Sanofi SA (SNY) 2007 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to today's Sanofi-Aventis Group conference call. For your information this conference is being recorded. At this time I would like to turn the conference over to Mr. Sanjay Gupta. Please go ahead, sir.

Hello everyone. Thank you for joining us for the presentation of our 2007 results. Let me take care of the legal formalities first. During this conference call we may make projections and forward looking statements that are based on the management's current expectations. Actual results may vary and may be different due to various factors. These risk factors can be consulted by reading our 20-F, which is filed with the SEC.

We will now begin the presentation of 2007 results with a short introduction by Mr. Gerard Le Fur.

Hello everybody. Although the pharmaceutical environment was a little bit complicated last year, we were able to deliver a solid performance one more time. The EPS, excluding selected items, is EUR5.17 which corresponds to an increase to close to 6% in euros and more than 15% in U.S. dollars.

The earning growth in fact was ahead of our guidance, which I remind you was initially 9%, then 10% and finally bottom line, it is 13.2%.

We have an ongoing selective adaptation of our resources. And in fact although the decrease in the Group headcount is only 1.5%, in fact as you can see in this slide, there's an increase of roughly 7% in the Vaccines area, and a decrease in the Pharma.

Concerning Pharma in fact we stabilized the R&D headcount. But we decreased the headcount of both Support Functions and industry -- and the Industrial level of about 4%. Inside Pharma operations one more time it was a little generous because in fact we decreased the headcount in USA and Europe, for instance, for close to 7% although we increased the headcount elsewhere, especially in the intercontinental and Asia/Pacific of more than 4%.

We have, as you can see here, continuing decrease in the SG&A to sales ratio starting from more than 30% in 2005 to less than 27% in 2007. And we believe that we're very competitive concerning this ratio versus our peers.

We are -- we still have eight blockbusters, meaning eight compounds over EUR1b of sales. And four of them are double digit growth compounds. This is especially the case with Plavix, with an increase close to 30% and we are quite happy of the full recovery of Plavix in the States.

Lovenox is still the number one in a very -- in a still growing market. And Lantus beats the EUR2b turnover this year with an increase of close to 30%.

Moreover Taxotere, which is the anti-cancer agent with the broadest spectrum, has a turnover close to EUR2b and a double digit growth.

In fact definitely the Vaccines is a strategic priority for us. And in fact we got an increase of the sales of more than 14% last year. And right now the Vaccines business represents 10% of the consolidated net sales. As you know we are a leader in the arena of the flu vaccines and we do have very new vaccines, such as Menactra, with a huge increase as you can see here. Moreover don't forget the successful launch of Gardasil with -- by our European JV with Merck.

We still have leading position in tomorrow's major markets. For instance, we are number one in BRIC-M countries, Brazil, Russia, India, China and Mexico. And this is thanks to a full scope offer for sure, innovative products and vaccines, but also generics, OTC and standard local ranges. This is due to a substantial investment sustained over time.

Concerning R&D, last September Marc Cluzel and his team made a full presentation of the portfolio and announced the targets for submission for the period of 2007 till 2010. And moreover, we wanted to strengthen our involvement in biotech. Today, as you will see with this presentation, the projects are in line with the targets announced at the R&D Day. And moreover, the Business Development alliances is able to support our biotech strategy. This is the case for instance with Regeneron. But don't forget what happened today with Dyax. And this is also true in the Vaccines business such as with Acambis or Oxford BioMedica.

Concerning the dividend, in line with our commitment we propose a strong increase in the dividend. It's EUR2.07 per share, which corresponds to an increase of more than 18% and a payout of 40% of earnings per share excluding selected items, which is in line with our European peers. As you can see in the slide, we doubled the dividend from 2003 to 2007. And I just would like to remind you that we've implemented a share buyback program that we acquired last year our share till EUR1.8b and will still acquire new shares till May by using the EUR1.2b that we are allowed to. So that's only what I wanted to say to you. And if you don't mind, Jean-Claude Leroy will present to you right now the finance part of our presentation.

Thank you, Gerard and good morning and good afternoon to all of you. From a financial perspective a few words about the performance in 2007. First a few highlights on the 2007 year, which is first mainly driven by the full recovery for Plavix in the States. You know that was the case as of the end of the first half of 2007 where Plavix took this -- its place as it has before.

Second, the -- as you know 2007 was a year where there was an impact of some generification of some main products. And Hanspeter will be back on that afterwards. But I just to mention them. And Eloxatin in Europe to say the least impacted our sales development. Facing this situation we -- and also the change in the -- mainly in Europe and in the state of the organization that we are facing in the Pharmaceutical business, we adapted strongly our selling and general expense as we did before. We went on this one. We came up to selling and general administrative expenses amounting to 26.9% on sales ratio, which is a decrease by 1.4 as compared to what we were in 2006, 28.3%. And I can tell you that from a benchmark perspective we are well ahead of the general average. Just for information purpose, the benchmark is a little bit over 30% in '07.

When it comes to the profitability ratio, there are a bunch of them. But in a few words you can see that we were able to increase the operating income current ratio to sales. And as you can see just one figure, this is an increase by 6.5% including exchange rate, which is to be related to the increase on a comparable basis to the sales which is 2.8%. So we have that leverage and that was part of the P&L which is a reflect of the -- all the operations we were capable to drive to save money on the -- mainly SG&A, but as you will see later not only on this line item, to come up to net adjusted income excluding selected items ratio which is 24.8% of net sales this year which is an improvement by 1.6% over last year. Once again, something which is remarkable among our peers.

And to end up on the EPS, excluding selected items. And I would point out that this is an increase by 15.7% in U.S. dollars. And it is not just to please the comparison, but this is the only currency in which we can compare what we do against or among the others. And you know that the reporting of the majority of our peers is in U.S. dollars. So if you make the comparison you'll see that at 15.7% is well comparing to the others.

A few words about the fourth quarter before going back to the entire year. Because what you've seen in the fourth quarter is a so-called contradiction between the evolution in sales and the evolution of the -- at the EPS level. A decline against I'd say a strong increase especially if I'm talking in U.S. dollars. So net sales, as you see, a decline of 2.2% on a comparable basis. Flu vaccine, there was a swing of around EUR200m between quarter number three and quarter number four when you compare with last year 2006. And this is more than offsetting the decline at the net sales level. I put that up that there is an additional one point which is due to the fact that we recouped, we buy -- we bought back some product from our Japanese associate for a long time. And that by doing so, buying back some inventories we had to cancel the related sales, which is a negative impact. In other words, and this is what is written there, at the Pharma level, all in all, we are delivering a self-evolution which is more or less in line with what we've been delivering on the three quarters of 2007.

At the same token we have a cost of sale which is decreasing or burdening. You see 28.4% compared to 26.6%. Once again the flu vaccine swings, FX, the exchange rate. And you would remain that -- remember that when it comes to the euro/dollar exchange rate, we have a drop which is rather important in -- during the fourth quarter. Obviously the Ambien generics impact which is at the third quarter of the first quarter comparison and which is rather heavy. All in all, with these three line items you would have a cost of sales ratio which would be equivalent to the '06 situation.

R&D a little bit heavier in that fourth quarter than it was during the three first quarters of '07. 8.3% before exchange rate when it was 4.4% during the three first quarters. Two main items to explain this difference. First, we -- it was a little bit heavier in the vaccines, the R&D vaccines. All in all we finished up in the R&D vaccines with the same kind of rate on sales on, that we are on a global pharmaceutical and global company basis and a special one which is cost of discontinuing the Nycomed Altana contract. When we get back the ciclesonide product to our partner and there we add two discontinued operations and close back one of our facility in the U.K.

To go down remaining, simply that we went up decreasing our SG&A ratio and the spending was decreasing over 7%. Nonetheless we're showing an operating income current diminution by a little bit more 13%. Once again you take into account that swing I was talking about in the flu vaccine business and the exchange rate you would come to something which is totally comparable or stable from one year to another. Why do we come up at the end of the P&L with a -- I would say a strong increase in the -- at the EPS levels, 6% in euro, 18% in dollars. Simply because we encountered that recovery of Plavix that was mentioned earlier. And this is particularly true in the fourth quarter of '07 as compared to '06 which was totally down. And Plavix is obviously one of the two line items which are part of the explanation. So Plavix from one part in the U.S. The other is monitoring the expense during that fourth quarter as we did before.

Now let's go quickly through the various big line items of the '07 P&L. To begin with the sales, starting from the 2.8 on a comparable basis growth. The exchange rate effect is negative 3.8%. Out of that 80% is due to the U.S. dollar. So -- and we finish up with minus 1.1% on a reported level.

