Sanofi SA (SNY) 2004 Q4 法說會逐字稿

Good day ladies and gentlemen. Welcome to today’s Sanofi Aventis 2004 full-year results conference call. As a reminder, today’s call is being recorded. At this time I would like to turn the call over to your host today, Mr. Jean-Francois Dehecq, Chairman and Chief Executive Officer. Please go ahead, sir.

Hanspeter Spek will give you some explanation on the financial figures, and then Gerard Le Fur will give you his view around our portfolio, and then I will conclude with some figures for ’05.

So Hanspeter, that’s you.

Thank you. Yes. Good day to you out there. It is a great pleasure, and it’s even described that I present for the first time the results of Sanofi Aventis.

Now what has achieved this Company, this new Company in the first year of its existence in terms of sales, if I could have the first slide please. Thank you. So you see we have achieved additional sales of €2b and you see further that this means a growth of 10% in terms of consolidated sales, and 12.3% in terms of developed sales.

The first to see is that the 15 leading products -- these strategic products have been growing by 17.8%. And that we have achieved, at least for the time being, the other products, which represent still nearly €10b of sales. So we have achieved at least a certain stagnation with those products, plus 0.2%, as you see from the chart.

Further worth noting is the fact that there is a good equilibrium between the sales coming out of the U.S., representing approximately 35%, and the sales coming out of Europe, 43%. And if we could have the next slide please.

This growth means we have outgrown the pharmaceutical market which is, of course, for the first year, not so bad. In more qualitative terms, you see from the chart that we have also achieved the largest growth amongst all major pharmaceutical companies.

And more in detail in terms of consolidated sales, we have achieved additional [uses], approximately the same magnitude as Pfizer. But then you see if you look to the large part, in the creating sales coming especially from Plavix, you see that we have clearly outperformed the market.

Further words to be noted is the fact that we have been growing nearly everywhere better than the market. And last but not least, again, our excellent performance in the United States, where we are now for 4 consecutive years the fastest-growing pharmaceutical company overall.

Next please. How could this have been achieved? Mainly by a very, very rapid integration. We took over the keys of Aventis only in August. And so it is probably fair to say that this has been 1 of the fastest integration processes of all.

How did we do it? First of all, by a very clear but not to say simple, strategic concepts which, in terms of products, is based on [2-folds] for strategic products. And those strategic products represent today 11 global plans. And within those 11, 8 products are blockbuster products, selling more than €1b per year. And it’s fair to say that some more products are on the way to become blockbusters.

The second [part] in terms of so-called base business. The products which represent, as I said before, approximately €10b, which means those traditional products, which are the [indiscernible], which are the basis for this business, which we will give more attention than in the past. And you have seen there the first insight there.

Another element is in the strategic choices put in place has been the model no small countries and also no small products. So country-wise we give the same attention to every market, knowing that the structural problem is the same. Of course, recognizing the magnitude of problems and also opportunities, of course, largely differs.

Last but not least, this is a strategic business, which is built upon pharmaceuticals, but we give a very, very strategic value to the vaccines and also for the future today on a relatively small level to the generics, which you see are an important component, especially in the future development for pharmaceutical companies.

As said before, we have put this in place very rapidly, already during the fourth quarter 2004. All managers have been nominated. We have put things right in terms of future locations of our subsidiaries. And consequently we have announced closing approximately 70 subsidiaries in the world. And the effects of those announcements translates in the first quarter of 2005, where we see the first people go subsequent to this decision. But we also see that we very much succeed to maintain the people who are important to continue to drive this business further.

So we can say today that as of January 1, which was one of our major objectives, the post a network of subsidiaries that is totally functional and is out there to achieve our targets for the ongoing year.

Other important elements of the restructuring, together with the merger across the sales force. We have today a sales force of 33,000 people, with approximately 8,000 people in the United States. And 8,000 people means today that we have the second-largest sales force in the U.S., only topped by Pfizer, which is currently employing approximately 9,000 people.

The other advantage is that we [have gained] some excellent other countries, such as Japan, where we employ now 1,500, and also China, where was aim for having 1,000 people.

We have aimed also for some [quickies] in terms of synergies. We have put Plavix and Lovenox promotion together. And we are expecting quite some upside from those. And we have also put Aprovel together with those people selling, and those the beginning of the second half of 2004 for ramipril in the Aventis side of the company, because we want to take advantage of the huge franchise in the cardiovascular field.

Last but not least, as you see from the chart, we have combined 2 sales forces in the U.S. which were both leader in certain qualitative terms. There is the fact that Aventis has been the most successful company in terms of access [access]. And Sanofi-Synthelabo has been the most successful company in terms of effectiveness of sales forces. So we feel we have good reason to hope that combining both forces will even drive the quality of our field force in the U.S. further.

Last but not least, the portfolio. The portfolio of blockbusters, and not only blockbusters. It is also a portfolio in which Plavix, Lovenox, Taxotere, Eloxatine, Ambien and Allegra are therapy captains, which means the first in their respective class.

I said before, we have currently 8 blockbusters in our portfolio, 2 more to come. We believe that Lantus and Copaxone will be those products, heading then up to a portfolio of 10 products selling more than €1b this year.

I think it’s fair to point out that we are very content with the close of those strategic products, as you see from the chart. Except Allegra and Tritace, both suffering difficult circumstances. Tritace, of course, the out of patent situation. Allegra, this specific situation of antihistamines in the U.S. Except those 2 products, all other products show high two-digit growth figures 60%, 29% for Plavix, and [so forth]. So it’s fair to say that this portfolio is in excellent shape.

Now more in detail. First of all, Plavix. Plavix has over-passed €4b of sales this year, 35% growth. And, as you see from the chart, Plavix is also a blockbuster outside the United States, which gives a certain light to the ongoing patent litigation.

We have very, very interesting imminent views ahead of us at the ACC convention, as the results of CLARITY and COMMIT will be presented. Of course, we cannot give you any details. But I think it’s fair to indicate that we are rather confident that those two studies will support an additional indication for Plavix, which is then an indication in the myocardial infarction, which would give additional room for growth.

Further important to indicate our total confidence in the product, supported by continuously large life cycle management program, including 30,000 patients. You see there it’s CHARISMA, upcoming in terms of results by 2006. But we may have another indication coming from that, ACTIVE is 14,000 patients, which is another potentially additional indication in atrial fibrillation.

So Lovenox, as [main product], is still the largest product in the portfolio in terms of consolidated sales. Sales were close to €2b. A product many, many years on the market in [perfect health], growing by 22%, still driven by the 2 major indications, prophylaxes and unstable angina. Both indications are leveraged only to approximately 40% to 50%. So it is clear that this product still has a very, very bright future ahead of it, despite the fact that it has far biggest market share today, ranking between 40% and 90%. As you see from the chart, the product is the market leader in 8 out of 9 major markets.

Aprovel. Our objective with Aprovel has been to grow with the market. Very clearly we are not out there with the ambition to dominate this market. We leave this ambition to others. And we can say that we have achieved this ambition of growing this market, from 21%, getting close to €1.5b. You see that especially in Europe the development of the product continues to be strong.

I mentioned before, we hope to get synergies from the ramipril franchise within the former Aventis field forces. And you see from the chart that also in this product there is massive investment in terms of lifecycle management. You see the impressive figures. Most of those [sides] are also indication seeking.

Lantus and Apidra, another domain of the new Group, which is the treatment of diabetes. Lantus, an insulin, has become market-leader in the United States, in Germany and in France. And this is a growth rate of 80%. So it’s fair to say that also this product is on a very, very positive way.

We have a number of interesting studies also where we will continue to benefit from. We have just launched in the United States a new device called Opticlik, which will further ease the application of the product. And then there is the imminent launch of Apidra, a fast-acting insulin, which is aimed to complete our portfolio, our offer in this field as from 2005 on a country-by-country basis.

Now, the next important step in terms of product launches, of course, is rimonabant. Acomplia, Gerard Le Fur will give you more details on the clinical result. So in summary, we are perfectly on track to deposit the file as foreseen in the second quarter of 2005.

And as more, we are getting close to the deposit of the file. Of course, we are getting closer to the final positioning. And as you see from the little graph, the positioning will take place in the triangle of abdominal obesity, risk factors in the cardiovascular field and finally, of course, cardiovascular diseases.

We expect that in the next couple of days 2 important communications at the American Cardiology Convention, if those communications are out, they will add to the mare than 100 publications on Acomplia since 2001. And last but not least, yes, we have initiated additional clinical trials in the prevention of cardiovascular disease with the evident primary endpoint.

It is too early to give you an indication for pictures of this product, but I thought it may be of help to discuss the target a little bit the market. As you have seen from the first chart, the key orientation is abdominal obesity. And you see that, for example, in the American population, this means today approximately 91m people in a potential target group.

Also we would not aim, at the beginning at least, for this enormous target group. You see that in the sub-populations, if I take, for example, obese patients presenting a risk factor which already has been treated or others who have not been treated, it gets to very, very large populations. And this is, of course, part of our optimism for the upcoming commercial and economic success of this product, which should become available by the end of 2005 or very early in 2006.

