Sanofi-Aventis (France) (SASY.PA) Net Profit Slumps On Restructuring
2/9/2011
PARIS, Feb. 9, 2011 /PRNewswire/ --
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In order to facilitate an understanding of our operational performance, we comment on our business net income statement. Business net income(1) is a non-GAAP financial measure. The consolidated income statement for 2010 is provided in Appendix 8. A reconciliation of business net income to consolidated net income is provided in Appendix 7. Consolidated net income in 2010 was euro 5,467 million, compared with euro 5,265 million in 2009. Consolidated earnings per share in 2010 was euro 4.19 versus euro 4.03 in 2009.
Commenting on the Group's performance in 2010, sanofi-aventis Chief Executive Officer, Christopher A. Viehbacher said, "2010 was the first year in which the patent cliff really became visible with generic competition for several of our products, notably Lovenox® in the U.S. However, we have delivered another year of EPS growth due to the excellent performance of our growth platforms, which now account for 54% of sales, and tight cost control. In 2010, these growth platforms accounted for more than 16 billion in sales, an increase of 12.5%, constituting a solid basis for the mid and long term development of our company."
2010 Performance
Overall sales(2) decline of 0.8%, demonstrated resilience despite the impact of U.S. healthcare reform, EU austerity measures, and more than euro 2 billion of sales lost as a result of generic competition Emerging Markets(3) generated in excess of euro 9 billion in sales (+16.3%), accounting for 29.9% of total sales and is now the largest contributor to Group sales by regionThe Consumer Health Care (euro 2,217 million in sales, +45.7%) and Generics (euro 1,534 million in sales, +41.5%) businesses continued their strong growth trend supported by bolt-on acquisitionsThe vaccines business had a record year with sales of euro 3,808 million, driven by a strong performance of seasonal flu vaccines which grew 33.3%; pandemic flu vaccines also contributed euro 452 millionDiabetes sales reached euro 4,298 million (+9.2%); penetration of Lantus®SoloSTAR® significantly increased and accounted for 40.2% of total Lantus® franchise sales in the U.S. in Q4 2010Jevtana® exceeded the Group's expectations with U.S. sales of euro 82 million, while Multaq® recorded sales of euro 172 million in its first full year Business EPS(1) grew 6.8% in 2010 on a reported basis and 2.6% at CER Free cash flow(4) increased by 26.7% to euro 9,416 millionProposed dividend of euro 2.50 (versus euro 2.40 paid in 2010), with an option for payment in sharesTransformation Program
Cost savings are progressing faster than expected; cost savings of euro 1.3 bn(5) were achieved in 2010 and the original goal of euro 2 billion(5) (initially expected to be achieved in 2013) will now be reached in 2011, with significant reallocation of resources toward growth platformsPhase III studies are expected to be reported in 2011 for 5 compounds FDA approval was recently obtained for Allegra® OTC with an expected launch in March2011 Guidance
Despite the absence of A/H1N1 vaccines sales and the impact of generic competition, double digit sales increase(6) of growth platforms and cost control should lead to 2011 business EPS(1) 5% to 10% lower at CER than 2010 business EPS(7), barring major unforeseen adverse events. This guidance does not assume a return of generics of Eloxatin® in the U.S. and does not include any benefit from a possible acquisition of Genzyme.(1) See Appendix 11 for definitions of financial indicators; (2) Growth in net sales is expressed at constant exchange rates (CER) unless otherwise indicated (see Appendix 11 for a definition); (3) See definition on page 8; (4) before restructuring costs, dividend payments and acquisitions; (5) at CER, before inflation and on a constant structure basis (6) at CER; (7) euro 7.06; see Appendix 11 for a definition.
2010 fourth-quarter and full-year net sales
Unless otherwise indicated, all sales growth figures in this press release are stated at constant exchange rates(1).
In the fourth quarter of 2010, sanofi-aventis generated net sales of euro 7,395 million, up 0.5% on a reported basis. Exchange rate movements had a favorable effect of 6.4 percentage points, mainly due to the weaker euro versus the U.S. dollar, Japanese Yen, Brazilian Real, and Australian dollar. At constant exchange rates, and including changes in structure (primarily the consolidation of Chattem), net sales decreased by 5.9%. Excluding changes in structure and at constant exchange rates, fourth-quarter net sales declined by 7.1% or by 2.4% excluding pandemic influenza vaccine sales booked in the fourth quarter of 2009.
