Sanofi SA (SNY) 2008 Q2 法說會逐字稿

Good day and welcome to the second quarter and half year 2008 sales and earnings conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Sanjay Gupta. Please go ahead, sir.

Thank you, Jill. Good morning everyone. Thank you for joining us for Q2 results. We will be beginning with a slide presentation. The slides are currently available on our website and should have been emailed to you also.

Let me begin with the formalities. Please note that the statements made by the Company today would contain forward-looking information within the meaning of applicable securities laws. Such statements involve uncertainty and actual results could differ materially.

Additional information about the risk factors are contained in our Form 20-F and in the document of reference in France.

With us today to comment on the Q2 results are Mr. Hanspeter Spek, Executive Vice President of Operations, Wayne Pisano, Head of Vaccines, Dr. Marc Cluzel, Senior Vice President of R&D, Jean-Claude Leroy, Executive Vice President, Head of Finance and Legal and Laurence Debroux, CFO.

So with that, I will turn things over to Mr. Spek to comment on the Q2 activities.

Yes, thank you Sanjay. Good morning everybody. Thank you for dialing in so early. We will try to explain the results of the second quarter and the first half of 2008, which evidently have been marked by the dollar development against the euro, but nevertheless are rich in terms of results concerning performance, research and development, further achievements in external growth and finally also adaptation of our workforce to the new conditions, as summarized on page four of our slide presentation.

If you continue on page number five, you see then, first of all, that total sales at a comparable basis has been growing in the second quarter by 5.2% and for the first half by 2.9%. And if you compare with the other trends, as pointed out on this page, you see that there is everywhere an acceleration of growth, if this is for the base business, for the pharmaceutical trade or also for the vaccines.

In Europe we continue to see minimal growth, but nevertheless it's a little bit of a positive trend as well.

And in the United States we are back to our good growth of 6.6%. This is, of course, largely due to the fact that in the second quarter 2008 the negative effect of the off patent situation of Ambien IR now has been finally leveraged.

And here at the end of the page you see that rest of the world, which is being defined as everything outside of Europe and United States and Australia, New Zealand and Japan, has further accelerated its growth from 10.6% for the first half to 12% for the second quarter.

So overall we feel that, on a comparable basis, our sales performance in the second quarter has very much improved, partially as anticipated because of course you have been aware of the Ambien effect. But overall the sales had growth of 5.2%.

So business is growing nicely in line with the overall market growth of the pharmaceutical market, which currently is somewhere between 5% and 5.5%.

Now on the page six, the following page, you see where this growth comes from, as I said, minimal contribution from Europe, which is not a surprise. We continue, as we had the strongest and increasing contribution from the rest of the world part, which is growing by 12%, totaling nearly EUR180m of our total growth, now largely outperforming the United States as a contributor to growth. But nevertheless, and as mentioned before, the 6.6% from the United States, we consider as a good result after four quarters of negative growth.

On page seven you see the four major elements that performed in terms of sales. Yes, the leading five products continued to show a very strong performance, Lovenox plus 13% (sic-- see presentation), Plavix plus 13%, Lantus nearly plus 29%, Taxotere nearly 14% and Aprovel close to 15%.

Vaccines continued to do good. Again, as to this result of more than 10%, it's driven mainly by two elements, by not only Menactra growing nearly 22%, and the H5N1 product contract with the U.S. government contributed EUR124m to the sales results of the first half.

Our base business, representing more than EUR4b of sales is behaving well. On a worldwide basis it is a business which is stable.

Of course, if you look more into the regional distribution of sales, you see then that is a group of products which is growing nearly 6% in the rest of the world, 6% in the U.S. And it is decreasing, for reasons you are well aware of, by 4% in Europe.

Then on the lower right side of the chart, once again the contribution from the emerging markets, with 11.1%, nearly EUR3.2b of sales.