The latest launch of Aventis has been Ketek, an antibiotic, which had been previously launched in France where the product very rapidly became market leader. The product is doing well -- even very well in the U.S. The product has been the most successful launch of an antibiotic overall so far in the United States. Sales, [I now confirm], is +67%. Still on a small level. But we believe that 2005 will be another successful year with even more as we start to have a very significant season for antibiotics in Europe, but also in the United States.

Ambien, Stilnox is approaching the end of its first lifecycle. The product goes off patent in October 2006. So if we get a pediatric extension 6 months later, then in 2007. The product is behaving extremely well, with 15% growth in 2004, achieving €1.4b. You see that of course the largest part of the sales comes from the United States, where the product has a fabulous market share of 86%.

We have deposited the success of Ambien, Ambien CR in June 2004. We have an action date with the FDA in April 2005. And so if everything goes well we expect to launch this product by mid-2005. And then the second life of Ambien should start. We will have everything in place to try the replacement of Ambien by Ambien CR to a maximum speed. We feel quite encouraged also by the fact that our 2 competitors have continuously delayed to report, so we have sufficient time to make the necessary effort to make a maximum shift to the new form, which will then give us another longer period of protection.

Actonel, another product which became a blockbuster in 2004. This is product developed by Proctor & Gamble. We market it jointly all over the world. You see that also in terms of consolidated sales, the development of the product has been fabulous, with 60% growth. This is through all over where the product is being marketed. We achieved all over the highest share of new patients, which makes us very, very optimistic, also for a continuous growth of the product in 2005 and further.

And now the domain of the new Company of exceptional strength is then oncology. Taxotere. First of all, you see a relatively modest growth for our sales of plus 11% in 2004, up to €1.4b. The main reason for this was a not very well balanced reimbursement system for this kind of product in the U.S. This is an effect of the past. The system has been reviewed by January 3, 2005. Today Taxoid(ph) and its generics, and Taxotere have the same conditions. And we see a very, very interesting, very exciting uptake since January 1 in our U.S. sales.

Besides, the product has a cornerstone tradition in the treatment of the metastatic breast cancer and also in the treatment of the hormone resistant cancer of the prostate. There are new indications to come, as you see from the chart, which is the gastric cancer and cancer of the head and neck. So together we see a harmonization of the reimbursement. We are very, very optimistic that this product will have high 2-digit growth in 2005 onward.

Second product, second blockbuster in oncology, which really is a totally unique situation for our portfolio, that is Eloxatin. Eloxatin had another year of superb growth, 57%. €1.2b of sales. We are market leader with this product in first and in second line.

For the future I think it is very encouraging to see that Eloxatin is the preferred combination partner of Avastin, which means our predictions that the new generation of products will be add-on products is coming through. And that was for Taxotere. Eloxatin as well became a cornerstone of the respective therapy, which is, of course, the treatment of colon cancer.

2 words on our presence in vaccines. As said before, we give a lot of importance to this presence as an important strategic part of our offers in healthcare. You see the sales of €1.6b for 2004, which does not include our sales through the joint venture with Merck.

The business has very much benefited in 2004 from a growth in the flu vaccines, which contributed 33% of growth. And that’s a very important use. Finally there has been, at the end of 2004, the deposit of a new vaccine, Menactra, which is indicated in the prevention of bacterial meningitis, a very, very traumatic disease. And we have significant expectations in this respect.

As you see from the chart, we had once again a leading position. We are market leader in vaccines, with a market share of 25%, followed by GSK and Merck. And with the new products in preparation and underway to be launched, we are convinced that we are able to further expand this market-leading position.

To sum it up, after the first year of 2004, what can be said? We have a unified sales force of 33,000 people. If I could have the next slide please. We have a fantastic portfolio of 8 blockbusters to date. 2 more products to be coming in blockbuster size is in a very, very short period of time. We have a base portfolio which we already now have obtained to become more or less stable. We always have stressed that [these uses] is mandatory.

We have very, very strong therapy-leading positions, especially in cardiovascular but also in oncology. We are very proud to say that for example in the United States, 1 out of 2 patients suffering from cancer can benefit from 1 of our products.

And last but not least, we have Acomplia and [indiscernible], which means there is an immediate source of further resource for continued growth. This growth has been excellent in 2004. You see that Sanofi Aventis has been the most important growth driver overall in pharmaceutical industry in terms of absolute growth and in terms of relative growth.

So, to make it very short, I feel everything is in place to have a continued success in 2005. Thank you.

Thanks Hanspeter. Jean-Claude?

Thank you Jean-Francois. Good day ladies and gentlemen.

I try to comment on the 2004 financial results now. And I will do that mainly through the proforma adjusted net figures -- net income, and proforma adjusted P&L, as I’m sure you have realized that this is the main proper way of reporting on the financial condition of the Company. And especially when it comes to my comparison with the 2003 year on the full-year basis. I will be back on this 1 with a little bit of methodology. But to begin with I will give a few words about purchase price and purchase price allocation.

Purchase price to begin with. This is a €52.1b acquisition with a cash component of €15.9b, and we will look at that a little bit later.

If we come now on the allocation of the purchase price -- next please, next shot please. This is a rather complicated chart. But I will only draw your attention on some figures which are included, and mainly those which are recorded in blue.

To draw your attention on the main valuation, to begin with, the valuation of R&D, which is the €5b. And second on the identifiable -- what we call identifiable intangible assets at fair value, we are talking of products currently in the market for €32b. And the third next important 1, which is the goodwill. The remaining value of the allocation, which is €24.67b(ph). And as you can see, the most important part of the valuation is done on [untenable] effects.

Maybe a fourth 1, which are the deferred taxes, which are referred there for €12b, just to remind you because we have had a lot of questions on this 1. That unfortunately we are not talking here of any saving -- cash saving of taxes. It’s purely accounting entries which are attached to the principal, for example, for the identifiable intangible assets. So unfortunately no cash savings for taxes as through this allocation.

The thing which I think is of interest is the fact that these values -- these final allocations which have been done with specialists, I am talking, for example, of Standard & Poor’s, is rather close to the valuation we provided to you with during the year 2004 through both the F4 and the [e-document] through the operation. So there is no surprise, if I may say so, between what we provided you with and the final allocation.

I would also just remind you that this balance sheet has not yet got definitive figures. I mean by that that the closing of the opening balance sheet is going to appear for August 20, 2005. And if there were adjustments to be made during that time, that would be made accordingly.

And to finish with, I would say that these values are going to be either amortized or impaired during a large number of years. And that is the reason for which, since the beginning of the launch of the operation, we can through utilizing the adjusted net income concept, which U remind you is an easy 1 to understand. It’s purely the net income and the French GAAP, less first significant purchase accounting treatment, which are to be eliminated, and less restructuring costs. And along this presentation, that is what I’m going to follow up through all lines of the P&L.

In the meantime, just because this acquisition has been done August 20, we have had to present proformas. We will remind you the rules again, to finish with I will go with the proforma adjusted statement. We are doing as if this acquisition had been done on January 1, 2003, with the acquisition date for the financial cost has been burdened to the P&L from the beginning of the year 2003.

We have eliminated these products, their contribution, the capital gain which have been sold because of the authorities decided so on the -- sorry, Arixtra, Fraxiparine and Campto. Obviously we’ve eliminated also the Aventis Behring, which was divested.

This is purely technical. Let me come back to the adjusted net income concept and comment on the P&L -- adjusted P&L of the Company. So between 2003 and 2004, 12 months aggregation of these 2 companies. The sales level, Hanspeter told you that the consolidated -- so-called consolidated run at 10% increased base. You know that there has been impact -- currency impact. There has also been perimeter impact. Some products were divested. So the so-called published pace was plus 4.6% at €25.4b in sales. And it’s going to be the comparison when we look at the charges which are going to come afterwards.

To begin with, the gross profit. You can see that we are making a 76.2% gross margin rate, which is exactly the same as we did in 2003. The reason for that is first that we have some negative impact in 2004, which are related to the -- what we call the pharmaceutical contribution, which is the money which is taken by the local health authorities. It’s a minus 0.4% impact on the sales.

On the contrary, we had positive sides, like the royalties, mainly on Plavix and Avapro, which increased. And this is an impact -- a positive impact by 0.3 percentage points when the product mix is also positive by another 0.1%.

When we go to the next line, we go to the R&D. R&D, with booking of about €4b of expense in 2004, which is a little bit less than the year before, 2.6%. I have to mention that this does include milestone payments. And we have observed a decrease of milestones in 2004 as compared to 2003, roughly €120m of milestones in 2003, as compared to €40m in 2004. And as you can see, this is mainly the difference between the 2 years.

More importantly, R&D does represent 15.6% of sales in 2003 or ’04. And you may recall that we said a year before that R&D would be more or less between 15 and 16% of the sales.

As far as the selling and general expenses are concerned, we are talking of close to €7.7b of expenses in this area. 30% of the sales. It is a plus 2.2%. This is the main area where we have resisted the synergies in 2004. And this is mainly due in the fact that since the announcement of the operation, I am talking now of the end of January 2004, the 2 groups kept their employment policy rather strictly since that date.