As you can see it's not very meaningful to look at the evolution directly as you on the first column which tells you that those net sales is minus 1.1% where operating income current is minus 0.1%. We prefer to give you more information excluding the exchange rate so that you are able to better monitor, understand and judge our performance net sales 2.8% operating income current plus 6.5%. That shows you the leverage we were able to put during this year. And as I showed you on the evolution of the headcount, that -- this has a lot to do with this particularly positive evolution from sales to the operating income.

Let's go out of the three main line items to give you a little overview of what's going to happen, or what should happen during the year 2008, 2007 on the cost of sales. So a little decrease or burden of 0.4%. Obviously definitely the impact of Ambien IR in the U.S.

his slide shows you that we've done a lot of things in the industrial arena. Not mentioning them, not making a lot of publicity, but simply decreasing, selling, closing every year. Adaptable means to come down on this line item to do what we have to do. What we expect for 2008 is to try and keep up the 27% cost of sales level out in this way, thanks to the Copaxone end of contract which is going to help simply because in this contract the cost of sales was rather heavy. This contract ends up at the end of the first quarter. We'll be back on that in more detail at the end of the first quarter. But simply keep in mind that the Copaxone end of the contract is not going to change the bottom line of the whole Group.

When it comes to the R&D, we said that we've -- I've encountered 5.5% increase on -- excluding exchange rate basis. This is true obviously for the global Group. In Pharma a little bit less. I would say in vaccine a lot more, plus 12.7%. We've said earlier that we had to invest in this area. We will keep on investing. When it comes to the global evolution that you can expect in the year 2008 let's say that no significant rise in R&D spend is to be expected next year, or this year.

Last very important line item, selling and general expenses, so SG&A. I know the improvement, year of improvement. The ratio is 26.9%. It's a lot less than the average of our competitors. We go on adapting. And you've seen through Gerard's presentation that it's an adaptation in the Western part of the world, where is an adaptation on a plus basis. Going on and being behind the investment and the countries which are showing an improvement in the growth. So we still are improving. We will go on adapting also in this line item next year.

To go directly to the bottom line, two quick comments. Interest expense, a decrease. Unfortunately it's not purely a decrease because of the debt reduction. It's a decrease of EUR100m in interest expense. Because of that, unfortunately minus EUR40m because of higher interest rates. I'm sure all of you I know the reason for that higher interest rate, especially in the second part of the year.

Income tax expenses, what is clear is that the effective tax rate is -- with 30.6% is unchanged from 2006. And we should gain around one point improvement next year, especially due to the decrease in the German tax rates.

So all in all, we come up with that as said the -- before tax, selected items, but before going to the bottom line I want to point out some very quickly on the selected items. You know that these items which we emphasize on are unpredictable. They're mainly driven by things such as tax and legal reserve, of settlements of disputes. As you see that from last year capital gains or obviously restructuring costs. This is the main component. As you can see very unpredictable. Positive last year, positive this year. Positive last year mainly through capital gains. Positive last -- this year mainly through settlement of tax disputes, all that contributed to the bottom line.

And we will therefore come up from trying to -- okay, thank you, trying to come from the adjusted net income of over EUR7b, which is EUR5.28 a share to the excluding selected items. And once again this is the one on which we want to report, on which we've based our guidance. And we went on basing our guidance close to EUR7b, EUR5.7 per share, plus 6% in euros and plus over 15% in U.S. dollars.

I don't go back to the explanations here. I guess that we did better, ahead of the guidance by 3%. Instead, as said, we made 13.3%. It's not purely because of the evolution of the exchange rate. It's the main reason being the cost containment that we were able to achieve during the year.

The '08 guidance, and once again Gerard will be back on that a little bit later on, but we propose and we commit to very major event to make -- to have the EPS excluding selected items grow around 7%. Obviously. we had to take a basis so it's calculated at constant 2007 euro/dollar parity. And you'll know that this parity was $1.371 as an average for the year 2007. And we give the sensitivity to the euro/dollar parity.

If you were to regard the statement of cash flows, once again we were able to decrease the level of debt to the Company from EUR5.8b back to EUR4.2b. At the same token we delivered a cash return to the shareholders which in '07 was EUR4.2b. Exactly the double of the EUR2.1b in 2006 through dividend share repurchase. This is starting from the EUR5.8b of free cash flow before dividend and share repurchase. You could say a little bit less, under EUR6.2 in 2006. Remember that in 2006 we had disposal of assets of around EUR1.3b, while this year in 2007 we have only EUR300m. So other comparison is once again a good comparison from 2007 to 2006. And as you can see, the gearing is very low on the balance sheet at the end of 2007.

So to finish up, I want to repeat what Gerard said about increasing in dividend our commitment we just made. And I guess it's just fair to say that we are just doing what we said we would be doing when we are very well inducted. Thank you very much.

Thank you, Jean-Claude. Then the next speaker will be Hanspeter Spek from Pharmaceutical Operations.

So, good morning, good afternoon to everybody. I will try to cover on four issues during my presentation. First of all comment again on the performance in 2007. Second, to analyze this performance also from a regional and geographical angle. Third, to comment on the performance of some key products. And lastly, to give you some comments on how we see the pharmaceutical industry landscape changing and how we intend to cope with it.

So first on the overall sales side, it has not been mentioned so far in absolute terms, so I do it. We have been selling slightly more than EUR28b. And if you compare the left part of the slide which is reflecting our quarterly sales in the fourth quarter 2007 and compare with the annual development, you see a slight change from plus 2.8% to minus 2.2%, which could indicate that the fourth quarter has been relatively light in comparison with the others.

Beyond the comments Jean-Claude just made a couple of minutes ago, yes, it is true that this is first of all due to the vaccines. The vaccines had earlier anticipated sales in 2006 in the third quarter. Right now in 2007 they took place in the fourth quarter. And there is the dollar exchange rate.

As you see from the next chart, if you focus sales analysis on Pharma sales only, you see that of course there has been a significant dip through the generification of Ambien IR during the second quarter 2007. But then later on you see very clearly that Pharmaceutical sales in the fourth quarter have nicely recovered and are more or less exactly on the same level as the second quarter. So whatever you see as a visual reduction of sales, it is strictly technical. And consequently, we look with a lot of confidence also in the first quarter 2008 of course.

Now looking to the products, there are a number of, as I feel, very positive comments to be made. First of all, the comment that all our major products show a very strong growth. This is true for Lovenox growing over the year by more than 13%. Plavix growing on a worldwide basis consolidated. Has nothing to do of course with the sales (that we were previously booking) 9.5%, Lantus 29% and Taxotere of nearly 12%.

Second you see very well that all those products even have a slightly acceleration in the fourth quarter, which is exactly in line with what I said before. The fact that the fourth quarter has been a good, reasonably good quarter for our Pharmaceutical operations where we see a further acceleration.

Overall our 15 leading products show a good growth and this is especially true if you eliminate the negative growth of those products which are all being touched by generification. First of all most importantly of course Ambien IR in the U.S., Eloxatin in Europe and Amaryl and Tritace on a worldwide basis. If you would eliminate those products you come up with a growth rate of well above 10%, which means very much above the worldwide growth of the pharmaceutical market which will be between 6% and 7% for the total year.

Now focusing more on a regional angle, you see, and that's a good traditional now that the -- let's call them developing markets contribute more and more to our growth, whilst Europe has even slightly decreasing sales. Besides the dollar effect this is of course due to the continued interventions on pharmaceutical shop prices in Europe. But you see then if you combine BRIC plus Mexico plus rest of the world, that those two parts of the world meanwhile even contribute more to our growth than the United States, which is a strong confirmation of what we have said in earlier years. That it is important to concentrate on those markets in order to leverage future potential.

Nevertheless, the United States of course remains for us the key market where we achieved more than 50% of our sales. And you see that besides Ambien we are in a very good and positive setting. The right side of the chart you see the impressive recovery of Plavix. As mentioned before of course, not in our books consolidated but nevertheless very important for up base line. And you see that our other key products are all accruing nicely more or less in two digits.

And if you go to a product like Lantus and Ambien CR, even in the very high two digits.

Nevertheless, we have adapted our structures, our commercial structures, but not only in United States, due to the changes of our portfolio. And you see that there has been a significant reduction in sales force headcount by nearly 20% of heads over the last two years. From previously 9,500 pharmaceutical sales reps we are today at approximately 7,800. So you see that restructurization and continued growth are not at all an opposite.

Another focus on another part of the world, Japan. Historically a soft spot in our environment. For historical reasons we had issued several statements that we will target Japan for accelerated growth. And we are content to report that in 2007 we really made a big step forward. You see that our commercial presence has been increased by 11% to EUR1.3b. This is not the figure you would see in our accounts. It's what you'll find again in 2007 in IMS. And you see then further that all our key products on the right side of the chart performed very well above their respective markets. And of course one of the big growth engines in Japan became Plavix, which is totaling more than EUR10m sales on a monthly basis by the end of 2007.