What are our positions in those emerging markets? More details then on page eight. As outlined before, we are in the good position of being the number one pharmaceutical company in those high-growth markets. Those markets contribute, in 2008 45% to the global pharmaceutical market, which means a growing share, but less than this part of the world contributes to the growth of our Company, as pointed out before, which is currently at 54%.

Our sales in this part of the world are today totaling 23% of our worldwide Group sales. And yes, they are resulting from a very well-balanced portfolio of products, so-called base businesses which representing about 46%, and the top 15 products representing 54% of the total sales in the emerging markets.

And as many times outlined before, we have allocated adequate resources to leverage the growth opportunities in the best (inaudible) as possible.

So second quarter also has been headlined by various opportunities and taking advantage of those opportunities of external growth growth.

On page nine you see a summary of our strategy behind our offer for Zentiva. Evidently we are attracted by the market from a geographical point of view, containing 456m people. This is a market where we already have a strong market position, with nearly EUR1b of sales growing today 11.8%.

We have a perfect (inaudible) of this Zentiva in those parts of the world. You see that we have already today, on the right side of the chart, relatively strong positions, between 4.1% and 6.7%. And, in combination with Zentiva, those positions would be, will be much stronger going up to nearly 15%. And, perhaps the most important in quantitative terms, Turkey. This 70m population gives an eventual market share of 8.5%.

We further see in Zentiva a good opportunity to continue to execute our strategy of a volume and a value strategy, which means a volume strategy based on affordable medicine on affordable prices, and a value strategy, of course, based on innovation driven by research.

Of course we are ready to give you more comments on the Zentiva offer during the Q&A.

So second opportunity for Pharmaceuticals during the second quarter has been the acquisition of Symbion Consumer business in Australia. This is a business which represented in 2007, as outlined on page 10, sales of EUR115m. The company is market leader in its segment, and its segment is OTC products and nutraceuticals.

We feel that we have a good opportunity, first of all, to further enforce our position as an OTC company in Australia. We further see synergies in the growing pharmacy business also for the prescription business. And last but not least we see a very, very good opportunity to expand this business coming from Australia, going to the other major Asian markets, such as of course China and the others in this part of the world.

We have discussed many times the opportunities in Japan. You look please then to page number 11. We have tried to realize also in Japan a strategy of external growth. We have realized that there is currently no attractive opportunity, which makes us then concentrate on our own opportunities, in terms of internal growth. And we are also content with what has been achieved so far.

You see that our Japanese sales in the first quarter has been growing by nearly 22%, EUR673m. And I kindly remind you that this first half has been also marked by a price cut, which was in average about 4% for the pharmaceutical industry, which brings our 22% even further up.

We are today the fastest-growing company in Japan with 14%, according to IMS, against the market of about 3.4%. All our products are doing well of course, headlined by Plavix. And I will go back to Plavix in a couple of minutes and comment more in detail on this product.

We feel that we have got on mid-term good perspective. During the first half we have launched two new products, Clexane during April 2008. And we have made a re-launch of Lantus, driven by SoloSTAR. And we see very, very encouraging first results from this.

Now focusing a little bit more on the major products, let me start then on page 12 please with Lantus. Lantus, as I said before, it's growing in the first half by 27%. And you see that this is a very strong growth on all parts of the world. Europe is 21% and the rest of the world is even 52%.

In the United States Lantus became the leading injectable inside the diabetes market. You see also there some more recent introductions of Byetta and Levemir have a more moderate performance than our product, which continues to be on a linear growth curve.

So this drives us then, as outlined on page 13, to our ambition to make Lantus from its today position, which is the number one worldwide insulin, to become the number one anti-diabetic product. We believe we are on a good way.

As you see we have improved our rank in this larger market of anti-diabetic products in the United States between 2007 and 2008, within six months, from the number three product to the number two product. Whilst in Europe we are already number one.

So what has to be achieved is to further improve our position in the United States in order to become the number one product, which we believe will be obtainable within the next, let's say, 12 to 18 months.