Net sales in 2010 were 3.7% higher on a reported basis at euro 30,384 million. Exchange rate movements had a favorable effect of 4.5 percentage points, largely reflecting the appreciation of the U.S. dollar, Brazilian Real, Japanese Yen, Australian dollar and Canadian dollar against the euro. At constant exchange rates, and after taking into account changes in structure (in particular the consolidation of Chattem), net sales decreased by 0.8%. Excluding changes in structure and at constant exchange rates, net sales for the full year decreased 2.7%.
Key Growth Platforms (see Appendix 5)
The Group's growth platforms collectively accounted for 56% of total consolidated sales in the fourth quarter of 2010 which is up from 52% in the fourth quarter of 2009. In 2010, the growth platforms increased by 12.5% and represented 54% of total consolidated sales compared with 47% for 2009. Animal Health achieved sales (not consolidated) of $577 million (-1.2%) and $2,635 million (+2.6%) in the fourth quarter 2010 and in full year 2010, respectively.
Pharmaceuticals
Fourth-quarter net sales for the Pharmaceuticals business were euro 6,505 million, down 2.7%, reflecting generic competition for Lovenox® and Ambien®CR in the U.S., for Plavix® and Taxotere® in EU and the impact of U.S. health care reform and EU austerity measures. Full year 2010 net sales decreased by 1.6% to euro 26,576 million.
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Net sales of the Diabetes division were euro 1,101 million (+8.8%) and euro 4,298 million (+9.2%) in the fourth quarter and 2010, respectively. In the fourth quarter, Lantus®, the world's leading diabetes brand, reported net sales of euro 894 million, an increase of 8.8%. Over the period, sales of the product grew by 22.2% in Japan, and by 24.8% (euro 137 million) in Emerging Markets(9) led by Latin America and China. Lantus® recorded U.S. fourth-quarter sales of euro 533 million (up 6.3%); these figures include an accrual related to U.S. health care reform and were impacted by a reduction in inventory.
(8) See Appendix 2 for a geographical split of consolidated net sales by product.
(9) World excluding the U.S. and Canada, Western Europe, Japan, Australia and New Zealand
The contribution from Lantus®SoloSTAR® in the fourth quarter 2010 represented 40.2% of total Lantus® sales in the U.S., an increase of 7.9 percentage points versus Q4 2009. In Western Europe, sales were euro 172 million (+3.0%). In full year 2010, Lantus® family sales reached euro 3,510 million, up 9.1%.
BGStar® and iBGStar, the first range of blood glucose monitoring systems (BGMs) co-developed by sanofi-aventis and its partner AgaMatrix were approved in Europe. BGStar® was also approved in the U.S. where a dossier for iBGStar was submitted in Q4 2010. The Group expects to launch BGStar® and iBGStar in 2011.
In January 2011, the FDA updated its ongoing safety review of Lantus®. In addition to the analysis of the four studies published in Diabetologia, the FDA also reviewed results from a five-year diabetic retinopathy clinical trial in patients with Type 2 Diabetes. At this time and based on these data, FDA has not concluded that Lantus increases the risk of cancer.
Net sales ofthe rapid-acting insulin analog Apidra® increased by 24.3% to euro 49 million in the fourth quarter sustained by Western Europe and Emerging Markets. Full year 2010 net sales of Apidra reached euro 177 million (up 24.1%). Amaryl® net sales reached euro 123 million (+4.7%) in the fourth quarter and euro 478 million (+7.7%) in 2010, driven by performance in Asia .
Lovenox® net sales in the fourth quarter were euro 582 million, down 26.9% and were impacted by a generic competitor in the U.S. (U.S. sales were euro 233 million down 51.7%). Outside the U.S., Lovenox® sales reached euro 349 million (representing 60.0% of Lovenox sales in the fourth quarter), an increase of 8.4%. Full year 2010 net sales of Lovenox® reached euro 2,806 million (-10.5%), 48.7% of which was generated outside the U.S. (euro 1,367 million, up 7.8%).
November saw the expiration of Taxotere® market exclusivity in the U.S. and composition of matter patent in Europe. Fourth-quarter net sales of the product decreased 20.1% to euro 456 million. In Western Europe, sales were down 26.2% (euro 146 milli