What is the outlook? I cannot say differently. But saying that this is bright outlook because we have made significant efforts in 2007 to integrate sales of products which have been dispartnered. Jean-Claude was referring to this. Those buyback of outstanding shares in joint ventures. And you see that we estimate for 2008 now sales in the neighborhood of EUR1.2b, EUR1.3b on one side by reintegration of products. On the other side by internal growth and of course within Plavix will continue to play a very important role within this. We are today the fastest growing international company in Japan. Overall, even the fastest growing pharmaceutical company in Japan. And we will picture ourselves very well amongst the leading 10 in 2008. Then we believe from there for the years to come for the given reasons we have a bright outlook for this very important market which is the second most important market within pharmaceutical markets in the world.

BRIC and Mexico, so those markets, where the future development will continue to come from, you see for very simple reason why. The macroeconomic situation in those markets is just right, nothing to do, let's say, with Europe or with the United States. You see a GDP growth of close to 10% and consequently a Pharmaceutical growth of being close to 14%, 15%.

We performed very well from our market leading positions. You see us ahead of Novartis, Pfizer and others, with a growth in 2007 of 11.5%, totaling nearly EUR2b of sales. And this once again leveraging in a good, perhaps even easier manner, the opportunities coming from our base business the top 15 and growing synergies with Vaccines. And this of course supported by sensitive investment over the last years into our structures. And this not only for promotional.

Other sunny side offices street so to say for China. We have achieved sales in China of more than EUR300m, growing by 36%. We continue so now for a consecutive number of years in the high two digits. You see that in China the picture is different from other developing markets. The business is totally and only driven by our innovative products. But it is strategic. Yes, strategically and technically very much supported by a footprint in terms of organization.

You will see it from the chart that we have regionalized China with 10 regions. We are strongly convinced that China cannot be mastered in a different way than by very solid and strong regionalization. And you also see that we have in total three manufacturing plants. One newly founded during 2007 for Vaccines out of those three.

I jump again on another continent, South America with Brazil. We are the number one company. You see once again that the starting point is very different to, let's say, China. We have a mixture of portfolio where we make significant sales even with PHC and OTC products.

You see that the base business plays a very important role. And yes, once again we have a two digit sales growth selling more than EUR500m. We are fully present once again with the large production unit and we will further leverage this as of 2007/2008 in going out in authentic generics in this market because we are just convinced that this market needs also more access to pharmaceutical products. And we have to make those products available in producing generics at adequate cost and adequate price.

Three comments on the major products beside Lantus, because Lantus will be covered intensively later by Pierre Chancel. Let me start with Lovenox. Still the most important product in our portfolio with sales of EUR2.6b. You see once again a two digit growth rate with 13.4%. We have gained nearly two points of market share and each market share point values approximately EUR16m. There is a lot of opportunity still out there because you've seen in very impressive terms that only approximately half of those patients who should get prophylaxis with the relevant treatment of low molecular weight heparin is getting this treatment today. We further see very, very positive support from the relevant guidelines. And yes, we also have been comforted during 2007 by the recent declaration of the Federal Drug Administration in the context of approving biogenerics in the field of low molecular weight heparins; a stand which has been meanwhile confirmed in a recent publication by all relevant academic groups.

Plavix, besides the back coming sales, we believe that Plavix will continue to grow out in front of the upcoming (Pazoclil) competition. We are eager to answer your questions in this respect. We see mainly two reasons for continued growth. One, we have started to advertise Plavix in the field of peripheral atrial disease, also to the consumer during 2007. And we are expecting for the second half of the year the results of an important clinical trial where Plavix is being used in atrial fibrillation. If this trial will turn out to be positive, it will give us access to approximately 6m patients which are today not having access to a Plavix treatment.

Taxotere, an issue for me which I took over the last year. It's a little bit personal. I was committed to bring together with my colleagues this product back to a real solid growth and yes, we are happy and proud to report that we succeeded. The product is not only nearly selling EUR2b, but it is also growing by 12%. As Gerard mentioned earlier, it is the cytotoxic with the largest scope of indications, eight in the United States and 11 in the European Community. And we continue to drive this product further and we believe that we have significant additional opportunities.

Last word from a portfolio angle on the base business, the so-called base business which represents more than EUR8b. And here, yes, we are equally happy to report that we continue to succeed to keep this base business stable. You see that if you eliminate out of the sales 2007 Ketek, which is more an accident than anything else in this respect, the sales of those products are flat. And more importantly you see that in many parts of the world, you have here three examples, Latin America, Africa, and Middle East, as the products are not only flat they are even growing at two digits because they still are very, very valid for those markets in terms of epidemiology but also cost.

Now let me conclude with some comments on the landscape. I believe that 2007 has been a turning point for this industry because finally this industry stopped to say that the market is changing and the industry has started to change itself.

In a very schematic way you could say that we have today three market models. One is the emerging markets, the intermediate markets, and the advanced markets. And yes, it is evident that the trend goes to the right side of the chart. And it is marked by an increasing number of entry barriers and hurdles.

If this is the bad side, I strongly believe that the good side is that as more hurdles exist as more opportunities also exist for us to interfere and to have impact on those markets conditions that we have an organization in place which is flexible enough and intelligent enough to do that. And it is therefore said we continue to try for stronger regionalization. We have started to do so in 2007, to address those three market needs as once again they are outlined here in the chart you have in front of you, which means we delegate more responsibility to those markets in order to get closer to our customers to take the good decisions in a more rapid speed at the point of sales where really the issues and the opportunities lay.

To really conclude let me show you three examples where we have been acting differently to others in the industry and where we believe we have superior results. The first example concerns generification. The example given is Eloxatin in Germany. We have generic, very strong generic competition. Approximately five to 10 generic products are on the market since March 2007. And you see that through proactive measures we have managed to keep about 75% of the volume part of the market, which has at least two advantages. First, we keep our factories busy. Second, we keep the patients on the same treatment. We don't expose the patients to a change in treatment. And last but not least, as a consequence out of this, we keep our positions as therapy captains in the respective field. In this field, colon cancer. Where, as you know of course we are preparing new products to be launched within the very imminent future.

Second example, regionalization. You have here the land map of the United Kingdom, but it's equally true for the United States. Both markets are undergoing in the field of healthcare and the way healthcare is being financed, strong regionalization between the west and the east coasts in the United States and between London and let's say Aberdeen in Scotland. And consequently we have totally reworked our structures in the same sense that we built our organization around the decision bodies which are in both countries and sales are only examples as said more and more regional.

All those more qualitative measures cannot go without a strong effort on the quantitative side. And you see here the examples. And you see that overall we have been reducing the number of our sales representatives once again without making a lot of noise, once again in a very fair and integrative way for the people concerned. Nevertheless, we have made a significant reduction in our overall headcount in promotions and we have in the same period succeeded to increase other qualitative and quantitative benchmarks such as the number of calls per center percentages and as well, the number of education days and coaching days out in the field. Vis--vis we permanently changed and adopt our commercial models. We see many trends which goes more to the point of sales which means pharmacy and we make the necessary adjustments in terms of organization but of course also in terms of economic policy.

So to sum it up I believe that 2007 has not only confirmed that we are able to deliver, but we have predicted before, we have over delivered. And besides I strongly believe that we have built a very, very solid basis to mark and to successfully manage the changing environment in changing our self as a company during 2007 for the years to come. Thank you so much. And I pass on to Pierre.

All right, good morning, everyone. I'm going to cover the 2007 results and some key achievements. And then I will present you the 2008 and beyond ambition in diabetes for Sanofi-Aventis.

So we are very pleased as was said to present that Lantus crossed the EUR2b threshold in 2007. More exactly it's EUR2,031m 2007 with a growth rate of almost 30% growth. What is really interesting and so is to look at the right-hand side of the chart, which shows in the U.S. the very strong growth of Lantus, the Lantus family, which is vials, cartridge and SoloSTAR. In the U.S. it is total Rx so you can see that it's a straight line. And a straight line is the same, that the result that we've got in '06, '05 is so in '04. Which means that although the launch of Byetta, Levemir, or even Januvia or Janumet, which is not on this slide, actually Lantus has managed to maintain a strong growth and very healthy growth.

Key achievements or so in 2007 is -- I'm going to the guidelines actually, that were made public in 2007. ADA and EASD is the guidelines, fully recognizing the Basal Insulin as the most effective to treat A1C. And as you can see right after a lifestyle intervention and Metformin today Basal Insulin and Lantus is 70% of total Basal Insulin. Is qualified as the most effective when Sulfonylurea is expensive and Glitazone is qualified again, and is not my words, it's the ADA words. The product which can be second line but potentially can increase risk of CHF.