Why? Because we have good progress with SoloSTAR also in the United States, as you see then on page number 14. You see that there has been an immediate effect from the introduction of SoloSTAR also on the sales of United States. We have introduced this product in the third quarter 2007. And I believe that the figures speak for themselves.

Worth to be noted that we have had a positive achievement yesterday in obtaining another victory in a legal battle against Novo Nordisk. You may remember that Novo Nordisk had made an appeal towards Novo's -- towards SoloSTAR from a patent point of view. This appeal has been rejected by an American court yesterday. So we feel that also, from this point of view, the position of SoloSTAR is more and more confirmed.

Besides SoloSTAR the second most important growth driver for the excellent development of Lantus is our achievement from newly insulinized patients that you see then on the right side of the chart. While those patients have contributed to the product before 42%, they are now contributing 52% of sales, which of course gives also a good mid- and long-term outlook for the further growth of this product.

On page 15, Lovenox. Lovenox in this quarter, in the second quarter or in the first half, needs some additional explanation. You may be a little bit disappointed when looking to the growth for the second quarter which is only 4.6%. But we have to be very clear. We have a strong technical effect in the Lovenox sales figures coming from the heparin crisis which developed in the first half of 2008 in the United States, but also outside, which led to anticipated sales in the first quarter.

So the overall growth for the first half, 12.9%, we feel is really good growth because very much line with, for example, the U.S. prescription rate, which is around 7%, 8%.

And if we take the anticipated sales out for the first quarter, we see a total linear growth of this product in the United States, but also outside. And I feel that this is nicely outlined on the right side of the page, where you see the growth of medical patients in the United States. And you see that there is a very linear growth pattern, even with a certain acceleration during the first quarter, as the chart outlines.

I am sure that during the Q&A we will discuss what may be upcoming competition for Lovenox. And we are ready to do so, of course. There is in the environment an important event, from our point of view, which is the fact that in the EMEA will issue guidelines by the end of 2008 around the question of biologicals and the need for clinical trials for low molecular weight heparin applications, which we feel will give a certain additional guideline also for the further attitude of the FDA in this respect.

Plavix, the second leading product of the Group, very nicely growing with 21% in the first half, as described on page number 16. There we have to reverse effect because in the sales, and the basis of the sales of Plavix, we still have 2007 with the known appearance of the generic from Apotex. If we make the same exercise that's done before for Lovenox, then we take those effects out, we have again a linear growth for the two quarters between 12% and 13%, which once again is being confirmed by our success with sales in the United States and outside.

Worth mentioning that we have a rather unreliable situation coming from IMS. IMS data in the United States is giving the wrong signals. You see in IMS close to zero growth. IMS has confirmed those figures are evidently wrong because there is a data issue for IMS, mainly coming from the mail business which has been underrepresented. So we don't look too much today to the IMS figures, but more to our ex-factory sales which are absolutely stable. And in the United States, as you have probably read in the report of Bristol-Myers who is our partner, growing nicely, above 12%.

The growth of the product is supported by the launch of the 300 milligram tablet form, which has started in Europe, the UK and in Germany. And we will expand this launch, which is an important launch, especially in the environment of standing and acute coronary syndrome. We will expand this launch to more than 20 countries by the end of the year.

I have the opportunity once again to make a reference to Japan on this page. As you see, we have obtained nearly EUR75m sales in the first half with Plavix in Japan, which means that the product really is on an excellent way.

We hope that there is more good news to come from two major studies within life cycle management, Active-A and Current. Current, the study of course important also in the context of [party sales], but I'm sure we'll come back to this during the Q&A.

On page 17, we try to give you some information on the potential of Multaq. Multaq, dronedarone is the generic name, has been filed with the EMEA and with the FDA in June 2008.

We are targeting here a market of approximately 6m patients. And this market can be roughly segmented into those patients who had first episode, and those patients represent about 68% of those 6m. And other patients, the so-called permanent patients, where the antiarrhythmic situation of the heart continues despite intervention. And those patients represent about a third of the 6m.