The next line might be a little bit technical. The other operating income and expense. Just a word on it. This is where we share profit with our partners. I am talking about Bristol-Myers Squibb, I am talking about Proctor & Gamble, [and action] in Actonel. So we had the remaining part of the profits, which are split. What can I say? This is a plus €100m as compared to 2003. And I can split that increase rather equally between -- from 1 part, Plavix and Avapro and the rest from the Actonel alliance with Proctor & Gamble.

Maybe I should have said, as a technical matter, but in the past this was not the way Aventis did account it for, so you may be surprised. But just to simplify your reading of the Actonel accounting with this book, let me just say that this is exactly the same way as the BMS alliance in Avapro and Plavix has been done for years in the ex-Sanofi-Synthelabo.

So we are down to the operating profit. And you can see 32% of the sales, an increase by 12.5%. Then we go to more technical lines, but some -- these are some comments.

I will begin by the financial incomes before the exceptional and be back on the exceptional afterwards. Financial income shows a little bit of an improvement. The main reason being that we have encountered, in 2004, a small reduction in the interest rate as well as an increase in the cash-flow position, just because the Company did generate cash flows.

Now, in addition to that, but on the other side around, this is the line item in which we do register the impact of these companies in which we hold a stake and which are lifted from the [statement], such as the [indiscernible] to [buy the] companies. And in 2004 there was a negative impact by €76m, when in 2003 the balance was rather equal.

As I mentioned before in this line item of the -- in financial items, when we provide with proformas, that does mean that the acquisition date has been accounted for since January 1, 2003. So both 2003 and 2004 are burdened with the financial cost of the equivalent debt.

Next, the exceptional items. I shouldn’t even comment on that because we are showing small figures - minus €41m in 2003, plus €29m in 2004. Nonetheless it is worth giving some comment. As you can see first there are these gains from disposal of receipt(ph). I should say disposal on products. And this is a result of the old policy, which was run by Aventis before the acquisition, and which drove to a level of capital gain which is equivalent in 2004 and 2003.

In addition to that, there were also this restructuring, which were conducted by Aventis before the acquisition. And there were some remaining costs in 2004, €140m, as well as there will be at the end of them with a small amount in 2005.

Aventis also did encounter some defense costs in 2004, €156m. So this is a component of the line item. And the last 1, which is rather important in 2003, €221m charges in 2003 as compared to -- €63m sorry, in 2004, charges which are related to these activities which were divested since. And I am talking mainly of Aventis Crop Science, of Clariant and the Animal Nutrition business.

If we go now to the next 1, this is first to begin with on the P&L, the income tax. You see a rather different income tax rate between 2003 and 2004, 28.1% in 2003 to be compared with 31.5% in 2004. Let’s just say a few words, that 31.5%, which is the 2004 rate, is the current rate. We have some positive exceptionals in 2003.

Income from equity investees net, you see there is a swing between 2003 and 2004. And 2003, which was a loss by €150m, to be compared to the positive €176m positive contribution in 2004. In 2003 there were some negative ones. Rhodia, which was accounted for under the equity method in 2003. No more in 2004, just because a large stake was divested to [indiscernible]. And this was a negative impact.

Another 1 was Dystar, our chemical company, which was divested the beginning of 2004. And this was the Wacker chemical company, also negative contribution in 2003. The 3 of them did represent more than €300m negative contribution which we didn’t encounter obviously in 2004. But I would say that the 2004 situation is rather normal.

So all of that drives us to a proforma net income -- and adjusted proforma net income of €5247m, up to close to 18%. And on an EPS basis, €3.89 in 2004, up to 18.2% as compared to the €3.39 per share in 2003.

When we looked at the 2003 and 2004 accounts, you see that there were a lot of pluses and minuses along the lines. And we asked ourselves the question, are the 2004 accounts -- the 2004 P&L a good basis for the future. So we did make the exercise -- the exercise, and to look inside the P&L to try and determine and to see if the basis was the correct basis.

As you have seen, there were these gains on disposal of, as I said, some products, which did represent more than €400m in 2004. And you know that we have said and determined that selling the product to make capital gain was not the kind of policy we wanted to follow up.

Now there are also some negatives which have been taken into account in the 2004 books, and which we feel are not at all reproducible in 2005, so which should be cancelled, if I may say so. And I have already mentioned some of them, like the defense costs, restructuring costs. I have said that it is going to be the end of it in 2005. Obviously the charge relating to divested activities. The quasi-equity instruments just because we refinanced.

To say it in a few words, we can say, I think that the plus and the minuses, that the net performance, the net adjusted result of 2004 is a good basis for all of us to see how the Company is going to perform in the future.

A few words about the cash position now. You know that we started from net debt, so this is a negative sign of €2.4b beginning of 2004, end of 2003. We have seen in the first slide that we didn’t count an acquisition debt of €15.9b. What for the rest? The rest is a free cash flow of the year 2004 which is a positive by €4.1b.

What does it come from? Mainly obviously from the cash flow from operations, a positive €5.5b contribution. In addition to that, we had also some disposals of assets net of taxes of €1.4b. What are these? Mainly these are comprised of these disposals which were made according to the Brussels requirement. I am talking again of Arixtra, Fraxiparine and Campto, which represent half of this amount.

In addition to that there has been the disposal of Aventis Behring for a little bit less than €500m. And these products, like Fandarapril(ph), as Marco(ph) generics, Synosis(ph) and so on, which were met before the acquisition and which did represent also a little bit less than €500m.

The other way around, as you may recall, there has been that reimbursement to a buyer on the Aventis Crop Science disposal by a little bit over €300m. These amounts are included. These are positive €1.4b disposals, as I said.

The other way around, there were expenses -- expenditures, I should say, in the CapEx by €1.4b. And dividend for the same amount as that. We did generate in 2004 a little bit over €4b. And as you can see, this is just about 1 fourth of the acquisition debt.

The final -- the ending situation is a debt by €14.2b at the end of 2004, which is a gearing of close to 40%. But saying that we have been capable of generating 1 fourth of the acquisition debt in 2004 reinforces our belief and our saying that we are going to reimburse the acquisition debt within 5 years.

Just a glance at the consolidated books. And I remind you that that acquisition was done on August 20, 2004, which does mean that these books do comprise 12 months of the ex-Sanofi-Synthelabo, plus 4 months and 10 days of Aventis. But all the entries which are related to the purchase price accounting. You see that it does end up with a loss by €3.6b. We did the same kind of exercise to come up to the consolidated net income by the same rules I explained with on the adjusted net income.

If I go directly on the earning per share -- consolidated earning per share, you see that this is a €3.86 per share. I have to comment on this 1. The first is that for Sanofi-Synthelabo shareholders, the earning per share in 2003 was €2.95. So this is a 30% increase between 2003 and 2004. And this is the reason for which we said from day 1 that it would be an equities operation for them.

The second I would say is of importance also. You have seen that the adjusted net income on a 12-month -- plus 12-month basis Aventis with Sanofi, we show that at €3.89 per share EPS. On the consolidated basis we are close to the same amount. So I guess that it brings some credibility to the way we have constructed these figures. And so that we can follow up the way that Sanofi Aventis is performing though the adjusted figures.

I will not talk very much about transition to IFRS today. We have an appointment together on April 14. Let’s just give you the impact on the bottom line, which, as you can see, is a decrease of the bottom line by €222m. The main component being the stock options, which is an amount by €240m and which drives us to the IFRS bottom line. That, if I can have the next slide please, thank you, from the €5247m in under French GAAP is going to show up with €5025m under IFRS. Or €3.77 per share, which is going to be the basis for which the Chairman is going to give the guidance for 2005 later on.

To finish up, the next 1. Thank you. A word about the dividend which we are going to bring to the AGM this year. We are going to propose a dividend of €1.20, which is an increase by 17.6%. This is to be compared to the 18.2% increase in the EPS. We said before, during the operation, that we would follow up the Sanofi policy.

As you can see the payout is either 31 or 32, depending on which reference you [look at]. It is a little bit less. But now we have taken into account, as we have said before, the indebtedness of the Company, which is indebtedness today. And we will adapt in the future these dividend ratio -- payout ratio policy.

Thank you very much.

Thank you Jean-Claude. Gerard?

Good morning or good afternoon everybody. First slide. We have 128 products under development. In fact, we have 48 products in phase II and III, and 80 products in pre-clinical or in phase I.

Maybe even more important, we’ve 35 compounds in phase IIb and III, 50% in phase IIb, and 50% in phase III. In other words, we have 77 compounds in clinical trials in human, which might be a record for the pharmaceutical industry.

If we talk -- if we have a more qualitative approach, we have quite a lot of first-in-class compounds, in the CNS, in metabolic disorders or in internal medicine. That is to say that certainly Sanofi Aventis R&D portfolio is unique inside pharmaceutical companies.

Next slide, if you don’t mind we’ll go through each domain. And we start with cardiovascular area. In the cardiovascular area we have 6 compounds in phase II and III. And it’s well known that because of Aprovel and ramipril we have a lot of knowledge in the hypertension or in the CHF domain.

We are still working in this area. We also work quite a lot on angina or on coronary arterial disease. We also work on PAD, either by chemical agent or by gene therapy, which is the case of XRP0038. In fact, talking a little bit about this compound, because we have the results of this phase IIb before the end of this year. And you will see that as a function of time(ph), they often will mention that we will have new results of phase IIb or phase III before the end of this year.