Last but not least in terms of achievement is the launch of Lantus SoloSTAR and Apidra SoloSTAR. And you can see on this slide, you saw the impressive ramp up of Lantus SoloSTAR in the U.S. when compared with Flexpen. And in Spain the strong push given by SoloSTAR on Apidra when compared again with the benchmark which was -- which is, actually, NovoRapid, which is the short acting analog from Novo in the U.S.

As a matter on fact, based on that, the ambition for 2000 and beyond is to move from the number one insulin to the number one anti-diabetic drug worldwide sales. And today we are already number one in Europe, number three in the U.S. and number two worldwide. But clearly the ambition is to become the leading anti-diabetic product worldwide.

And our ambition also is not only to focus on Lantus as a standalone, but also to maximize the full potential of diabetes franchise with Lantus. Indeed Apidra but also Amaryl and I will allude to it in some time when looking at the emerging market.

The reason for confidence, based on the market environment and its conditions, more and more patients. Diabetes is the epidemic of the 21st century and also you see that 60%, 70% of patients are still not controlled. Second point is that intervention will be made earlier and earlier and this already started because today insulin is -- and Lantus actually did help to drive insulinization earlier post-diagnosis.

Second point is as the basis of our confidence is the very strong position of Lantus. Today it's well recognized in -- by the payers. And you see on this slide actually the position of Lantus in the managed care organization. In the U.S. almost 100% of Tier 2 or higher coverage which is clearly the recognition of the Lantus value by the payers.

Two is a strong commitment and ambition in the emerging markets. Good portfolio to start with, as I said, with Lantus and Amaryl, which is very well positioned to tackle the -- as a neural form and so the Asiatic population where the problem is probably more insulin deficiency than insulin sensitization. So what we want is to redo the job, expand market diagnosis education, influence market to establish clear guidelines according to ADA-EASD and IDA guidelines, drive global business management and as Hanspeter alluded to it, clearly increase investment.

Two is major investment in industrial operation. So it gives it the mean to succeed, increased capacity in active ingredient, cartridge, vial, new dedicated devices. And we are even exploring additional capacity in emerging markets.

Third point is the portfolio. I already alluded to the already marketed product. But I want to strongly highlight the future portfolio and with our GLP-1 agonist AVE0010, SGLT-2 inhibitor and Acomplia, that will be expanded with the filing in the diabetes indication by 2009 will give us again the new breath to accelerate in diabetes management. Diabetes is an evolving disease. Each step deserve actually a combination therapy on newer treatment and also with the diabetic Type 2 or diabetic patients actually have a lot of co-morbidities and the whole rationale for strategy and portfolio will be to offer the best product alone or in combination with each other to tackle and to address each type of the diabetes disease.

Last but not least what we want to go is we want really to tackle the last dimension which is to move from actually the management of risk factor or surrogate marker to move to the prevention of cardiovascular complication. And this is the Origin trial. Origin is a study, very interesting and exciting study. Results will be available in 2010. And the point with this is clearly to go beyond or earlier than the ADA or EASD algorithm, which means that in this study 20% of patients are IGT, impaired glucose tolerance patients. So before diagnosis, current diagnosis of diabetes. Or diabetic patient but just diagnosed, so with maybe one oral and not more.

And clearly the goal, the question is can earlier use of Lantus reduce CV events in patients with clear diabetes and diabetes more than standard glycemic care. Clearly, this is creating or giving us again the mean to create a new standard and move again forward in the definition of ambition in innovative Type 2 or diabetes management.

So all in all, and it's my last slide actually, we clearly have an ambition, vision and aspiration in diabetes to reinforce our position to become the world class leader in diabetes. And we will not develop it if we are not the best partner for patient healthcare and providers, healthcare authorities and payers in order again to maximize our already very strong position in the diabetes business.

So thank you very much. And --

Thank you, Pierre. The next speaker is Wayne Pisano for the Vaccines business.

Thank you, Gerard. Good morning. Sanofi Pasteur experienced strong growth in 2007. Sales were up 14.5% on a comparable basis. Our growth was driven across all of our product franchises. I would like to point out that our joint venture in Europe, Sanofi Pasteur MSD, exceeded EUR1b in sales for the first time driven by the launch of Gardasil, which generated EUR341m of sales.

Looking at our flu business, our flu strategy has four components. The first component is to drive the seasonal flu market place. The second component is to expand the capacity to -- basically to fill the market demand. The third component is to develop innovative vaccines, particularly for the elderly who can benefit from increased protection. And the third is to continue with our aggressive pandemic preparedness.

On the seasonal basis we recorded 180m doses of production in sales in 2007. This is up 10m doses. We had strong sales of Vaxigrip and Fluzone worldwide.

In terms of capacity we're approaching the completion of a new facility in the U.S. that will give us 100m doses additional capacity. That facility will come on line in 2009. We've announced plans to basically build a bulk manufacturing facility in Shenzhen, China. And we have both formulation and filling facilities under construction right now in France and the U.S. And these will come on line in a staged fashion from 2009 to 2011.

In terms of new products, we're working on a number of new products to improve efficacy. The first is a flu microinjection system. This product was actually filed in the EU in December and was -- the file was accepted for review. We'll file for the same product or similar product using Fluzone in 2009. This coming year we're filing for an improved flu product in the U.S. which will increased the immunogenicity and that filing is scheduled for Q2. Our cell culture program is also progressing quite well.

In terms of the pandemia area, we recorded nearly EUR100m of sales of H5N1 contracts to the U.S. government. And we licensed our first prototype vaccine in the U.S. and have filed a mock dossier in the EU. Additionally, we've had very positive results with our novel adjuvant. This has indicated that we might be able to lower the dose of a pandemic vaccine to as low as 3.8 micrograms or even 1.9 micrograms.

Looking specifically at the U.S., for the first time in seven years the industry not only met but actually exceeded market demand in 2007. It's projected that 130m doses were delivered to the U.S. marketplace and 110m to 115m doses were actually -- are used for immunizations. Sanofi Pasteur sold its entire production of 50m doses in the U.S. In the U.S. the focus now is to return to expanding immunization rates which were suspended several years ago by the ACIP due to the shortages. The ACIP has a goal of universal recommendation in the U.S. And if you look at the targeted population where they're recommending immunization, it exceeds 200m people.

Looking at our Polio/Pertussis/Hib franchise which is the cornerstone of our pediatric products, sales were EUR660m in 2007. And we expect this franchise to approach EUR1b within the next several years. The main driver in 2007 was the launch of a pentavalent vaccine, Pentaxim. This was launched in Mexico and Turkey. Mexico was the first Latin American country now to basically move from wholesale Pertussis to a cellular Pertussis and from oral polio vaccine to an activated polio vaccine. We expect the rest of Latin America to follow over the next several years.

Turkey did the same. It was the first major market in Asia to do that.

In 2008 we expect Pentaxim to basically continue to expand on the international zone towards Pentacel in the U.S. and complete the development of Pediacel in Europe with a filing in 2009.

In terms of our booster business, the booster products are targeted for adolescents and adults. We had very strong growth in 2007 up 27%. And sales now are over EUR40m. The Pertussis based boosters within this franchise basically grew 45%. And we expect strong growth in the future. In fact, we would expect the booster marketplace to double in the next several years as we see increased recommendations within the EU and the U.S. to immunize adolescents and adults.

One of the things that has been observed by the policymakers is that infants that are most susceptible to disease actually contract the disease from siblings and parents and healthcare workers. And these are the targets for the booster business.

Looking at bacterial meningitis, this is a devastating disease. Meningitis is often misdiagnosed. It has a rapid onset of action and it has high morbidity and mortality. It's one of the biggest challenges in terms of providing coverage because it's caused by multiple serotypes.

Our quadrivalent vaccine Menactra achieved very strong growth in 2007. The growth rate was over 80%. Our sales now again are over EUR400m. We secured a strong recommendation from the ACIP for all 11 to 18 year olds. We also secured the two to 10 year license in 2007 in the U.S. This product is going to be a major growth driver in the future for us as we broaden recommendations in the U.S. Increase our capacity. We have plans to produce between eight to 10m doses in the next several years. And then in 2010 a new facility will come on line which has the capacity of over 20m doses. And that will allow us to basically leverage opportunities in the -- in Europe as well as in the international zone.

Looking quickly at Gardasil. Gardasil was launched in the late first quarter in Europe and achieved sales of EUR341m. Gardasil is on its way to being a blockbuster. It has clear benefits as a quadrivalent vaccine, protecting against serotypes 6, 11, 16 and 18. The main objective in 2008 will be securing the recommendations and reimbursement. In 2007 Germany was the first with this and we saw a tremendous uptake. And recently, France basically has gone forward with our recommendation on Gardasil as well.