Then within those groups we have patients where the aim of the treatment is to change the rate, and other patients where the aim is to change the rhythm and the rate. And as you see simply from the chart, the first group represents about 56% and the second one represents about 44%.

So our strategy will aim to first attack the group of first-episode patients. And only in a second attempt to target on the permanent patients. We are optimistic that we have an excellent product for doing so. We believe that this is the first real breakthrough in this indication since more than 25 years, to be precise since Amiodarone.

We are the first product having really delivered hard data, hard end-point data in terms of cardiovascular hospitalization and death which has reduced, as you know of course, by 24%. And we have a product which is extremely safe compared with the other products in this market. And we go into a market segment which has a heavy burden of disease. The burden of disease of course in the United States, we estimate at $16,000 per patient per year.

So we are in intensive preparations of pre-marketing for this product. And we estimate that both agencies will come to a decision during 2009. And in consequence of this estimate, we prepare for launch.

Last but not least, what we continue to do was, in the first half of 2008, to adapt our structures to the new market conditions. We work intensively of reviewing our business models. We do this in line with our overall strategy, as outlined before to polarize this market and adapt our organization into a value and into a volume segment. And we differentiate from a geographical point of view. We invest there where we see opportunity, and we reduce our investment where we see no real opportunity or less opportunity. And this has been outlined on the right side of the page.

We do this with quite some effect. You see that the overall headcount of pharmaceutical operations in North America and Western Europe over the period January 2006 until April 2008 has been significantly reduced by approximately 4,000 people. And in the same period of time we have increased the headcount by approximately 2,000 people in the segment which is defined as the rest of the world.

To finish, of course we have also adapted our collaboration between marketing and research in redefining what our future products will present, in terms of value proposition. Of course this is a mid- and a long-term exercise. But also there we believe to be on a good way. And Marc Cluzel will report on this to you later.

So, so far on Pharmaceuticals -- on our pharmaceutical operations side. I'll pass on to Wayne Pisano to report to you on performance of vaccines in during first half. Wayne.

Thank you, Hanspeter, and good morning everyone.

Q2 and the first half was an eventful quarter and half for the Vaccine division. If we go to slide 20, the work done in the first half of the year has resulted in an offer to offer Acambis, which is a biotech firm based in Cambridge UK, with most of their operations are in the East Coast of the U.S. This is an organization we've had a fruitful partnership with over the last decade. And it's a logical next step in our relationship is to bring Acambis into -- inside the Vaccine division of Sanofi Pasteur.

There are multiple drivers on the value of this. Foremost is the pipeline of Acambis is complementary to the pipeline of Sanofi Pasteur. They have two early stage projects, one clostridium difficile. As you know, is a nosocomial infection. It's the number one nosocomial infection and it affects about -- there's 500,000 cases annually in Europe and North America. There's relatively high morbidity associated with this.

The other project is an M2e, which is known as a universal influenza A vaccine. And this would be complementary to our seasonal trivalent vaccines and would be foremost targeted to the elderly population who need better protection.

From an industrial affairs perspective, while we were able to bring our expertise to the two facilities in the U.S. to optimize them, which affects the launch of both the Japanese Encephalitis Vaccine and the West Nile Virus vaccine. From an R&D perspective this will add a fourth research center to the Sanofi Pasteur research group. Clearly the Acambis group is known for their innovation. And so by coupling their innovation with the development expertise of Sanofi Pasteur, we believe we can accelerate the development of products in the pipeline.

We also basically will be bringing their ACAM2000, which is a smallpox vaccine, coupling that with our H5N1 business with the U.S. government to basically strengthen our overall position in terms of U.S. government relations as well as bio-defense.

And finally there is a ceiling reduction in royalties associated with the partnership on West Nile Virus, Japanese Encephalitis and, to a lesser degree, on dengue.