But in fact, we mainly focus on arrhythmia. It’s well known that the best anti-arrhythmic agent is certainly amiodarone(ph). However, it’s also well known that this compound has quite a lot of side effects. We are very easy to criticize this compound since it is a Sanofi Aventis compound.

In other words, we have 1 of the targets of a potential anti-arrhythmic agent that we are looking for is the following, an amiodarone compound with a very safe ratio with less side effects. And this is the case of dronedarone, which is currently, as you know, by the end of February, and I can tell you that we will file this compound the second quarter of this year, both in the States and in Europe. And then roughly at the same time we will start a new safety study in patients with atrial fibrillation.

Following this compound -- and I give you more details of a very recent study -- very recent and pivotal study that we did with dronedarone in a couple of minutes.

Following this compound we have in phase IIb another anti-arrhythmic agent which is currently, as I have mentioned to you, at the beginning of phase IIb. The difference between dronedarone and this compound being that the second compound is actually once a day, although we administer dronedarone twice a day.

We have also another target in the area of arrhythmia, which is atrial rapid potassium channels. And these potassium channels are only present in the atrium, which leads to the fact that such compounds exist in animals, also in humans, devoided of any pro-arrhythmic activity or any [toxic points]. So in other words, we believe that we don’t have too many competitors in this area. And that someday we will have certainly a compound that will launch in this area.

Next slide. Let’s got to thrombosis. In this area we have 4 compounds in phase II and III. And as you know, we are worldwide leader because of Plavix and Lovenox. And as Hanspeter mentioned to you, we will have very new results very quickly at the ACC following a chronic treatment with Plavix with CLARITY and COMMIT plus MI.

In this area, as you know, we are leader with synthetic oligosaccharides. And this is certainly the case of idraparinux. And I will comment a little bit the third phase study of this compound in a couple of minutes. This compound is a once-a-week compound for DVTP and atrial fibrillation. And we compare this compound to vitamin K antagonist.

We have also other compounds from the same chemical series in phase IIb. This is the so-called hexadecasaccharide, which opposite to idraparinux, which is a pure tenet(ph) antagonist, this compound, the hexadecasaccharide, is a [two tenet] antagonist. In other words, it’s a kind of clone of eparin(ph), but totally synthetic. And we already started the phase IIb with this compound in the prevention of cardiovascular events in acute coronary syndrome.

We have quite(ph) other compound from the oligosaccharide chemical series in development, both in phase I and pre-clinical.

Octaparine is an ultra-low molecular weight eparine, which is certainly, or possibly the back-up of Lovenox. And we will see what will be the plus of such a compound on comparison to Lovenox. It certainly, or it should be, safety.

Following these 2 big families, we also have compounds which are totally synthetic and which are selectively acting either on factor Xa, by IV routes, like automaxibant(ph) or with other analogs which are active by other routes. Automaxibant is active only with IV routes.

And we have also a non-key(ph) direct combine inhibitor, which is currently in phase IIa. In other words, a compound with the same mechanism of exonta(ph) but which is, as you know, very, very safe. So here is the compound we have in thrombosis.

In the next slide you will see the compounds in the CNS area. We had 12 compounds in phase II or III in this area. Talking about sleep disorders, as Hanspeter mentioned to you, we do hope to get the NDA of Zolpidem MR the second quarter of this year.

However, we have 2 other compounds which are currently in phase IIb, eplivanserin and the M100907, which are no more a sleep inducer, but which are compounds that increase slow wave sleep, and might have a qualitative approach for sleep disorders. All the patients of the phase IIb with eplivanserin are recruited, meaning that we will have the results of this phase IIb before the end of this year.

We roughly completed -- not yet, but roughly completed the phase IIb study with the other compound. In other words, we also have the results of the M100907 before the end of this year for the sleep disorders.

A few words about neurology. Rilutek is still the only compound which is active in amyotrophic lateral sclerosis, but we do have a compound in phase III in multiple sclerosis, such as teriflunomide, and 1 compound in phase III for Alzheimer’s disease that is xaliproden.

Teriflunomide is an amino modulating agent, which has drawn some activity in multiple sclerosis by other routes, either 7 milligram once a day or 14 milligram once a day, by using -- it’s very active. We were able to demonstrate some activity by using MRI(ph). And this compound was very potent. And this is also true for physical disability.

We are currently at the beginning of phase III study in monotherapy with this compound, and we are discussing with the authority in order to build up such clinical trial on top of existing therapy with teriflunomide. To my knowledge, with an acceptable safety profile, teriflunomide is the most advanced compound which might be active by other routes for multiple sclerosis.

Talking about Alzheimer’s disease. Xaliproden is in phase III. This compound is a neuroprotective agent. It is a kind of quantitative approach. This is a modifying agent, which offsets nil productive activity and induced [neural] growth.

We have 2 very large phase III studies. 1 in Europe and 1 in the States. With each we need to answer(ph) 1200 patients for 18 months. And right now we are, including both sides of the Atlantic Ocean, 1000 patients, meaning that we do want to finish the recruitment of the phase III study with this compound before summer. With 18 months follow-up, that means that we will have the results of these studies by the beginning of 2007.

We have another compound which is in phase IIb for Alzheimer’s disease and for Parkinson’s disease, with roughly the same mechanism of action. This is SR57667. This compound we also have recruited all of the patients for both the study in Alzheimer’s disease and the study in Parkinson’s disease, meaning that we will have the results of some of these studies before the end of the year. So 1 more time, before the end of the year, we will have the results of phase IIb study with this compound.

We have another compound in Alzheimer’s disease which is currently in phase IIb. This is a 5-HT4 partial agonist, which is both a neuroprotective agent and also an agent which can enhance memory. So that is why we only have 3 months follow-up with this compound versus placebo. 1 more time, we recruited all the patients of this phase IIb, meaning that we will have the results of this study before the end of this year.

1 more compound in phase IIb is the nicotinic partial agonist, the SSR591813. 1 more time, this compound is a competitor of the compound which is currently in phase III with Pfizer for smoking cessation. We recruited all the patients of the study. That is to say that we will have the results of this phase IIb study in smoking cessation before the end of this year.

A few words about psychiatric. We have 2 compounds in phase III in depression. The first 1 is the beta 3 agonist, SR58611. We already recruited the patients of the 2 phase III studies, meaning, 1 more time, that we will have the results of these 2 phase III studies before the end of the year with this compound.

With saredutant, which is an NK2 receptor antagonist, we are just starting the phase III study with this compound both in Europe and the United States.

I also just would like to add that in phase IIb we have another compound, osanetant, in schizophrenia, which is, as I mentioned to you, in phase IIb. This is the compound that was active in the so-called mega-trials in schizophrenic patients with [hallucinative] symptoms. And this compound was very active on hallucinations in this clinical trial. So we try to reproduce it in phase IIb. We recruited all the patients and, 1 more time, we will have the results of this phase IIb before the end of this year.

In other words, in the CNS area, we will have quite a lot of results before the end of this year. And most of these compounds are [indiscernible], either in neurology or in psychiatrics.

In the next slide you will see what we have in the early phase. I will not comment too much, except that as you can see we have quite a lot of compounds in phase I and at the pre-clinical level. Again, 1 more time, some of them being [indiscernible].

Let’s got to oncology. In oncology here we have 7 compounds which are currently in phase II and III. And I just would like to remind you, as Hanspeter mentioned to you, that we are leader following Eloxatin and Taxotere. And I just would like to remind you that in the last 6 months we got an extraordinary [new flow] with both compounds, especially for breast and prostate cancer with Taxotere. And also, for sure, for colon cancer with oncology as an additional treatment of a new formulation that we got very recently.

Following these compounds, it’s well known that the main side effect of Eloxatin is neuropathy. And we are currently in phase III with xallproden in order to see whether xallproden is able to antagonize the oxaliplatin in this neuropathy. For sure it will spare the patient for the side effects, but even possibly for the potency of the compound.

1 more time, we recruited all the patients in this phase III study, meaning that we will know before the end of this year whether xallproden is able to protect patients versus the main side effects of oxaliplatin. That is to say, neuropathy. It is also, in other words, a truer concept study for the neuroprotective activity of xallproden.

We also have tirapazamine in phase III for head and neck cancer. And it’s well known that this compound has a unique mechanism of action because it is more -- it’s well known that its mechanism is atypical. It is more potent in hereditary conditions, that is to say that it will strongly potentiate, we do [participate] in animal, as it was the case in phase II, radiotherapy in the head and neck cancer. We do hope to have the results of this phase II study in 2006.

We also, as I mentioned to you, have 2 very atypical compounds in phase IIb. 1 for prostate cancer and 1 for small cell lung cancer. We all know that there are roughly no drugs for small cell lung cancer. Both compounds are, as I say, unique mechanisms of action. We all hope that it will be effective, but in any case, it’s really a very new approach.

Just to 1 more comment on the oncology domain. We have 2 new taxoids. 1 which in phase III. And this compound has a unique profile. This compound is very active in patients which are registered to Taxotere. And with a safer profile, especially on retention of fluid and [indiscernible]. It is evident that we will have another very good profile with the compound and its analog, which is currently in phase IIa, also in breast cancer. But we have less results on this compound than the previous 1. Be sure that we will do our best in order to speed up the phase III study of this new taxoid.