In terms of our future growth one of our key strategies is forming alliances with biotech firms, and we had a number of deals that were closed in 2007. We had two partnerships with Acambis. One for Japanese Encephalitis, which is endemic throughout the Asia-Pacific region. The other with Acambis was for West Nile Virus. West Nile Virus has become endemic in the U.S. and these two products strengthen our travel endemic franchise.

We formed a partnership with Crucell for rabies monoclonal antibodies and this is a product that would be used for rabies post-exposure. There are 55,000 deaths worldwide each year from rabies.

We also have partnerships with Statens Serum Institute for Tuberculosis and with Institute Pasteur for malaria. And these are two major areas of unmet medical need in the developing world.

Looking at our pipeline, the pipeline is well balanced with new targets in lifecycle management. I already mentioned the flu microinjection system, which has been filed in Europe and this will not only improve immunogenicity, but also provide greater convenience.

Menactra Toddler will allow the product to be used at nine months of age and this will basically be a two dose series and will absolutely -- will remove the need for immunization for infants, which requires four doses.

And then Dengue, which is our most exciting project in our travel endemic area, this is a disease that is second to malaria in incidence. Dengue is caused by four serotypes and it's endemic throughout Latin America and Asia Pacific. And interestingly, we've seen that the vector, the mosquito that transmit the disease is now present in 23 States in the United States and for the first time in 2005, we saw Dengue in the U.S. There were 25 cases and in 2006 the number grew 10-fold at 250. So if the epidemiology basically continues to trend, it wouldn't be surprising to see Dengue to be epidemic of endemic in the Southern U.S. states in the next three to four years.

In terms of our planned submissions, over the next four years we have 11 products that will be submitted. It's a balance of lifecycle management and new entities and these filings basically will assure us sustainable growth in the next four year period.

So in conclusion, Sanofi-Pasteur had another strong year in terms of revenue. We're moving forward, increasing our capacity. We've had a number of alliances, which strengthen our pipeline and we're progressing towards a solid performance over the next four years. Gerard?

Thank you Wayne and the last speaker is Marc Cluzel for R&D.

Hello. Good morning, good afternoon and good evening. So in September 2007, we delivered a road map and I think what we are trying to show today in that in fact we follow the road map. By following the road map, in fact, we're able to increase the value of the portfolio short term just because the products are closer to submission and we are also doing the presentation, some kind of results, and also we are allowing for the long term. In fact, a minimum of two registrations per year out to 2014, 2015 horizon.

So first, a quick summary of what was and what is our road map. It is certainly potential submission of new products, including vaccines. So like new chemical entities and biologicals planned by the end, 2010 and out of these 30 products, for the R&D part, we highlighted the 18 products.

At the same time, since the purpose is to have two products registered per year, the horizon 2014 or 2015. We consider that we need to put 20 candidates per year into development. In 2007, in fact, we put 16 products into development, but considering that we put the first three programs into development by the acquisition of TroVax, we are close to our goal.

At the same time again, to 12 -- to sustain our growth in the future, we need to continue to increase our investment in biotech. And by doing that by increase our IT, our business development activity. And I think that today, with the Regeneron deal in November and the Dyax deal today, in fact, we are totally on track with this objective.

So, a quick summary since what happened since the -- since September. We were just -- we registered Lovenox in Japan and at the same time, we submitted Aquilda in December in Europe and U.S., which explains why in fact it is not under the table at the end.

At the same time, we ended -- sorry, we ended two products. Most of the time we terminate products because of safety or efficacy troubles. In this case, it is a little bit different because Hexadecasaccharide has positive results, but we decided that in front of AGF, AVE5026, in fact it was more interesting to put more resources on AVE5026. And you will see that we have resumed ambitious development for this compound. And for Dianicline, it is a mix between the absence of benefit versus a first of the class and also some problems with the class itself.

So for AVE5530, we have now the results of the Phase IIb. So three messages from our side. The first one that we have a strongly positive versus placebo, starting at the dose of 25 milligram. The second, and it was partly expected, it's why we made dosing AM and PM. We have a greater efficacy PM and just because of the transit time. And the third point is that even if there is a numerator difference in favor of ezetimibe, we think that with the small number and the absence of statistical difference, we still compete -- we can still be competing with ezetimibe, especially with a 50 milligram dose, PM.

Some other advantages above efficacy versus ezetimibe is the quasi or the virtual -- it's a quasi absence of absorption by 5530, at least relative to ezetimibe. And I think one of the indications of that is the total absence of liver toxicity in our toxicological data. And we are showing the data that we have at the present time. It is the longest toxicological study. So six months in the rat and 12 months in the monkey.

We had a meeting -- we had a meeting with the FDA very recently, so we can say that the Phase III program is on track for a submission in 2010, as it was expected. And we are doing, at the same time, a submission as a monitor activity and as a fixed combo with a statin.

GLP-1, I will pass this one, just to go for the program. So we have presented the results of the Phase IIb study in September. We have picked up the dose of 20 micrograms per day and we have a rather ambitious program in inhibitors, considering that most of the recent programs in this indication were less of 2,000 patients and most of the time with a situation of treatment for a maximum of three months. Here we have more than 3,000 patients and with a total duration of treatment for some patients up to one year and up. Also what is interesting is that based on what is a very good dose ranging that we got during the Phase IIb. We thought that by a -- by good titration, we should be able to decrease in fact, the side effect at the initiation of the program and to avoid a lot of drawbacks.

Up. I pass. For Rimonabant, just to show you that the program and the impetus is on time. That for the conestant study in the morbid mortality study after a slow, a little bit of slowdown just after the committee. The recruitment is on time to have the recruitment finished during the middle of this year.

And in fact, to go now for presentation of results. You know that now we are trying to present most of our clinical results during Congress, during meetings. So the results of Rimonabant in Arteriosclerosis in coronary disease will be presented at the ACC in March 2008. The full characterization of the effect on the Rimonabant on lipid profile will be presented at the European Arteriosclerosis Society in April 2008.

And I think one of the most interesting data for Rimonabant will be ARPEGGIO, which is the effect of Rimonabant on top of insulin, knowing that we will have to look at two parameters. One of course is HBA1C, which is classical for diabetics. But the other point will be weight, weight loss, since you know that the treatment with insulin is increasing the weight gain and still the purpose of all treatment for diabetic patients is to reduce the weight.

At the same time, we implement, during all our studies, in fact the new requirement by the FDA mainly in terms of TK-triggered adverse events. It's not specific for Rimonabant, but for all CB1 receptor antagonists. It's also not only for all CB1 antagonists now, but for also anti-depressive agents and anti-epileptic agents.

The submission in Type II diabetes, based on the program we just presented on slide 93 is still planned in 2009. In terms of fixed combination, the combination with metformin is planned for 2010 and the combination with simvastatin in 2011. For CRESCENDO, since the minimum treatment duration is three years and as we expect the end of inclusion in the middle of this year, the submission for CRESCENDO will be in 2011.

So I will not comment the interest of AVE5026, since it was done in September. Just to remind you, and we have some experience within the anticoagulation field, for us it's the best treatment in terms of benefit risk for in fact the knee replacement. Based on this fact and also with the pick up of the dose of 20 milligrams per day, 20 milligrams allowing in fact a reduction of VT events of 60% versus Lovenox. And the reduction of bleeding, including major and minor bleeding of 20% to 30%, so really is the best benefit efficacy dose.

We have an extensive and really ambitious program, since we want to recruit close to 10,000 patients within less than two years. So the three initial studies are rather classical when you want to study an anticoagulants, which is hip replacement, knee replacement and hip fracture. What is a little bit different in fact from most of our programs is our emphasis on cancer, both by -- both for surgical patients and for medical patients. And for medical patients, in fact, we will look not only to radiographic prevention of the events, but also in fact for morbid mortality.

I would like to remind you, and it was presented in September, that 15% of the deaths for cancer patients are in -- are caused in fact by VT events. At the same time, and you know it is also aware, there is a most medical need. It's medical patients. For medical patients, the study will be a little bit longer just because of the number of patients to be treated and also the conditions. So the submission for this specific indication will be in 2011.

For Idrabiotaparinux -- I'm sorry. Yes, for Idrabiotaparinux, sorry, not so easy to -- it's not so easy to say. One of the advantages, in fact, some of the people are considering that the oral route is always better than an injectable route. And in fact, we think at least for 5026, but even more true for Idrabiotaparinux, in fact as a subcutaneous route is an advantage. It is an advantage because we have less viability, because we increase the biodisponsibility, viability, close to 100%. No direct drug intervention.