If you turn to slide 21, here we're reporting the sales for the first half of the year. As expected, the second quarter was a very strong quarter for the vaccine division. Sales were up 17%. So overall for the first half year they were up 10%. The main driver is influenza. We had a good southern hemisphere season in the first half. And the main growth driver was the H5N1 contract with the delivery of the vaccine in the second quarter to the U.S. Government.

Menactra, as Hanspeter referred to, was up by over 20%.

And our joint venture which is not consolidated on sales, this is Sanofi Pasteur MSD, sales were up 60%, the main driver being the continued uptake of Gardasil across Western Europe.

If you look at our Polio, Pertussis Hib business, it looks rather modest, only $4m. However we expect a very strong second half for a number of reasons. If you go to slide 22, the main driver of the growth in the second half will be the introduction of Pentacel in the U.S. Pentacel was licensed on June 20 by the FDA. This is the first five-in-one paediatric combination that combines not only diphtheria, tetanus, pertussis, IPV and now Hib. This is the only Hib paediatric combination in the U.S. This has been the standard of care in Canada for the last 10 years. So it has a very strong track record in terms of efficacy and safety. And there's clear benefits for the patients, in terms of shock reduction. And from a physician's perspective it's an ideal bit to the U.S. immunization schedule.

On slide 23 this is the current U.S. immunization schedule for paediatrics. And you can see that in the primary series, which is the two, four, six months schedule, with boosters given between 12 and 18 months of age, DTaP, Hib and IPV are basically the standard vaccines that are administered. So Pentacel is the ideal combination. And this will allow physicians to have the flexibility to administer hepatitis B in the hospital at birth, which is the preferred way of administering hepatitis B in the U.S.

Going to slide 24, the product was launched actually a week and a half ago in the U.S. Post licensure, the Vaccines for Children program, which is the top accepted program in the U.S. that basically accounts for 60% of the volume in the U.S., approved the product to put into the program. Early indications that there's a strong preference for this pentavalent vaccine. In terms of the target market, this is a four dose product that basically targets 4m birth cohorts annually. And clearly Pentacel will strengthen our leadership position in the U.S. marketplace.

Going to slide 25, this is addressing the influenza campaign for 2008. As I already mentioned, we had a solid southern hemisphere campaign in the first half of the year. This is an unprecedented year for the industry because the FDA and WHO have changed all three strains. That has never happened before. So it creates some variables in the manufacturing that is basically challenging everyone in the business. I'm glad to report that our production schedule is on track and on target. We expect to deliver 150m doses or more for the northern hemisphere campaign.

We do expect a strong performance in the U.S. We had a very strong pre-booking season, where physicians and healthcare providers basically put a reservation in for delivery of vaccine. We received a license for Fluzone two weeks ago in the U.S. It's the first product that's been licensed this year for the northern hemisphere campaign. And our first two lots were released by the FDA last week. And we shipped product yesterday to healthcare providers. So this is the first delivery of vaccine in the U.S. for the industry.

Going to slide 26, I know there's been a lot of discussion and concern about potential oversupply of vaccine in the marketplace in the future. We believe there is still significant growth opportunity in the influenza marketplace. Several things have occurred in the U.S. to basically take advantage of the increased capacity. First of all the ACIP is now recommending vaccine for all five to 18 year olds. So the target population in the U.S. is in excess of 200m people. The CDC and ACIP intend to move toward a universal recommendation where they will recommend everybody in the U.S. be immunized in the future.

Additionally we have a number of projects in our pipeline which are innovative improvements for the influenza vaccine. We have a product that has improved formulation, which is a high-dose product, which is targeted at the elderly. The elderly do not get as good a protection as healthy adults because their immune system basically is compromised due to age. And this product basically ahs shown an increased immune response compared to the standard IM products that are available. We'll be filing for this product in the next several months and expect to launch it in the second half of 2009.

Additionally we have an intradermal vaccine that basically has been filed in the EU and will be filed next year in the U.S. This is a product that will increase immune response, as well as provide convenience and reduce the discomfort for patients receiving the product.