You see that we have quite a lot of other compounds at the pre-clinical and in phase I level. I just would like to say that we strongly believe that with these compounds, which are rather classical oncologic agents, like Eloxatin and Taxotere.

And with a compound that we have in early stage, such as the compound which are working on angiogenesis or the compound that we share with Generum(ph), that we strongly believe that in the next 10 years the future of the oncology treatment will be the association of classical oncologic compounds, such as Eloxatin or Taxotere, in association with targeted compounds. And you recently saw very good results, for instance, of the association of Eloxatin plus [Avacine] in colon cancer. 1 more time, very good position in the domain of oncology.

In the next slide, we show to you what we are currently doing in metabolic disorders. In this area we have 4 compounds in phase II and III. It is well known that following Lantus and Apidra, the Company has a strong knowledge in the diabetes. As you know, we are still discussing with our colleagues from Pfizer in order to see what we will do with Exubera, which is currently in phase III.

But I will present to you a new approach, the compound whose code name is AVE0010, which is a GLP1 agonist, which is a new approach for diabetic patients. And again, I present to you a few results in a couple of minutes. And that you saw that in phase I or pre-clinical, we have also new mechanism of action of compounds for diabetes.

However, it remains bottom line that we are and will be leader in the area of the CB1, of the [indiscernible] receptor antagonist. For sure, that with rimonabant, and I just remind you that we will file rimonabant the second quarter of this year, I will give you some results in the couple of minutes.

Roughly all pharmaceutical industry is not working in this area. But I can tell you that the most advanced compound which is currently in development following rimonabant is, in fact, its backup. The SR147778, which is currently in phase IIb in obesity. And 1 more time -- 1 more time, we will have the results of the phase IIb with this compound before the end of this year.

We also, as you can see, in phase I, another compound which is currently in phase I with mechanism of action of blockade of CB1 receptors.

So, that is all for metabolic disorders. In the next slide, we show to you what we have in internal medicine. We have 7 compounds in phase II and III in this area. I just remind you that we got, in association with our friend from Altana, an approvable letter for Alvesco for asthma. And we are currently performing the study that we need in order to answer the question of the authority.

But as everybody knows, in fact the market is more the association of corticoid with beta 2 agonist. And this corresponds to the phase IIb compound that we have, where we associated the ciclesonide to formoterol. And we are currently starting the phase IIb study with this compound.

We file fumagillin for intestinal microsporidiosis. And I will give you some results in a couple of minutes. We file this compound in Europe. And we are quite pleased to also file and develop a compound in niche market. We are here to develop blockbuster, a potential blockbuster like rimonabant. But we are also here to help the patient even if it is a niche market.

We have, with SR121463, an aqualitic(ph) agent active by other routes, and which is currently in phase III for hyponatremia, and in phase IIb for cirrhotic ascites. We finished recruitment of the patients in ascites in phase IIb. And we plan to finish by this summer for the phase III study in hyponatremia, meaning that we do hope to have the results with this compound, 1 more time, before the end of this year.

Following that, we work a lot on, let’s say, inflammation, either in the gastrointestinal tract, which corresponds to ulcerative colitis, or in the lung, which corresponds to asthma or to rheumatoid arthritis, hence the wave(ph) after the CNS wave will be the 1 for internal medicine.

Next slide. A few words about vaccines. We have 8 vaccines in phase II and III. I just would like to insist a lot on Menactra. As you know, we got the license of Menactra for patients for 11 -- above 11 years old very recently. And this will be a huge success, no doubt about that, following the recommendation of the American Health Authority with this compound.

We file Menactra for children between 2 and 10. And we are currently in phase IIb with Menactra toddler, meaning that Menactra for the [indiscernible] will be certainly a blockbuster as a vaccine. And we are quite proud of that. I can also add that we will file Pentacel the third quarter of this year in United States.

So, in the next slide, if you don’t mind, I will give you very briefly a few results. Let’s start with dronedarone. You already saw the result of ADONIS and [ARABIS], showing that dronedarone was much more active than a placebo in atrial fibrillation patients, and with a very nice safety profile. However, as you know, in the safety study with patients with CHS, we got unfortunately more deaths under dronedarone than under placebo. For that reason we decided to stop this [inaudible].

Here we present another phase III pivotal study, which corresponds to the effect of dronedarone on the control of ventricular rate. And, as you will see, in these patients it is another mechanism of action, another possibility that does occur with dronedarone. That is to say, a decrease in the ventricular rate, leading, for sure, to a productive effect for a patient that will suffer from atrial fibrillation.

However, when you induce a rate control both in basal conditions and during exercise, you might not have any impairment of exercise capacity. That is to say, on the duration of the exercise. So the main objective of the ERATO study was to follow patients with atrial fibrillation and to treat these patients either with placebo or with dronedarone. And to see what would be the rate control at rest and after physical exercise. And we have 6 month phase treatment for the safety of this compound.

In the next slide you will see that the primary end point was very easily reached, that is to say that this placebo bears no change in the ventricular rate. But a decrease of roughly 12 beats per minute under dronedarone with a [indiscernible] value, which is a huge 1.

In the next slide, you can see that we got the same profile of the ventricular rate at maximal exercise. For sure, there is the placebo. The ventricular rate increased from 90 to 100 -- more than 160 beats per minute under placebo. And no change following a 2-week treatment. But there was a dramatic decrease of the beats per minute of close to 25 beats per minute following dronedarone treatment.

Next slide. Fortunately expected this, we have low uptake on the exercise duration, either with placebo or with dronedarone treatment.

Next slide. 1 more time, in this study which is a 6-month safety study, we got roughly a very good tolerance of dronedarone. As you can see only 12 serious adverse events under placebo, and 14 under dronedarone.

Next slide. And the main side effects, as it was suggested in the previous study are, in fact, GI disorders. Diarrhea or some abdominal pain.

Next slide. So, as I mentioned to you, we will file dronedarone second quarter of this year.

A few words about idraparinux, which is currently in phase III versus vitamin K antagonist. In the treatment and second prevention of either DVT or pulmonary embolism, this corresponds to the so-called Van Gogh treatment, we recruited all the patients in both DVT and Van Gogh PE, with a 3 to 6 month treatment. Then we have an extension of 6 months. And 1 more time, we recruited all the patients, the exception being versus placebo. Or in other words, we recruited all the patients for the Van Gogh program.

Concerning the Amadeus program, which corresponds to prevention of the thromboembolyic events associated with atrial fibrillation. 1 more time, this is versus vitamin K antagonist 6-month treatment. We recruited, as you can see, 3500 patients. And we plan to finish that before the end of this year.

And, in other words, we strongly believe that if positive, for sure, we will file as expected idraparinux by the end of 2006. And I just remind you that this compound is a synthetic oligosaccharide. And that small dose of 2.5 milligram once a week administration in phase IIb was able to protect the patient versus DVT in the study we already have shown to you.

In the next slide, a few words of the glucagon-like [peptide] 1 agonist, which might correspond to a new approach for type 2 diabetes patients. This compound regulates the glucagon secretion, meaning that it induces a decrease in the hepatic glucose production. Moreover, it stimulates insulin secretion in a glucose-dependent manner, which, for sure, reduces the risk of hypoglycemia.

Moreover, this compound promotes weight loss by a delay of gastric emptying and a reduce of appetite. In animals, this compound demonstrates an increase in the beta cell mass in the pancreas, which meant a b-cell function, it’s a kind of protection of the pancreatic cells. We could develop this compound with a different format.

In the next slide you can see the effect of this compound in phase I. This is postprandial glucose in a type 2 diabetic patients. And, as you can see, you have in blue the placebo as a [indiscernible] response curve, and it’s active in all patients above 10 micrograms per -- 10 microgram administration once a day [indiscernible].

In the next slide we decided, in phase II, to compare roughly the once a day to the BID administration of these compounds. I will not enter into details of this study.

And in the next slide you can see that if we consider the area under care(ph) of the blood glucose levels after breakfast, we got really similar results either once a day administration or BID administration.

In the next slide, although we got some difference in the fasting glucose between once-a-day administration and BID administration, very -- with a perimeter with is very important, with [glycagon generated imoglodine] we got the same effect, either once a day or BID administration. And we are currently preparing a phase IIb study with this compound in order to set up the right regimen.

In the next slide you see the side effects that we got with this compound, which are mild and transient, most of them between being some headaches and mainly GI disorders.

In the next slide you can see here that this compound has potential advantages both versus classical insulin, including, for sure, possible opportunity of long-acting formulation at least once a week. And we are currently working in this area. And, as I mentioned to you, we might have a very profound effect on the b-cell function since in animals this compound decreased apoptosis of b-cell at a pancreatic level.

Next slide. A few words about rimonabant. First of all in the obesity area. And you can see here the classical protocol that you know, with RIO North America and RIO Europe. I just remind you that you got all the results of the 2-year follow-up of RIO North America, and that in a couple of days you will have the 2-year results of RIO Europe with this compound. And this is an understatement, we are quite confident on this.