At the same time, we have no need for bridging a specific study of specific measurements to bridge with other anticoagulants and we have also no need for lab monitoring. At the same time, it is very convenient for the patient and for the doctor. And all the inquiries that we did when we ask what will be the best regimen preferred between anti-Vitamin K, oral anticoagulant or Idrabiotaparinux, it might be patient, it might be doctors. And in fact time after time we always end up with the same answer, that the preferred way of administration was once a week. And in fact, we have some confirmation because both patients and doctors were very unhappy when we stopped multiuse at least in terms of convenience for the patient.

In terms of clinical programs, as you can see for EQUINOX, which is DVT, the recruitment is finished. For CASSIOPEA, which is preliminary embolism, one-third of the patients are recruited and we started an important study, BOREALIS, in Atrial Fibrillation on a double blind double dummy design, which is quite difficult. But we think monitoring now, if we want to register the drug with only one study.

For Multaq, so it's a little bit complicated slide. In terms of recruitment, so the first patient was in in June 2005. The last patient out was in January 2008, which explains why we are not presenting the data at the ACC, because we do not have the data at the present time. In fact we will not have the data at the time of the ACC, since we have roughly six weeks of data by its closing.

When you are considering that the minimum duration of treatment within ATHENA was 12 months, it means -- oh I'm sorry about the microphone, it means that in fact the recruitment took roughly one year enough and to recruit in this population 5,000 patients within one year enough, is from our point of view, showing wide acceptance by both physicians and patients of the treatment. When you're looking at the left part of the slide, you can see that we have the classical demographics for atrial fibrillation patient, with 60% with structural heart disease and 30% with cardiovascular.

A big difference with ANDROMEDA is ANDROMEDA, more than one-half of the patients was without atrial fibrillation when in this population all the patients are atrial fibrillation at inclusion. So since the results will be not available at the ACC, it was decided to submit them at the next available meeting, which is American Heart Rate Society in May, 2008. And we are still on track for submission and we are on track in fact for submission before the end of the second trimester.

Ilepatril I will pass. NVGF I will pass.

So I will go directly for the new and exciting results of this presentation, which in fact is Eplivanserin. So Eplivanserin, I will not comment too much because it was also presented in September. It is a new approach to insomnia treatment. It is not an inductor of sleep, but in fact it is improving the quality of sleep, mainly by increasing the stage III and IV of sleep and it has been demonstrated now many times with Eplivanserin, always Eplivanserin. The advantage of this class, since it is absolutely not a biological compound, we can expect it to be non -- we can expect it to be a non-scheduled drug in the U.S.

The Phase III program is a three -- Phase III studies. Two with self patients reported WASO. WASO as you know it. It is wake after sleep onset, and one with Polysomnography. Well now the results of the first Phase III study since the other one is still, we are still waiting for the results.

So for the study EPLILONG, I think it is interesting for two reasons. The first reason, and it is patient reported, so really the patient is feeling the difference. We have a strong difference versus placebo and it's more 15 minutes and it's quite a huge number when compared to [Gab ijec]. So we have a strong difference for both WASO and the number of awakenings. But I think from our point of view, and we have some experience, what is even more interesting that most of the time with [Gab ijec], you have a tendency in fact with time to have a decrease of the activity of the drug and in fact even a decrease between the first day of administration and the third week. And here, even after two -- 12 weeks, we have roughly the same activity and even from the number of awakenings, we have an increase of the activity of the product, which is totally unusual with this kind of drug.

At the same time, since we are increasing the -- since we are decreasing the awakening after sleep onset and the number of awakening during the night, it is not too surprising to find that the patient is experiencing a better quality of sleep.

We had the same result with the PSG for both, again, the number of awakenings and the WASO. They only point -- and again, a strong difference versus placebo except at six weeks, which is not statistically significant, we had some experiences, some literature, of same results with the [Gab ijec]. I think -- we think this is mainly due to the techniques of registration since the lab is totally different while -- totally different from your classical bed.

In terms of safety, you have the profile and this profile is very good versus placebo. And even if you are taking some specific adverse events with anti-insomniac drug, you can see that for memory impairment and for depression, we are totally comparable for placebo. We have, of course -- not of course, but it was already shown, we have no evidence for next day residual effect. In fact, we have the opposite. If you are going back to the presentation, last February we have shown in fact that the patients are feeling better in the morning with a previously ingested placebo. And since we are not touching the [Gab ijec] we have -- system, we have no rebound phenomenon, no withdrawal affect after two weeks stop of treatment.

For depression, Saredutant, you know that we have two statistically significant studies versus placebo for Saredutant. We have two studies where Saredutant is not statistically significant different from placebo but where Saredutant is still better than placebo. And when you are doing the mid-analysis of the first study Saredutant is better than placebo. On top of that the safety profile of Rimonabant is equal to placebo with, in events, some better affect on sexual dysfunction. So the submission is scheduled for the 3Q, 2008 but we are still waiting for the result of elderly patients and [MAGENTA], but really the submission is ready.

Just -- we think that the interest of such product is mainly on top of [SSRI] or SNRI and so we have two studies with this kind of design. And the last study will be available in 2009 and we are doing studies in GAD.

So finally, big [inaudible] is there is a little bit different since we need to have positive result, another positive result for this campaign. And also, as we presented in September, we have some hepatic signals. So we need to have the full dose here before to take the decision for filing.

For oncology, for S1 I will pass very quickly because we are a little bit late but the program is on time. For Aflibercept, again, the program is on time with the possibility of submission at the end of 2008 for a subline of ion cancer. This is two doses of the study are showing a strong difference, I would like to remind you that we have no placebo or no comparator on -- and no comparator in this study. So the submission will be only possible if there is a strong difference between two and four doses.

At the same time, on the four end integrations that we started, prostrate second line, metastatical rectal cancer, lung cancer and pancreatic cancer, the study has been initiated. For 1st line metastatical colorectal cancer we're doing a pilot study in order to calibrate ourselves best with Avastin. And following the Advisory Committee, the ODAC meeting in December about the result of Avastin in first line breast cancer and the possibility to use progression free survival, we are likely to start the study in the near future in this indication. And several abstracts will be presented at the ASCO.

For TroVax, the program is on time. So in renal cancer the potential submission in 2009. We -- you know that we are going also for colorectal cancer. The program is ongoing. And we think that with this kind of curative vaccine it is -- this kind of treatment is more -- in fact it is the case for most of chemotherapy, but it is even more true for curative vaccine that the smaller is the tumor the bigger, the biggest might be the effect. So it's interesting to initiate the treatment when the tumor is still small. And the tumor is small at the beginning of the cancer so adjuvant treatment is certainly one of the best options for this kind of treatment. And so we are initiating a study in adjuvant treatment even without result in first line metastatical colorectal cancer, with a British group. Unfortunately you know that the duration of the study is rather long. Between three and five years, so the result are not expected before 2014.

Larotaxel and XRP6258, again, I think that now we have a very clear indication where we want to go. I would like to remind you that in fact the patent for Larotaxel is extending largely after 2020 so we have two potential indications ongoing. One which is second line pancreas and the second one which is first line bladder where there is still a lot of medical need.

In terms of breast, which is certainly a very interesting indication, looking at the efficacy of Taxotere but perhaps not the very good durability of Taxotere, we are doing a study in new adjuvant breast. So new adjuvant is before surgery when administering the compound versus Taxotere. The answer is that you can look at the etiological result and calibrate very quickly your product versus Taxotere, so of course if the result is positive we'll go for adjuvant study. A good indication that we are in fact faster than expected in terms of inclusion which means some interest by the oncologists about this kind of treatment.

The same in fact for XRP6258, in second line prostrate cancer mono-resistant. Again, we are above expectation in terms of recruitment, which for us highlight a kind of unmet medical need and the submission for this product is scheduled in 2010 now.

I will pass on AVE8062 because we are late. So, the first part of -- in fact of our roadmap describing in September was to, on short term product, to deliver on time. And in terms of result -- I'm sorry, our portfolio in Phase -- for Phase IIb/III product, but this -- the second part of our roadmap was to be able to sustain the portfolio after 2014, 2015. For that in fact there were two big directions.

The first direction was to increase a little bit out our geographic exposure and going a little bit away from -- or above Europe and the U.S. So we opened our first Asian pharmaceutical center in India, Pharmaceutical Development Center. And at the same time we increased our presence in China knowing that in China we do not want to establish a classical R&D center but we want really to work in collaboration, especially with fundamental scientists, from both university and Chinese Academy of Medical Sciences. We already signed one deal in Tianjin, about the stem cells but it is likely that before the end of 2008 we will have signed five or six more deals. At the same time we are interested by stem cells for cancer, but we are also interested for regenerative medicine.

