater China(1)
Other Emerging Countries
(1) Greater China: Mainland China, Hong Kong, Taiwan
699m
512m
374m
273m
13
Sanofi achieved Annual Sales in China of ~€1bn in 2011
13
2009 2008 2007 2011 2010
981m
CAGR 38%
Total Sanofi Sales in China(1) (in EUR)
(1) Mainland China
14
Sanofi Is Progressively Developing its Key Growth
Platforms in China
14
12%
4%
Animal Health
Vaccines
12%
Pharmaceuticals
63% CHC 9%
Diabetes
Breakdown of Sales in China(1) by Business
Total Sales EUR 981m
Vaccines
Pharmaceuticals
72% Diabetes
22%
6%
2007 2011
Total Sales EUR 273m
(1) Mainland China
ASTRAZENECA
BAYER
PFIZER
JS.YANGZIJIANG FTY
ROCHE
SINO-SWED
JS.L.Y.G.HENGRUI
HLJ.HAERBIN PHARM.
NOVARTIS
2007(1)
1
2
3
4
5
6
7
8
9
10
Source data: Ranked by sales value in LC RMB.
(1) IMS CHPA Dec 2007 .
(2) IMS CHPA Dec 2009
(3) IMS MTH June 2012
Sanofi Has Grown Faster than its Peers in China
15
1
2
3
4
5
6
7
8
9
10
PFIZER
ASTRAZENECA
BAYER
JS. YANGZIJIANG FTY
ROCHE
KE LUN
SHANDONG QILU FTY
JS.L.Y.G. HENGRUI
HLJ. HAERBIN PHARM.
2009(2) June 2012(3)
1
2
3
4
5
6
7
8
9
10
PFIZER
BAYER
ASTRAZENECA
SHANDONG QILU FTY
KE LUN
JS. YANGZIJIANG FTY
ROCHE
JS.L.Y.G. HENGRUI
MSD
15
16
Sanofi: Well Established in Greater China
with a Fully Integrated Presence
16
● Present since 1982
● 11 regional offices with ~7,000
employees in Greater China
● Of which >4,000 sales force
● Network of 6 manufacturing sites
● Newly established CHC platform
● Vaccines with local production
● Animal Health with local production
● Integration of Genzyme
● Regional R&D platform
Sales of EUR 606m in H1 2012
Shanghai HQ
Hong Kong
Taipei
Tianjin
Hangzhou
Beijing
Shenyang
Guangzhou
Wuhan
Chengdu
Wulumuqi
Nanjing
Shenzhen
Sanofi’s Presence in China
Regional offices
Manufacturing site Pharmaceuticals
Greater China offices
Tangshan
Manufacturing site Consumer Healthcare
Manufacturing site Animal Health (Merial)
Manufacturing site Vaccines
Nanchang
Jinan
Portfolio to immunize
pediatric and adult
population in China
Strong position in the
Avian Biologics market
A leading MNC(2) player in
the OTC market through
strategic acquisitions &
Joint Venture
Addressing disease
burden of 90m people
with diabetes
17
The #1 brand in the ARB class
in China(2)
Branded oncology portfolio
covers top cancer types in
China
The #1 Rx Pharmaceutical
product in China(1)
17
Human
Vaccines
Consumer
Health Care
Animal
Health
A Large Portfolio of Flagship Brands Across our Growth
Platforms that Fits the Local Needs in China
Diabetes
Solutions
(1) IMS CHPA MAT June 2012, value
(2) IMS CHPA June 2012 , volume; ARB – Angiotensin Receptor Blockers
(3) MNC = Multi National Company
A Broad Healthcare Offering in China’s Counties
18
283 Cities(1) 1,950 Counties(2)
Population ~900m
Characteristics
1. Huge base
2. Lower affordability, higher
out-of-pocket spend
3. Geographically broad
(1) Defined as prefectural level cities (PLCs). (2) Defined as county-level cities (CLCs) or counties
Reaching out to China’s ~2,000 counties
Primary Care Business Unit
implemented in 2011
A successful business
model supported by a
dedicated sales force
Portfolio approach to fully
leverage our broad product
offering
Cover key Provinces with
several hundred Counties
Addressing the medical
needs of a huge population
Diversify geographic
concentration
Strategy
China with 31 provinces Ex.: Zhejiang province
19
Agenda
19
Sanofi – A Leading Presence in China
Focusing on Diabetes
Conclusion
Outlook on the Healthcare Market in China
20
China: Main Macro Economic Indicators Point Toward
Continued and Superior Growth
Population in 2011(1) 1.34bn
Estimated Real GDP Growth 2012-2017(2)
Healthcare Expenditures as % of GDP(3)
Middle-class and Affluent Population in 2015(4)
Pharma Market Growth 2011-2016 (CAGR)(5)
7-8%
4.5-5%
52%
5.7
(1) China 2010 population census
(2) IMF World Economic Outlook,April 2012; internal analysis (CAGR)
(3) WHO 2011, Global Health Expenditure Database; country data 2009
(4) Annual house hold income > US$10,000; BCG and internal analysis