In the next slide you can see that we decided to present to you the effect of rimonabant in the patients with morbid obesity. That is to say, with patients with BMI over 40. And it’s well known that these patients are in danger. They have quite a lot of cardiovascular risk.

And you can see here, following 1 year of treatment, if we consider metabolic syndrome as a parameter, for sure, there is no significant difference between -- with the placebo of the 1-year treatment. 44% at the beginning, 39% at the end. But a very significant decrease after 1 year treatment of rimonabant. 52% to 32% of patients who suffer from metabolic syndrome after 1-year treatment with 20 milligram rimonabant.

It is well known also that such patients suffer from insulin resistance. And fasting insulin is a good marker of insulin resistance. And, as you can see, after 1 year treatment of placebo, there is an increase in the [indiscernible] of fasting insulin of more than 3 microunits per MM(ph) and there is a decrease of 0.6 under rimonabant treatment. And for sure, this is very, very significant.

Next slide. This is also true with the number of patients with a weight loss of more than 5%. We roughly more than doubled the percentage of patients with a weight loss of more than 5%. Less than 20% of the placebo group. 47% ITT population in the rimonabant group. And what is true in the ITT population, for sure, is also true with the completers population, a double of the number of patients with a decrease in weight loss of more than 5%.

Next slide. The results are even more spectacular, with -- if we measure the number of patients with a weight loss of more than 10%, we more than tripled the number of patients with a weight loss of more than 10% after a 1 year treatment of Acomplia in these severe patients. I just remind you that these patients are very unsensitive to treatment. And this is close to 8% under placebo, to close to 26% in ITT population, and close to 40% in the completers population. Very huge risks.

Next slide. If we compare all the patients at the very beginning with a BMI screening of over 40, which is by definition, the increasing criteria. After 1 year of treatment, only 17% in the placebo group have a BMI of less than 40. It is 38% in the rimonabant group. So 1 more time, a very, very significant effect if we consider that kind of cut of at -- with a BMI of over 40.

In the next slide you will see the effect of this compound versus placebo on the weight. And you can see close to 11 kilograms after 1 year treatment under 20 milligram of rimonabant, and roughly 10 centimeter decrease in waist.

Next slide. As expected, we got a very dramatic increase in, let’s say, the good cholesterols, an increase in HDL, which is very, very significant. For sure, as expected, no effect on LGL levels. And a dramatic decrease on the triglycerides level. 1 more time, as it was the case with the other patients, 50% of the effect either on the HDL cholesterol or in the fasting insulin is linked to the decrease in body weight. But 50% is independent of the decrease in body weight.

In the next slide you will see the side effects of this compound, which is classical and well known. You can see, for instance, that patients permanently discontinued due to adverse events, 9% roughly in both cases.

In the next slide you will see that, as expected, we have [indiscernible] these others, and had very mild and transient CNS effects, as it was the case in the previous studies.

In the next slide we present to you right now the 2 studies we have with rimonabant in smoking cessation first, and maintenance of smoking cessation afterwards. We presented to you the so-called STRATUS-US, which has the same protocols as this study. And in the next slide you can see that we got a very, very significant effect of Acomplia versus placebo in STRATUS-US with an odds ratio of about 2.

And in STRATUS Europe, as you can see, Acomplia, and it is, of course, the same, was more potent than placebo, also although it didn’t reach significant. But keep in mind that the odds ratio is in fact of 1.4, which is I would say not too bad. And for sure, if we pool the 2 studies, it is very, very significant, with an odds ratio between 1.7 and 1.8.

This not significant effect of the prolonged optimum is a little bit curious, but is linked to a very high(ph) classical response. It’s only curious since -- next slide, we got roughly the same results on the other parameters that we got in STRATUS-US. That is to say, an increase in body weight of about 1 kilogram in ITT population under placebo, and a decrease of 0.5 kilogram under rimonabant. This is for the ITT population. And in the known obese patients with prolonged abstinence, and increase in body weight of 2.3 kilograms under placebo, and only 0.5 kilograms after 1 year, after 20 milligram treatment of rimonabant. Both parameters being, for sure, very significant.

In the next slide you can see, 1 more time, the side effects of the compound. Serious events is at 2.7 and the placebo 2.2. And complete drop-outs 6.9 under placebo, 14.6 under rimonabant.

In the next slide, as expected, 1 more time, the side effects are always the same. Mild and transient CNS effects and also some GI disorders.

Next slide. In conclusion, even if we got high placebo response in STRATUS Europe, which leads to a non-statistic significance of the effect of 20 milligram of rimonabant, the trend was very, very positive. And we got a positive effect on the secondary end point, which is body weight in these patients.

The safety profile is similar to what we got previously. And this is also true with vital signs, blood test, ECG no effect, and on HAD CNS scales, no effect on the [indiscernible] under placebo.

Next slide. The most difficult clinical trial in smoking cessation is the maintenance of abstinence. And here I will present to you the results we got in the so-called, what we call, STRATUS Worldwide in maintenance of abstinence.

The patient receives either rimonabant 20 milligram or rimonabant 5 milligrams. And the responders were re-randomized. In the 5 milligram group there is either, 1 more time, placebo or 5 milligram treatment. In the 20 milligram group, they receive either placebo or 5 milligram rimonabant or 20 milligram rimonabant. I will present to you only the results with the 20 milligram arm, because we got no difference versus placebo in the 5 milligram arm.

On the next slide you can see here that -- you will see on the maintenance of abstinence ITT population, a very significant effect of both 5 milligram and 20 milligram versus placebo. For the non-relapse, 32% in placebo group, 42% in the rimonabant group. To my knowledge, this is the first time that the compound is active after 1 year treatment for the maintenance of abstinence for nicotine dependency. The other total(ph) I know, the compound was active after 6 month treatment but not active after 1 year treatment. And as you can see here, the odds ratio of the effect of this compound is 1.5.

In the next slide you see the effect of rimonabant on body weight. I would say, surprisingly, 5 milligram was as active as 20 milligram for the maintenance of the smoking -- of the abstinence. However, 5 milligrams bears no difference versus placebo on the body weight, although it was very significant in the 20 milligram group.

This is also true for the fasting HDL cholesterol. A very significant increase induced by 20 milligram of rimonabant. No significant increase by 5 milligrams. We don’t have the data right now for triglycerides. But, believe me, there was a significant decrease of the level of triglycerides induced by 20 milligrams of rimonabant. So 1 more time, it illustrates that fact that the effect of rimonabant on lipid parameters is not totally linked with decrease in body weight, but only partially.

In the next slide, you have here the safety in this study. As you can see, the serious adverse events 5% in the placebo group, 5.3% in the 20 milligram Acomplia group. Drop-out 6.1% in the placebo group, 9.7% in the rimonabant 20 milligrams.

In the next slide you see, in fact, that 1 more time we are -- the side effects we got are always the same. Some minor mild and transient CNS effects and some GI disorders.

In the next slide, in conclusion you can see that both 5 and 20 milligram continue to show efficacy in the maintenance of abstinence after smoking cessation. But only 20 milligrams was active on the reduction of the weight gain, and this is also true for HDL cholesterol and triglycerides in the ITT populations.

The safety is, 1 more time, very good, and consistent with all we got in all the RIO program. And for sure, no other side effects reported either for lab tests or ECG analysis.

Next slide. Following the potential blockbuster, rimonabant, just to remind you that we will file this compound second quarter of this year. We will also file fumagillin in Europe, in fact, in France, following the MRP solution for intestinal microsporidiosis, even if it is a niche market. We are very happy and proud to say that we are here for the patients.

And we are quite happy to have potential blockbusters, but also quite happy to help patients who suffer a lot, as it is the case with these kind of infective disorders which occur in patients with -- immunocompromised patient, such as an HIV patients. And it causes chronic diarrhea and malabsorption and weight loss, leading to massive cachexia. Here, fumagillin is, to my knowledge, the only active compound versus the microsporidiosis.

On the next slide you will see the effect on the parasitological clearance. And you can see it is really a very profound effect since it’s a totally clearance. No effect on placebo. 100% decrease under fumagillin.

On the next slide you can see the big(ph) xylosemia is a marker of malabsorption. And as you can see, it’s a very profound effect following fumagillin. And Karnofsky score corresponds to the clinical state of the patient. And we got, 1 more time, a very nice and important improvement of the effect of this compound.

In the next slide you will see the submissions expected in 2005. As you can see, mainly a filing of rimonabant and dronedarone second quarter this year. And in the last slide you can see all the filings with Plavix, Taxotere and zolpidem in Europe. And don’t forget, Pentacel, that is pentavalent pediatric vaccine, that will file in the U.S. the third quarter of this year.

So in conclusion I just would like to say that we had, let’s say, a lot of fun, a lot of pleasure to build up this portfolio. But right now the Company is ready to fight for all these compounds and that it was certainly the best deal for us to build a new team. Be sure that everybody is very passionate and devoted to the development of all these compounds.

Thank you.

Thank you Gerard. I will try to be very short in terms of conclusion to give you the opportunity to ask questions. We spend a lot of time on research and development. But I think that we have always to remember that it’s our job to make and to build new innovative drugs.