The second engagement at R&D Day was after geographical spread, it was in fact to continue to reinforce ourselves in biologicals. And in fact it's what we did with Regeneron. You have I think, fully aware that Regeneron is one of the best technological platform for engineering antibodies coming from mice. And it is a true collaboration since likely there will be synergy for the finding of the target. After that Regeneron will provide the tool to test the target, to screen the target. I think we have some advantage in fact in our -- with the pharmacological tool to test the target. Regeneron after that, as I believe they have production. And for the end I think we have a little bit more expenses for end stage development.

It is also allowing us to have two more products within our portfolio. One which is an Anti-IL6 and it will be interesting to compare this compound, which is fully humanized versus competition which is a chemical agent. And we are also including in our portfolio an Anti-delta like ligand 4 which we'll make in fact with the deal that we signed today. So just for your memory we have VGF trap, which is preventing the growth of base cell within the tumor. We have Combavastatin which is disrupting the vessels within the tumor.

We have DLL4, in fact, which is preventing the normal growth of the base cell within the tumor and which is active after a failure of EGF. And at the same time, as you know, we signed today or yesterday a deal with Dyax. So the deal with Dyax has two advantages. The first one that there is two ways of producing antibodies. One is going through immunization of the mice which is the original platform. And the other way is a Phage display so we have now an agreement to license the Phage display technology and there is not so many licenses available for this technology. And at the same time, we are getting another anti-agenesis agent which is Type 1 which is close to I&D.

And my last slide, in fact it is exactly the same slide as in September, except that Aquilda is no more in the 2008 column since Aquilda is already submitted. Thank you very much.

Before we answer your question, quickly two slides, as a conclusion so there is no need for me to insist on the fact that we will have quite a lot of results -- for quite a lot of clinical trial results in 2008. So we still believe that we will have both our flagship Pharma products and Vaccines a good year in 2008.

However, because of this very complicated pharmaceutical environment we need for further selective and affective adoption measures and we do it without big announce, but we will do it. And we also believe that we need the different large management which corresponds exactly to changes in each of our markets. And there's certainly, one more time, no need for me to reinsist on the guidance. Jean-Claude Leroy already mentioned that to you. That it will be around 7% growth of adjusted EPS excluding selected item for sure, on constant euro/dollar parity.

So right now we are ready to answer your questions.

Can you please start the question and answer session?

(OPERATOR INSTRUCTIONS). We have our first question from Chris Schott with Banc of America Securities. Please go ahead.

Great, thank you. Just a couple of quick questions. First, on Menactra, the additional capacity coming in 2010, how much of that is allocated to the, let's say the two through 10 year old opportunity or the toddler opportunity in the U.S. versus the overall kind of European and rest of world opportunity?

And then can you comment on the impact you'd expect on the Menactra franchise if there were an infant meningitis ACY vaccine to become available?

And then a second question on AVE5530. Just an update on your intent, if this is a product that you're still seeking to partner or one that you're going to pursue independently? And again, if we look at you starting a Phase III later this year should we assume that if you start that Phase III this is a drug that you're likely going to be developing independently? Thank you.

Okay, I'll start with the questions on Menactra. In 2007 we produced 7.4m doses and with the existing facility we will be producing upwards of 10m doses by 2009. And then in 2010 we have the new facility that brings on an additional 20m doses.

The two to 10 indication, assuming ACIP makes a recommendation, which we believe they will once we have capacity, they will probably come in with a recommendation for one dose for this birth cohort. So about -- birth cohort in the U.S. is about 4m children and normally you would see an uptake in the range of 80%, 85% in that type of age group. So that new capacity, somewhere between close to 4m doses would be earmarked for the U.S. and the rest of the capacity then be available for the other markets in Europe and the rest of world.

In terms of the impact of a potential infant meningitis vaccine, first of all, we have a product in development for that. However, we believe that the toddler strategy might be the most appropriate one for a couple of reasons. One is the complexity of the immunization in the first six months of life which is at two, four and six months. Today the children are receiving anywhere from six to nine immunizations or -- in that period. And a toddler approach would basically circumvent having to basically bring, add an additional shot or bring into play the concerns around the interaction and safety associated with multiple immunizations.

So we believe Menactra is going to be very competitive should an infant product become available somewhere in the future in the U.S.

So for AVE5530, so we got a meeting with the FDA very recently and we were happy to see that in fact they were in agreement with our program which means that we will start the Phase III during 2Q, 2008. And we will do it independently.

Can we have the next question please.

Certainly. Our next question comes from Graham Parry with Merrill Lynch. Please go ahead.

Thanks for taking my questions. I've got four. Just starting on Dronedarone, your comments seem fairly inconclusive or mixed on the product. In the press release you're indicating the product could be filed by mid- 2008. So my question would be would you actually file if you got no mortality benefit in the ATHENA study, but also there is no adverse mortality affect and just try to get approval on the basis of the [Iridous] and ADONIS? And have you discussed with the FDA the acceptability of such a filing? Also, could we expect a press release on whether the data has met the primary morbidity/mortality endpoint when you actually do know this?

Second question is on S1, just wondering if you could give us detail on the design of the 1st line metastatic colorectal cancer study? Are you running this head to head with [Fiverfuel] versus Zeloda?

And thirdly, wondering why you discontinued the [Cyclezimide] combination. Was it an efficacy formulation or an economic decision?

And then finally, a question on operating margins in developing countries versus developed countries, if you could just give us a feel for how they differ given the increasing importance of developing countries to your revenue line? Thank you.

Perhaps I start with the question on the operating margin. The operating margin between those markets and other markets is comparable. You may see a slightly lower ex-factory price level but this is setoff, or not to say, modern setoff by usually lower overall cost into promotion and to a lesser extent also in administration. So our overall profitability between those markets and the advanced markets is absolutely comparable.

For Cyclezimide, I think it was perhaps Hanspeter can answer?

Yes, I think for Cyclezimide if you go back to the previous communication on the issues there was a first decision of Altana. It's a predecessor company of Nycomed, who had decided not to launch the product together with us. This again had then triggered our decisions that we also dropped out of this so the product consequently went back to Nycomed and Nycomed is now free to do with it. And as I recently understood in the process of doing something. The reasoning for former Altana and our reasoning has been clearly lack of commercial interest.

So for Dronedarone and obviously it created some misunderstanding so I will try to make it very simple. We have in fact two objectives with ATHENA. The first objective of course is to be positive on our primary endpoint and our primary endpoint is hospitalization for cardiac reason plus all co-morbidity. So this is the expected result for ATHENA. But at the same time because of [Andremeda] we have to show that we were not increasing the number of deaths with Dronedarone and it was something which was agreed with the FDA. So it is part of our communication.

Since the result of ATHENA not known at the present time, I think it's rather fair to put a conditional about the filing because of course if we are not meeting the expectation of the FDA, especially for the potential increase of mortality, the dossier will not be submitted. At the same time you can think that, but it's just a speculation. You can think that if we went so far we should be at least the close of the expected data.

For S1, capacity data is not registered in the U.S. in colorectal in first line so we have still the thinking to going against Fulfox.

Maybe we should take the next question from the Internet questions that have been submitted. So we will take the first of the series of questions from Tim Anderson of Sanford Bernstein.

His question is, can you tell us why Dianicline was terminated? Was it a safety or lack of efficacy or what exactly? And then the second question is on the cholesterol absorption inhibitor. Can you clarify what dose will you take to Phase III? Will it be dosed in the PM?

And then the last question is for Hanspeter, maybe we can take that afterwards. Marc?

So in terms of the dose, and it was agreed now, and it is agreed now by the FDA it will be 25 and 50 milligram PM.

In terms of Dianicline, it was a mix of class and no definite advantage before -- in front of the first in class which is [Veriniclin]. So it's mixed.

And the base business question for Hanspeter is, that with the large 8b a year base business? Can you comment on the future trajectory of this line? Will it likely to be flat, down slightly?

Well first let me go back to the previous situation. Pre-merger this was a business which was largely coming from previous Aventis which was decreasing by 10% per year and our concern was of course that this could not continue like this. I believe that if we continued to keep this business with a slight decrease in the neighborhood of a black zero or a little negative one-digit decrease of 2% or 3%, we do a reasonable good job.

Thank you. We go to take the next question submitted by [Tracy Vest] from Piper Jaffrey. And the question is for Wayne, it says, are you still planning to initiate a Phase III trial for the Dengue vaccine in 2008? Can you tell us more about your development plans for this product?

Our Dengue vaccine has passed proof of concept and is currently in Phase II. And the plans in 2008 are to expand upon the studies that are underway, I'm referring to the efficacy studies, and so we have probably another three to four years of a development program which should result then in the final license issue actually in Asia/Pacific and then ultimately in the U.S. and Europe.