Going to slide 27, we're addressing here Menactra. We had a very strong first half of the year, up almost $50m, or over 20%. By the end of 2008 we would expect that over 50% of the 11 to 18 year olds in the U.S. will have been immunized. Today the recommendation is for all 11 years old and college-bound students to be immunized with Menactra. And then the age groups between 11 and 18 are called the catch-up marketplace. And we would have basically achieved immunization over half of those patients by the end of this year, which means that future growth drivers for Menactra will come from other indications beside adolescence.

Menactra is indicated for the two to 10 year old. And we will be basically completing our -- actually we have completed our enrollments for new indications for toddler.

And if we can go to slide [28] you will see the opportunity for an infant toddler product. This is a two-dose product that would be administered at nine and 12 months of age, and will provide full protection by the child's first birthday. It requires fewer injections than a typical primary series vaccine, which would be three doses plus a booster. Therefore there's clearly a lot of benefit associated with this. We've completed our Phase III enrollment and expect to file for this product in the first half of 2009.

So on slide 29, in summary, we had a strong sales performance in the first half of the year in the Vaccine division. We have licensed Pentacel and have launched it two weeks ago. Flu production is on track and we expect a strong year in the northern hemisphere campaign. We will be filing in the next couple of months for the improved formulation of Fluzone in the U.S. And we expect another strong year from Menactra.

So thank you. And I'll turn it over to Marc Cluzel for an R&D update.

Hello good morning. So since it is page 31, since it is a little bit more than the mid-year, it seems interesting to make an evaluation of our potential submissions for 2008. So as you have seen from the communique, we have already one product down, which is S-1, and the press release in early July, because of the failure of the (inaudible). And it was inducing a kind of difficulty as a product in the U.S. for [those indication].

At the same time we have also decided to stop Amibegron. In fact it was despite a strongly positive study in maintenance. But, as we have already said, we had a safety hepatic signal. We are not about to clear with the study, this hepatic signal. And we decided that it is [in Europe. And Europe market] it will be very difficult to market this drug.

At the same time we have two products which are ongoing to be submitted this year. For Multaq it is already done, as said by Hanspeter. And for Eplivanserin it will happen during the fourth trimester of 2008.

We have two products which are, I will say, delayed. One is VEGF. There is another slide on VEGF, so I will explain our strategy on ovarian and ascites and at the same time on the other programs.

And for Saredutant, in fact the maintenance study was not fully positive, so we have to wait now for the research of the [ADaM] therapy and as you will see, its results should come the turning of the year.

So going back to Multaq, I think I think Hanspeter gave a lot of explanation about that. From just the traditional point, we had better (inaudible) of course. And in terms in fact of clinical trial, ATHENA is within the five top clinical trials in terms of both absolute (inaudible) reduction for morbid mortality. So I think it's interesting to be noted.

At the same time we continue -- we submit of course in U.S. and Europe, but we continue to expand the registration. So there is eight additional countries to be done before the end of this year.

And, at the same time, we have a lot of very interesting data about morbid mortality because for example hospitalization is interesting but the duration of hospitalization is also very interesting, effect on stroke also. And so we have an extensive program of communication in order to better understand the product at the European Society of Cardiology, but also at the AHA.

So going for idrabiotaparinux, you know that in idrabiotaparinux we have the bridging strategy with idraparinux. So one part of this bridging strategy was to compare idrabiotaparinux to idraparinux in DVT study. Just for your information, to remind it to you idraparinux in DVT was better in terms of efficacies anti-vitamin K and also better safety profile than anti-vitamin K.

So the first slide, slide 33 is showing that, in terms of efficacy and safety, we are comparing on the better side versus idraparinux. Since it was not the primary endpoint, we will take it with some of cautious -- we will be a little bit cautious. And we'll do confirmation of this good result with Cassiopea which is the next study in pulmonary embolism.