I think that we want to be sure, and we are sure now after this long research and long organization of research, that with 128 molecules in development, of which 48 are in late stage of development, we have certainly a very rich and good portfolio in this industry.

What is interesting is to see -- I’m just looking, I put the figures because I think it’s important. Before the end of the year, in the next 10 months, what said Gerard during his presentation is that results for phase IIb or III, and you know the results of phase IIb or III are very important in this industry, we have about 10 results in the next 10 months. So we are not only dreaming about research. We are, as you say, and as you know, always on the mark.

These products are really in major therapeutic areas. I think that we can say that all these molecules are very innovative and nothing is a [indiscernible] product. And that is a good way for the future. You saw all what we say in the past about central nervous system, and you have seen how that, in terms of this to be able to have a suite of products are arriving.

I said that 5 years ago that the most important part of our portfolio was in my mind what we have in central nervous system and at that moment, that [indiscernible] in phase I. Now we are arriving to phases II and III. That’s very important. What said Gerard about oncology or inflammation is very important as the next wave for the future. And I believe that also in terms of vaccines we have a certain number of good opportunities.

What is important is the [data for less] than 6 months. Sanofi Aventis research now is fully operational, with a clear portfolio and clear objective. I think it’s very important and no so quickly expected some months ago.

What were our commitments at the launch of this version in January 26, 2004? What we said. We said that we need a strong, sustainable and profitable growth. Taking each of these commitments, if you look at the strong growth it’s clear that ’04 in the new Group was above the pharmaceutical market. Clearly Hanspeter showed you the figures.

I think that what is clear is that the story of more products with more markets is something very, very important, very important for the future. And we will see that it’s a solid basis and very important for the growth [out there].

To be clear and also to be sure that all the appropriate means are in place to push -- to push the top products. And you saw that for the 15 first products, last year we were at a gross of around 17%, [a little more than 13%]. And no reason not to continue this trend for ’05.

So what we see for ’05 in terms of sales is that the trend above -- clearly above the market growth -- the growth of the market will be our target. And we expect to be the result. So no reason, and it could be said that the beginning of the year is running well.

After, we say that it is not enough to have a strong growth. We need to have a sustainable growth for the future. It’s easy to make good results for the next quarter or for the next year. But to prepare the future and to be sure that you have a sustainable Company, that needs a certain number of investments.

The first 1 is in R&D. And we told you in the past that it’s a key, true, for mid and long term. And what we see for ’05. It’s clear that we are not ready to cut the research because if you see the portfolio we have in our hands, it’s clear that what we have to do is to work, to invest more in clinical prize, in clinical development in ’05 to accelerate the development of the products. That is what will be -- that is what we will do in the next year, in this year ’05. We will increase strongly our expenses in clinical trials. That is necessary and that’s good news. That’s good news.

After, I think that we think we will [sustainable grow] in the sustainable growth to expand and mature on the local product is very important. Why? Because it’s a full vision(ph). And for us we have a good [indiscernible] after the new products arriving are making, are delivering the growth. And that’s what we expected. That’s the figure we have for ’05. And as a result why, in ’05, like we started in ’04, we will increase our promotional resources for, in fact, the new commercial organization. And that’s what Hanspeter told you just before.

And it’s clear also that if we are in a growth of around 10%, or more than 10% in place of having 4 or 5, it’s not the same way to manage a company because if you need to have -- to increase your productivity in terms of manufacturing, in terms of distribution, it’s clear that with a growth of 10% it’s easier than with a very low growth. And for the future that’s something which is also very important.

After, the third term, which is a profitable growth. I think that the ’05 result that you have seen -- 18 -- a little more than 18% confirms the potential of our Company, our new Company. We have met and will reach our synergy target. That’s clear. I know that you want always that we give more details inside the synergies that we need to see to know how many people will be fired, how many plants will be closed and so forth, I think it’s not a good solution.

And not only yet, it’s first because I think that it’s normal to start a discussion with the people to be sure that the people are properly motivated and running and not sitting. I think that we need to first discuss this kind of question with the people, with the salaries of the Company.

But what we can say also is that it depends on the results of our growth because we are trying to push the top line of our P&L. And I think that’s the best way to have good results and good future. And we have to adapt the story at what will be the growth.

Remember when we merged Sanofi and Synthelabo, we have very beautiful clarification of the synergies, how many people we have fire, and so forth. And I remember, for example, that we put for the second year 1500 people to fire and at the end of the year in place of firing 1500 we hired 500 people.

What I can say, yes, €1.6b is our commitment. It will be done, clearly. At the end of ’04, in place of making just a 10% of our synergies at €160m, we have €220m, despite the fact that we started only in August. It’s very important because if we are at this level in ’04, you can be sure that ’05 will be met without any big problems.

€220m, that’s certainly the most important -- the most important part is in general expenses, because the first fact is the structure. Up to now you are closing 1 headquarter or 2 in each country, when we are taking only 1 headquarter in place -- I corporate headquarter in place of 5. This [means that we will have] this kind of synergy very quickly.

After, you know that a certain number of decisions taken in ’04 will have the results in ’05. And I can tell you that some 1,000 people, it was around 3,000 people last year, which leave the Company or were not hired. It will mean the same level but more this year. But in the same moment, if we want to succeed in our story of pushing the [indiscernible] that we are not ready to cut the people, in the fact that we are not ready to put a lot of people in the sales force. In place of that we will have to hire people.

But we have very important cost cutting in terms of cost shaving(ph), in terms of many contracts, contracts in research and milestones on research and so on and so forth. So I think be confident that the €960m which are our commitment for ’05 will be done without any big problems. And we will manage the story. And especially the story, to be sure, of the motivation of the people. And to keep this very strong motivation, which is the most important results of ours after 6 months.

What will be our objective for ’05? If we said that in terms of earnings per share, we will have the same at the level of 1.25 for euro/dollar. It’s important to say that. But I think that yes, our target is to be at the same level of growth in ’05 than in ’04. So that is to say that we will be around 18%. If we can do more, we will do more. But our commitment is 18%.

And it’s very important, because it’s after a strong increase of our investment in data research, but also with hundred, many hundred million euros investment for the pre-launch of Acomplia. So that’s our target for ’05. It’s not -- it’s very important that that’s clearly our commitment.

If we look at ’05, what we would say. In January, 1 year ago, we said that we need a very rapid integration. For that reason that we take the way of meeting something which is more [indiscernible] than amical(ph) takeover. It’s very important. And we said 1 year ago it’s important because the story of the pharmaceutical industry could change dramatically in the next years.

I think that looking at the last 12 months, I think that yes, the pharmaceutical industry changed dramatically. And I think it’s a big success, I would say, in this so rapid integration to have a fully operational Group at the beginning of ’05. And that’s only the success of all the people inside the Company and the motivation of all the people at all the levels of the Company. And that’s certainly our best success for the future.

So, after I continue to tell you that our commitments of 1 year ago for a strong sustainable and profitable growth will be met in ’05, like in the next years. Thank you very much.

So now we go to the questions. Now we proceed.

[OPERATOR INSTRUCTIONS]. And we will take our first question from Paul Major with Redburn. Please go ahead sir.

Thank you. Just a couple of financial questions. Just looking at the French GAAP consolidated numbers, with €15b of sales. We know what the H1 sales for Sanofi alone were. We know what the combined proforma sales were for Q4. The implied number for Q3, as a percentage of the proforma number looks a little bit low. I was just wondering if you could tell us if there were any effects on sales in that quarter.

With regards to the €220m of synergies that you’ve mentioned, could you tell us if that is an actually achieved number since August 20, or an annualized total for 2004?

And with regards to your guidance for EPS growth for next year, what are you assuming with regards to income from equity associates during 2005?

And then finally, could you give us some guidance on capital expenditure in the next couple of years? Thanks.

I think that we are no good return and please ask very short questions to be sure that it can be understood here. Jean-Claude, you understand the questions?

Not all of them unfortunately. As far as the question on the synergy, which were realized in 2004, the question was were they annualized or were they realized as of the acquisition date, meaning as of August 20. Obviously they were annualized in 2004 as compared to 2003.

The French GAAP, I didn’t get the question properly. There was too much return on the speakers. So could you ask again the question on --?

Sure. I was just looking at the Q3 sales implied by the French GAAP reported number, given your prior H1 sales and what you’re reported for Q4. And the number just seems is a little bit lower than I would have expected. So I was just wondering if there were any effects in the third quarter on the sales.

There were not actually. As you know, the sales that were reported by the new Group began actually August 20, meaning by that, let’s say, 4 months in ’04. Now there were no major change or disadvantage of change in methodology in between the first half and Q3 and Q4. So no, I don’t see no particular reason for a change between the last 2 quarters.

Thanks. And then the final 2 things were guidance on associate income and CapEx for the next couple of years. Thanks.

[I am sure] you are best to give the detail. No, the only thing I can say when I made a comment about the associate income is that the amount that was showed in the 2004 P&L was more reasonable than the heavy charge we saw in the 2003 P&L. I guess that for the rest we won’t enter into the various details of all the line items of the P&L.

Thank you. We will now take a question from Jo Walton with Lehman Brothers.

Good afternoon. A few questions please. Could you tell us how representative you feel the €5.5b of cash flow from operations was going forwards? Your actual level of disclosure of the cash flow at this stage is obviously very limited.