(5) IMS Market Prognosis China 2012-2016 (2012)
7-8%
5%
52%
16.1%
China Healthcare Reform
Key
Healthcare
Reform
Activities
● Better and broader basic
medical insurance coverage
● Improving medical services and
patient care by CHCs(1) and
rural health centers
● Increasing government funding
for chronic diseases and
vaccination
● Improving quality of medical
services
● Implementation of payment
reform by the government,
such as global budget and
pay by disease
● Cost containment with price cuts
● Essential Drug Lists (EDL)
policies to favor usage of local
cheap generics in CHCs(1) and
township hospitals
Challenges Opportunities
21 (1) CHC – Community Healthcare Centers
22
(1) Health care expenditure reflects the total expenditure on medical and health care services, which includes government expenditure, social
expenditure and individual cash expenditure. –
(2) WHO 2011: ‘Total expenditure on health as % of Gross National Product’ (GDP): U.S. = 15.8%; Germany = 10.5%; Brazil = 8.4%; China = 5.1%
(3) Source: China National Bureau of Statistics, Ministry of Finance, 2011
The 2009 - 2011 Healthcare Reform Has Led
to a Significant Increase in Healthcare Investment
Health Care Expenditure(1, 2, 3)
HC expenditure as % of GDP
Significant Incremental
Healthcare Investment(3)
Original plan
866
503
320
0
2
4
6
8
10
12
14
162,000
1,500
1,000
500
0 2009
5.1%
2005
4.7%
2001
4.6%
1997
4.1%
RMB bn
850 RMB bn
Updated report 1,134 RMB bn
Investment into county healthcare
system, both infrastructure and
insurance
1,720
2009-2011:
8.4%
10.5%
15.8%
5.1%
431502
583
676
785
910
23
(1) IMS consulting, China 2015 study (September 2011)
(2) IMS Market Prognosis China 2012-2016 (2012)
China Expected to Become a ~150bn USD Pharma
Market by 2016
Projected China Market Growth(2)
Growth (%)
600
1,000
200
0 2015
16.0%
2013
16.1%
2012
16.4%
2011
16.2%
0.0
RMB bn
400
800
1,200
2014
16.1%
● Market growth driven by increasing
demand in Cities and Counties
● Market growth also driven by
increasing “middle class” and aging
population
● Impact from healthcare policies to
reduce drug prices expected to
continue
● China is projected to generate 27%
of the world’s pharmaceutical market
growth over 2011-2015
10.0
18.0
China expected to be the 2nd
largest
Pharmaceutical market by 2015(1)
2016
15.9%
24
Agenda
24
Sanofi – A Leading Presence in China
Focusing on Diabetes
Conclusion
Outlook on the Healthcare Market in China
Diabetes Remains One of the Largest Opportunities
in the Healthcare Space
Adults with diabetes worldwide(1) 350m
% of patients not achieving glycemic control target values in the U.S. and EU(2) >50%
Patients remaining undiagnosed in BRIC countries(3) ~2/3
Expected size of global diabetes market in 2015(4) $43-48bn
Expected CAGR growth of global diabetes market between 2011 and 2015(4) 4-7%
25
(1) G. Danaei, Lancet 2011; 378: 31-40
(2) Adelphi Disease Specific Program (DSP) III and VII (sample of over 10,000 diabetic patient records)
(3) Internal estimates based on multiple sources
(4) The Global Use of Medicines: Outlook through 2015, IMS Institute for Healthcare Informatics, May 2011
Lantus® #1 Insulin Brand Worldwide – A Growth Story
€2.031bn
€2.450bn
€3.916bn
€3.510bn
€3.080bn
2007 2008 2009 2010 2011
2007-2011
CAGR
+17.8%
26
Diabetes is a Fast Growing Disease in China
27
Adults with diabetes in China(1) >90m
Patients not diagnosed(2) ~2/3
Insulinized patients in China in 2010(3) 4.6m
Expected size of Chinese diabetes market in 2020(4) $3.2bn
Expected growth of China diabetes market between 2012 and 2017 (CAGR)(4) 14.4%
27
(1) Yang et al., 2010
(2) Internal estimates based on multiple sources
(3) IMS data and internal patient model
(4) IMS Therapy Prognosis 2011-2020 China Diabetes
Sanofi’s Share in the Diabetes Market in China
Almost Tripled over the Last 4 Years
28 28
China Diabetes Market Share by Diabetes Player (Value) Market Share (%)
MAT Q2 2012(2) 2007(1)
+85.3%
Lilly Novo Bayer
(1) IMS CHPA MAT Dec 2007 .