When you are going -- page 34. So it was really the true primary endpoint. As you can see we are fully, on the left side, we are fully bioequipotent in terms of anti-Xa activities with idraparinux. And at the same time, and it was in fact at the origin as the main purpose of the campaign, when you administer Avidin even as after six months, you have a (inaudible) of the Xa activities.

So as I told you the Phase III program is ongoing. We have a little bit more than 50% patient on roll for Cassiopea. It is a difficult study to be performed, but we continue the recruitment. On a trial fibrillation the study is already starting. And it is a [major] study in terms of the recruitment. So the study is going very well, the recruitment at least. For -- and then submission is scheduled for the first semester of 2011.

For Aflibercept so VEGF Trap. You have seen that we missed slightly the primary endpoint for registration based on the response rate in the third line ovarian cancer. But at least -- but at the same time we have very consistent result in terms of CA-125 between the population taking two and four dose.

So we continue to discuss at the FDA. Also I would like to remind you that we have a 70 -- more than 70% disappearance of ascites. And you know that we are also doing study in ascites. So it's difficult at the present time to say exactly what will be the outcome of the discussion with the FDA on both third line ovarian and ascites. But we are continuing to push our case.

What is interesting, there was a lot of discussion at the last call following the respective safety profile of VEGF and Avastin. At least what we can say that we have with VEGF at the dose tested, the same profile in terms of the [such events] as a class which is hypertension and proteinuria.

In terms of gastric or GI perforation, which is one of the [frame] of the class, we have less GI perforation than Avastin. I will say at this stage -- I will agree with some of you saying that at this stage, since there is no direct comparison between Avastin -- actual comparison between Avastin and VEGF, the safety and efficacy profile at the present time can be considered as comparable. Of course it might change. It might change when we're going head to head versus Avastin.

At the same time we have a very large program in oncology. So page 37 if you may. You have the four main studies and program listed. At the present time I think it's interesting to know we have more than 1,000 patients registered in these different studies. And also what is interesting, we have so far no safety signal. And the different data, safety monitoring board are, in the different study, continuing saying that we have to continue the study without to adapt the regimen, which in oncology is a good sign.

And I just spend time going back to a head to head comparison versus Avastin. We are starting a pilot study in first line in order to see what is, in this specific setting, the respective advantage of Avastin versus VEGF.

So for Saredutant as I told you, we missed shortly the maintenance efficacy in a trial in MDD. So we are now waiting for the combination program, with the result of the first study at the turning of the year and the result of the second study, first semester of 2009.

Page 39. We will not comment the recent vote by the (inaudible) committee about the need to perform cardiovascular study in a diabetes patient even without any kind of cardiovascular signal because it's a little bit difficult to predict at the present time what will be the true outcome. But I think it's interesting to know that for Lantus we have already ongoing cardio-morbidity trial with cardiovascular endpoint which will be finished in a year. And the same of course for Zimulti Acomplia you know that we have the [questionable] study with the result of the study in 2011.

At the same time, you have seen that there is a lot of -- a little bit of change within the portfolio. So the number of products into development was partly reduced. It's to take into account the new development. But at the same time, in terms of late stage product, we have made some good progress. And here is highlighted, page 40, the six program which are already -- which are started or in fact, in the case of teriflunomide, the recruitment is finished now for the first pilot of study.

So AVE5026 we have started the recruitment for the seven Phase III studies.

For AVE0010 we also started the program. I will not comment the program because it was done in the previous -- I think it was shown in February.

For cholesterol absorption inhibitor we have also started the study. We are already in sarcoma with our vascular disrupting agent. And we have also started the recruitment for our gene therapy in peripheral arterial disease.

And as I told you before, teriflunomide the first pilot and Phase III study the recruitment is finished.

So it's my pleasure to introduce Jean-Claude Leroy.

Thank you, Marc. Good morning everybody. Let's move now to the financials. And I will dedicate a part of my time to comment on our Q2 figures and a part to illustrate the profitability of some key assets that have been presented to you by Wayne and Hanspeter and in Vaccine base business and emerging markets.