Secondly, I wonder if you could identify the line items where we should see the benefits of the synergies coming through. Unless you’re expecting 18% top line growth as well as bottom line growth, there will presumably be some margin improvement. But you have talked about a higher level of R&D. Do we expect to see the synergies showing in a reduction of the SG&A as a percentage of sales or the cost of goods or both?

And finally, could you give us some idea of the ongoing restructuring charges? You have excluded the restructuring charges from the merger from your earnings. But presumably in order to get these savings going forwards you will have to ultimately spend more than €500m. Where will that be booked? And is that part of the ongoing income?

And just a very final question, could you tell us what the impact of foreign exchange was on your 2004 earnings? You’ve given us a very helpful guide as to what the impact will be in 2005.

Okay. Your first question was on the cash flow from operations, the €5.5b. What I can tell you is that in that, the need for working capital was showing a need actually in 2004 by around €800m. Now even though I don’t give you too much of a detail for 2005, this is for sure that we are going to utilize cash in 2005, just for the sake of spending the necessary money for the restructuring costs.

So that if, in turn, because of the guidance, you saw on the EPS line, which means more important net result -- bottom line result for the construction of the cash flow from operation the other way around. There will be more natural expend, need for working capital because of the restructuring.

You were asking second question where are we going to see the synergies in which line items in 2005. As Mr. Dehecq said, there will be several origins. And when he was talking, for example, of purchases obviously we are going to see consequences in the gross margin as well as in R&D as well as in SG&A.

Now, obviously there is 1 line item which is going to show probably the more important part of it, which is the administrative part of the SG&A. The G&A in itself. We said that we are going with monies in R&D, that we were going to support the launch of products and from a commercial perspective. And we are going to do all what we said to do as far as the headquarters are concerned. So I would suspect that a great part of it is going to show up in the SG&A.

Remember that as far as the R&D is concerned, 1 part of the synergy we have mentioned is the fact that we are not going to push [forward]. We have already stopped some contractual agreements which existed in the past between some biotech companies and Aventis. And this is part also of the synergies.

On the restructuring charge. We discounted around €560m in 2004, I am talking before taxes. Where is it? This is what you see in the consolidated accounts but it is not in the adjusted net income, just because we have said before that in this kind of charges are excluded. Next year is going to be the same.

Probably a larger charge in 2005 than we encountered in 2004. Again, not in the adjusted. But, as you mentioned before, we are going to have to spend the money accordingly and that is what is going to burden a little bit the cash flow from operation if so from a cash flow perspective.

Now, foreign exchange. It is right that we gave guidance with sensitivity to the euro/dollar priority(ph). And we said that in that respect that for 2005 a difference by 0.5% in the EPS would arise by each cent of dollar change in the priority. Now the question was more dedicated to 2004.

Well, you know, it’s been, as you know, not very easy when you talk about proforma to do a briefing. But we could give a figure on each line item of the sensitivity to the priority. We have chosen not to give too many figures on each and every line.

We know for the time being the dollar has been decreasing. So obviously this is a drawback on a year per year comparison from the time where probably, and hopefully, if the dollar is going to improve, it’s going to be the other way round. And that’s the reason for which we choose not to give the impact on each and every line item. Again, obviously indefinitely, this has been a drawback in the comparison between 2004 and 2003. But we are not ready to change from euro to dollar to have better figures. Too many people have done that.

Thank you. We will now take a question from Graham Parry from Merrill Lynch.

Good afternoon. I’m just wondering if you can give us a little bit more detail on the other operating income line, especially compared to how you booked this in your F4 release in November last year. If I take the €581m you get from Bristol-Myers, less the €250m you are paying out, that leaves about €102m which could be accounted for by the income from Actonel. So could you confirm that this is the only item that contributes that €102m or are there other items contributing to this line as well?

And then a follow-on to that as well, where the other items have been booked, such as the €400m in Aventis license income as well.

Okay. Mainly your question is dedicated to the Actonel alliance booking. And you are right to mention that in the notes of operation, the F4, we did show up a line item of other operating income and expense [were rather billion] euro rather than what we are actually showing actually by €400m. Now what did happen?

Again, we did harmonize the presentation of the operation from the Aventis perspective to the Sanofi Aventis, meaning the old Sanofi perspective - in that respect. What did happen to the Actonel treatment, the Actonel alliance treatment?

We did book the royalties as we do for any other, and especially for Bristol-Myers Squibb in the cost of goods. So it is a great part of the difference between that million and what we show up, which has been, I would say, setting back to the cost of goods sold, obviously, in 2003 and 2004. So it’s comparable in the schedule.

Now, in addition to that, you know that, for example, we are giving some promotion -- our sales forces are promoting Actonel in the U.S. We are rebilling that to Proctor & Gamble. How did we treat that? We did treat that by subtracting what we are rebilling from the total of our sales force, exactly the same way we are doing when we are promoting Plavix and Avapro in the U.S. And you know that we are not the 1 who is driving the product, per se, in the U.S. The Plavix 1 it is BMS in that example. This is Proctor & Gamble.

So [indiscernible] over this line item, per line item, the remaining -- the balance of that is what we make -- of profit we make on the product. And this is only this part which has been booked in the other operating income and expend line item. So again, same kind of treatment in 2004 and 2003 for Actonel and Avapro and Plavix.

Now, your second question what was the original increase by €102m. Well, I can say that there are several other smaller agreements, especially in Japan on this line item. But, generally speaking, I would say close to half of the increases are coming from the alliance with Bristol-Myers Squibb, and close to 1 half of the increase of this line item is coming from the alliance with Proctor & Gamble on Actonel.

Okay. Can I just follow up there as well? If you look at 1 of the items that contributed to that figure in the F4, it was the €400m, I think, in license income that Aventis was booking in its 2003 historic numbers. What’s happened to that line item? Is that now being booked as an offset to SG&A?

You are right. As long as we provide services, it diminishes our charges as long as Proctor & Gamble is providing services in Europe where we do consolidate in some countries the sales. It does increase our SG&A line item, facing sales and charges or no charge when there are no sales.

Okay. Thanks very much.

Thank you. We will now go to Credit Suisse Asset Management to take a question from Stephen Putnam.

I’ve got a nice simple 1 hopefully. In the operating income of 8163 on the adjusted basis, could you just tell me what the depreciation charge is as part of the costs? And just to confirm that the only amortization expenses that you record are the ones you have already given us - the €110m and the €9m.

Okay. Another technical 1. As I said, this is an adjusted proforma P&L. So the only amortization remaining in this P&L is the ordinary amortization of the industrial and IS investment. And roughly speaking, in 2004, we have been talking of around €750m of amortization.

That’s of the fixed asset amortization -- tangible fixed asset amortization.

And information system.

Right. €750m. Okay. Thank you.

Thank you. We will now take a question from Michael Leacock from Nomura.

Good afternoon gentlemen. I just wondered, you started to talk quite a bit about the body mass index of 40 or more for rimonabant. And I just wondered whether perhaps this was a signal in any way of a slight change in the strategy or the indication that you’re going for with that product. Perhaps you could confirm the wording of the indication that you intend to seek.

Secondly, I think you mentioned, Mr. Dehecq, that Aventis had a considerable number of projects and consultancies, particularly in R&D that you are not continuing. I wonder if you could just give us, perhaps, a total for all of those that you’re not continuing. I think you said on the call this morning each of them amounted to 10s of millions. I just wondered what the total would be. Thank you.

So concerning the so-called political approach of the profile of rimonabant, there is no change. This compound is not at all a cosmetic drug. It is a drug for the cardiovascular risk associated to visceral fat. And we just wanted to show to you the results we had with this type of relation morbid obesity, because morbid obesity has quite a lot of cardiovascular risk. And we just wanted to show that to you. There is no change in the strategy concerning the compound.

The only difference you will see, or the only additive that it will add, apart from the 2-year follow-up in RIO Europe, you will have in June the effect of this compound in all these patients with diabetes. That is to say that you will see in this condition how potent is the compound.

About the second question, I think that looking at the consequences and so forth, I think that what we are looking around the world is more than €100m, [that is]. And in plus we have to put a certain number of research contracts. But I am not ready to give you the global information today because we continue to be in discussion in a certain number of contracts. So it will be added to this more than €100m. So it’s a lot of money.

Thank you very much.

I think that if it’s the last question I want to thank you very much for being with us for more than 2 hours. And I expect that this meeting give you the information you need.

I am sure that in terms of research and portfolio and research, you learned a number of things. In terms of sales I think that the trend that we saw during the last quarters continues to be the trend for this year.

And be sure that even if we are not ready to give you line by line and people by people the synergies, all what has to be done will be done in a very fair atmosphere inside the Company because, I repeat, what we need is to have people running and not people sitting because they are disappointed.

And the success of this merger and it’s served 6 months, something which is certainly like a success. And the success is the success of all the people because we found a very fantastic motivation of all the people around the world at all the levels. So I think we have to continue at that. But be sure that all the synergies possible will be done on time and we will deliver that like our commitment.

Thank you very much.

That concludes today’s presentation. Thank you for your participation. You may now disconnect.