(2) IMS CHPA MAT June 2012
Others
RMB million
Insulins:
CAGR 2007-2011 at + 32%
MAT June 2012, Growth +20.8%
Sales Value of Diabetes Therapy Segments
Source data : IMS CHPA MAT June 2012
GLP-1 share 0.43%
3,752
59%
41%
8,326
54%
46%
2009
6,768
55%
45%
2008
5,231
56%
44%
2007 MAT 2012
10,554
51%
49%
2011
9,882
52%
48%
2010
Insulins Are the Fastest Growing Diabetes Segment in China -
Representing Already Half of the Diabetes Market
29
RM
B ‘m
il
Oral Anti-Diabetics (OADs):
CAGR 2007-2011 at + 23%
MAT June 2012 Growth, +11.3%
Sanofi Has Reached the #3 Position in the Chinese
Diabetes Market
30
● Disease burden increasing
dramatically
● Diabetes patient population up
4-fold from 2001 to 2008(1)
● Healthcare expenditures on
diabetes are estimated to have
reached $6.9bn in 2010(2)
● Sanofi Diabetes BU created in
2009 in China
● Sanofi now #3 in the Diabetes market
in China(3)
● Sanofi’s diabetes franchise
outpacing market growth
(1) New England Journal of Medicine 2010;362:1090-101
(2) IDF press statement, March 2010
(3) IMS CHPA 2007; MAT 06/2012
RK CORP MS%
1
NOVO
NORDISK 34.1%
2 Bayer HC 16.8%
3 ELI LILLY 5.7%
4 SERVIER 4.2%
5 BMS 3.9%
6 GSK 3.7%
7 3.5%
RK CORP MS%
1
NOVO
NORDISK 35.4%
2 Bayer HC 14.1%
3 9.9%
4 ELI LILLY 6.5%
5 BMS 4.1%
6 HUADONG 3.1%
7 SERVIER 2.5%
2007 June 2012
Companies in the Chinese Diabetes
Market Ranked by Market Share(3)
30
Lantus® Has Reached 16.5% of Total Insulin Market in
China in June 2012(1)
Lantus® Qtr. Value Market Share(2)
in Insulin (%)
(1) IMS CHPA June 2012
(2) MS CHPA Q2-2012
(3) IMS CHPA MAT 06/12; Cities where Lantus is the #1 insulin include Guangzhou, Suxi, Nanjing, Chengdu, Xi’an, Dalian, Shenzhen, Ningbo, Shijiazhuang
● Lantus® launched in China in 2004
● SoloStar® launched in 2009
● Recent improved market access in
China's two largest insulin markets
● Shanghai (December 2010)
● Beijing (July 2011)
● Leading insulin in several big cities(3)
ahead of Novo Nordisk
● Only available in disposable pens
● Low average daily dosing per patient
0
2
4
6
8
10
12
14
16
05-
Q4
1.4%
05-
Q2
0.7%
04-
Q4
11-
Q4
15.8%
15.4%
11-
Q2
14.9%
10-
Q4
14.7%
10-
Q2
13.1%
09-
Q4
09-
Q2
12.4%
12-
Q2
15.7%
0.3%
08-
Q4
10.5%
8.5%
08-
Q2
07-
Q4
7.1%
07-
Q2
6.6%
06-
Q4
3.5%
06-
Q2
2.7%
Enter ~70%
provincial RDL
Launch
SoloStar®
Enter
NRDL
31 31
● Despite generic
competition, Amaryl®
is a growth driver for
the OAD market in
China
● In June, Amaryl®
reached 6.5% market
share of the total
OAD market in China,
growing at 11.2%(1)
● Amaryl® expected to
remain an important
driver in our diabetes
portfolio in China
50% 51% 57% 65% 69%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
MAT ~ 05/2008 MAT ~ 05/2009 MAT ~ 05/2010 MAT ~ 05/2011 MAT ~ 05/2012
Generic
Amaryl
25% 27% 30% 37% 41%
0%
20%
40%
60%
80%
100%
MAT ~ 05/2008 MAT ~ 05/2009 MAT ~ 05/2010 MAT ~ 05/2011 MAT ~ 05/2012
Generic
Amaryl
Amaryl® is Gaining Market Share in Value and Volume
against Generics in the Oral Anti-Diabetics Market
32
A Value Share in Glimepiride
Am Volume Share in Glimepiride
1)IMS CHPA June 2012
“China Initiative for Diabetes Excellence” -
A Major Public-Private Partnership in Diabetes
33