Operator, can we have a couple of questions please?

We now move to [Michael Doistead] with Deutsche Borse. Please go ahead sir.

Thanks, this is Michael at Deutsche Bank. Just one question on Rimonabant please. The changes to the monitoring that you have agreed with the FDA and you're implementing in the diabetes program, was that in time that you can actually cover enough patients in the diabetes program to fulfill the FDA requirements?

To make it simple, yes, the answer is yes. You know, we have a rather extensive problem in the diabetes. It is true that the request of the FDA is quite important, but we still hope to fulfill all the requirement of the FDA for the diabetes part. It's not only for the diabetes program because, by example, all the suicide delegation, in fact it is for all the programs. It is true that we have also some specific requirements for the diabetes program.

And can we have the next question please?

Our next question will come from Louisa Hector with Lehman Brothers. Please go ahead.

Thank you. Firstly, on Lovenox, you sounded much more confident on the status of generics. I just wondered if there's been an update in your discussions with the FDA or if you're simply referring to the non-approvable letter that Momenta got last year? So any color that you could add there would be helpful.

And then just quickly on Taxotere, can you say anything more about the improvement in growth, where it's coming from both U.S. and ex-U.S. and is there any price component in the U.S.?

On the letter, first it's coming from all over the world. Lovenox is growing all over, all 10 markets where we have no price effect at all or even negative pricing effects if I refer to Europe where we continue to be in a relatively difficult environment in terms of price. Also coming from the affects that the competitors are generic.

The question on Lovenox we have no feedback from the FDA beyond what is in the public domain on the non-approvable. But we feel further to be reasonably confident by the recent publication which you will find also has a quote in our brochure by [Fari] and others, which is a summary of all relevant academic groups taking care of low molecular based Heparin and guidelines which is perfectly supporting the previous statement of the FDA indicating that there maybe intrinsic risks which have to be further studied and addressed.

And nothing new on the citizen's petition?

No.

Okay. Thank you.

Can we have the next question please?

Kevin Scotcher with HSBC has the next question. Please go ahead.

Thanks, a quick one. The income from Axinal, in the U.S., what was it in 2007?

Could you repeat that question, the income from --?

Axinel in the U.S. what was it in 2007?

As you know, the income is not derived -- I mean, is derived from the sales but we don't give out the sales. So it's certain -- same type of regime that global, worldwide agreement which includes all the region of the roving mix from another part. And the rest of the world from this part, so we have displayed so far the various component of the agreement. So well, let's say that it's not significant to the bottom line of the whole Group.

Thank you.

We are going to take a few questions from the Internet. The next one is from [Terril Vicroat] from Dresdner Kleinwort. And the question is what kind of efficacy did [Inopsaparen] show when compared to Lexapro in the Orion and clinical trials? Marc?

It was a little bit less than these two products.

And that's a very clear answer.

Next we will move on to another question by Tim Anderson from Sanford Bernstein. It's with regards to AV5026. And Tim asks, in your comparison to [Inopsaparen], at the 20, 40 and 60 milligram doses that showed better efficacy, there was more bleeding. Is this a potential problem?

I have a tendency to disagree. When you were mixing in fact minor and major bleeding on the AV5026 versus Lovenox and there was only one major bleeding with AV5026 at 20 milligram. The rate of bleeding was 20% to 30% less than the one with Lovenox.

And you need to associate that with a 60% prediction in terms of the [Novistrom] event because if you are doing up to 60 milligram you are going up to more than 90% of VTE reduction. But bleeding at 60 milligram might be a concern, not at 20 milligram.

Thank you Marc, another question from Tim on Saredutant. And he says, when you refer to the drug as a drug that modulates the stress casket what do you mean exactly?

That's an interesting question. I think that in fact you have a -- in the brain, but I think it's a little bit difficult to comment during this kind of teleconference. You have bigger effectors and serotonin wasn't the bigger effectors, [technical difficulties] big effectors events and after that you have system which is modulating this big effectors pathway. And in fact the neurokinenes, especially NT2 is modulating in fact this big pathway.

So Tim if you have further questions, when you see Marc next you can do that. And Natixis Securities, [Sylvain Goriane] has a question, for again, for Marc. He asks would you consider a development of Aflibercept in other neuro-vascularization conditions like acute muscular degeneration?

In fact for the [Pfizer] we gave back our right for a non-timing solution to Regeneron and so now Regeneron is developing it I think with Bayer, but that's another story.

So, Operator, can you take a question from the phone lines please.

We now have a question from Ben Yeoh with Dresdner Bank. Please go ahead.

Thank you. I was just wondering, where will we see the Saredutant data? You said it would be out in Q2 but would we actually see the data or the headline data at that time?

Secondly, on AVE5530, also I was just wondering if we're going to see the full Phase IIb data published anywhere or are we going to have to wait until some of the Phase III trials come out?

And then lastly, I was just wondering if there is any comments on the Plavix and Staten and A2 combinations that you're looking at? I notice they're still on track for filing in 2009. I don't know if you have any comments either on the patent situation or when we might see any data or any further information on those? Thank you.

I will start by the end. Plavix Staten, yes we are still on track for submission. It's not a thing that is brand new, but it's just the fact that more than 60% or 70% of the patients taking Plavix are also under Staten so we have a large database of the co administration of the two drugs. Just for convenience it is making sense of doing a placebo.

For 5530 I think we have been rightly open in terms of presentation of the result. The safety so far is excellent. The drug is not absorbed but yes, it is likely that we will publish the data before the end of Q3.

And for Saredutant, since the submission is expected in 3Q, 2008, it is likely that we will try to make a full presentation of the results at least around the submission of the dossier.

Thanks.

Wayne, can we take a couple of questions on vaccines?

Okay, I have a question here with regards to the role of Crucell's Percy 6 for Sanofi Pasteur. And Crucell is our partner in developing a cell culture influenza vaccine. The Percy-6 cell line is the first cell line, and the only cell line, that's been shown to be scalable to a 20,000 liter fermenter level. And this is important as it relates to developing a viable cell culture vaccine for flu because of the need to have reasonable cost of goods and because cell culture will be competing ultimately with egg-based manufacturing and cost of goods and selling prices, the critical variable.

You have another question Wayne, from Tim, again. He asks can you comment on your flu vaccine sales in 2007? They seem to be less than in 2006.

When comparing 2007 to 2006 there are a couple of things you need to know about 2006. In 2006 in the U.S. there was still a shortage of vaccine from the -- our competitors and the U.S. government asked us to extend our production season well into November. So we sold nearly 58m doses of Fluzone in 2006 and this is an unusually high level relative to historical norms. So in 2007 we produced 50m doses and sold the 50m doses. So that explains the decline in the U.S. on seasonal flu. However, we were up 10m doses overall because our sales of Fluzone outside of the U.S. and VAXIGRIP in Europe and International basically resulted in an increase in 10m doses.

And the other variable, in 2007 was that we sold EUR98m of H5N1 to the U.S. government and the contract with the U.S. government in 2007 for H5N was smaller than the contract in 2006. So all in all it was a, from our perspective, it was a good seasonal flu season for us, up 10m doses and the H5N1 business which is more opportunistic business for us and that was down because of the size of the contract with the U.S. government.

Thank you Wayne. We will take a few questions from the Internet before we close. So there is a question from Graham Parry at Merrill Lynch on ABE0010. And this question is what nausea rates do we have with this product? What doses are we taking into Phase III for the short acting version?

What is the dosing frequency of the longer acting version? And given the A1C drops that we've seen at ABE0010, they're not as impressive as the other GLPs but the weight loss looks good. Would you consider developing this as an obesity agent?

So, to start the dose is in the range of 20%. Knowing that it's a recall data, we are going to need a little bit more in the 30% range.

The dose once a day is 20 microgram. The dose of the long acting, the one which is expected, is once a week. We disagree about the weak effect of compound. Our compound has in our hands the same effect as the other GLP-1 which is in the range of a drug of 0.8 to 1% of HBONC.

The question of association is interesting so going for decisions as far as you know. But in fact GLP-1 can be associated to our drug of our portfolio. Was in Rimonabant in order to get the better control of HPNC or -- of HBA-1C, but at the same time also to increase the weight loss which might be interesting. And at the other end of the wrench, and in fact that Pierre mentioned it this morning, it can also be associated with Lantus. In fact, for presenting a little bit the weight gain with insulin and at the same time perhaps to allow to decrease the dose of insulin and to allow a better control of the glycemia, even if Lantus is already providing a very good control.

Following the answer of Marc Cluzel, we will close our International meeting. Just would like to thank you for your interest. Bye, bye.