● First public-private partnership to develop a patient-centric, integrated diabetes
management program in China
● Landmark program for the prevention and control of diabetes announced in
May 2011
● 5-years initiative led by the Bureau of Disease Prevention and Control of the Ministry of
Health
● Collaboration with the Chinese Diabetes Society
● Train 500 emerging experts, followed by 10,000 community and county doctors
● Enhancing patients’ self-management capabilities through education and
organized peer support groups
5 years program
Educate millions
of patients
Cascade to 10,000
country doctors
Train 500
emerging KOLs
33
● Local Manufacturing of Lantus® SoloSTAR®
Pen in Beijing Facility inaugurated in
May 2012
● A strategic decision to manufacture
Lantus® SoloSTAR® locally in China
● Capacity of 48m units
● Second phase of the US$90m project
to install a high-tech cartridge aseptic
production line announced
Continuous Commitment to Fighting Diabetes in China
34 34
Delivering the Full Value of Other Portfolio Assets in the
Chinese Diabetes Market
● From Lantus® to Lantus® -based solutions
● Further expand basal insulin treatment
paradigm
● Expand leadership position with Amaryl®
● Grab untapped opportunities with Apidra®,
Insuman® and Blood Glucose Monitoring
devices
● Local clinical development ongoing for
Lyxumia®
35 35
Established Insulins
Optimized Devices
Innovative Blood
Glucose Monitoring
36
Agenda
36
Sanofi – A Leading Presence in China
Focusing on Diabetes
Conclusion
Outlook on the Healthcare Market in China
Sanofi Is Poised to Sustain Significant Growth
in China
37
● Solid historical presence and fully-integrated structure
● Strong socio-economic drivers underpinning growth
● Well-suited portfolio for China’s medical needs
(Rx, CHC, Vaccines, Diabetes, Animal Health, Genzyme)
● Growing position in Diabetes by maximizing the value of the entire portfolio
● Increasing access to new market segments at the county level
● Significant investments in local production facilities serving all Growth Platforms
and accelerated investment in R&D
● Industry lead in talent attraction, development and retention
37
Continued Execution of Strategy Expected to Deliver
Sustainable Growth Over 2012-2015
38
Expected 2012-2015 Sales CAGR
Diversified sources of growth and scale in businesses with significant barriers to entry
Low small molecule patent exposure in mature markets(1)
Large Emerging Markets presence(2)
Potential new product launches(3)
Operating margin evolution
2012-2015 Business EPS CAGR
Increased dividend payout ratio(4)
Corporate Social Responsibility
(1) 2012 sales from chemical products exposed to patent expiry in the U.S., Japan and Western Europe over 2012/2015
(2) Based on 2015 internal estimates
(3) Over 2012-2015
(4) Dividend to be paid in 2014
~6%
50% of 2013 results
18
38-40%
Rebounding
> Sales CAGR
At least 5%
The Dividend Remains a Key Element of Shareholder
Value Creation
39
● Dividend of €2.65
per share for 2011
● Progressive increase of
payout target to 50% for 2013
Business Net Income(1)
(1) Dividend to be paid in 2014
2011
€2.65
2010
€2.50
2009
€2.40
2008
€2.20
Evolution of Dividend
Payout
35%
Payout
40%
Dividend
+6%