So first Q2 achievements. We are on page 42. Starting from minus 3.6% at the sales level, we come down to a plus 3.1% at the operating income current level, meaning a good leverage during this second quarter.

Another way, probably a better way, to show this is to compare sales growth on a comparable basis, which is a little bit over 5%, plus 5%, to operating income current excluding selected -- sorry, excluding exchange rate. And, as you can see, this is plus 14%.

Excluding the negative selected item in H1 of 2007, we're still comparing 5% in sales to 11% growth at the operating income current level.

Next on page 43, as you can see a strong effect of the exchange rate during this period. Importantly Q2, during Q2 the U.S. dollar is responsible for 75% of this [6.5%] negative effect when during H1 U.S. dollar is responsible for 80%. This means clearly that during Q2 currencies other than U.S. dollar dropped rather sharply against euro.

As regards the changes in the Group structure, this is the first quarter we do not consolidate any more sales of Copaxone in North America.

Moving to page 44, a few words on the top part of the P&L. As explained earlier, the end of the commercialization of Copaxone North America has a favorable impact on the cost of sales.

R&D is increasing by 3.4%, excluding exchange rate effect, a little less than during Q1.

Coming down to SG&A, once again it decreases. The rate -- the ratio to sales is down by more than 1% over the first half of the year. And we are once again among the very best performers in our industry.

As a consequence, we gained 2 percentage points over last year, at 35.9% at the operating income current ratio to sales.

Page 45 net financial expenses, excluding the Millennium gain, the shares we had in Millennium after the offer of Takeda, we are showing heavier net financial expense during the Q2. This is mainly driven by the decreased remuneration of our positive treasury position in U.S. dollar in the United States.

Income tax, as anticipated our tax burden decreases this year below 30%.

Coming to the share of profit of associates, it increases in real terms as Plavix and Merial are growing. But the translation into euro offsets almost all of these improvements.

All in all, adjusted net income at EUR1.6b is down 4.4% and corresponding, EPS down by 0.8% at EUR1.23, burdened by selected items this quarter.

Moving to page 46 under the selected items, as you can see we booked in Q2 close to EUR150m of charges net of taxes, first on restructuring in France and other countries in Europe, such as Italy and Spain. We also booked impairment on intangibles, such as the Trovax and S-1 projects.

From the first half perspective now, the difference is rather important, since we're talking about a charge of EUR168m in '08 when we had a net profit of EUR146m in '07, mainly driven by resolution of tax audits.

So now we can come to the adjusted net income excluding selected items. EPS is at EUR1.34, up 3.9% over Q2 of '07, and equally importantly up 20.7% in dollars. At the first half level, EPS is EUR2.77, up 2.6%, and 18.1% in U.S. dollars. This performance expressed in U.S. dollars compares very favorably with our peers.

A few words now on the cash flow statement, page 48. As you can see, with EUR2.5b this first half delivers a free cash flow before dividend and share buyback which is comparable to the one of the first one of '07. After having spent EUR1.2b to aid a EUR3b share repurchase program in May, and therefore the dividend, obviously the first half show a negative position of EUR1.4b, leaving the net debt position at EUR5.6b, a level which is equivalent to the one we had at the end of the first half of 2007.

After these first half results, we decided to increase our full year guidance by 1 percentage point, from around 7% to around 8%. Obviously we're still talking at constant 2007 euro dollar parity. I remind you it was $1.371. And I can give the following information coming from a Plavix Europe situation. The impact of the Plavix event, which occurred recently in Germany, has obviously been taken into consideration when revising this guidance.

I said at the beginning I would be giving some information to better illustrate our strategy. I will begin with vaccines. And in this slide, slide page 40 (sic -- presentation) you've got two kind of indication. The first one which is the structure in itself of the P&L of the Vaccines business. And as you can see, when you compare to the global P&L of the Company, and express as a percentage to sales, you'll see a lower gross margin, an equivalent R&D level, and lower SG&A.

The second information, obviously, is the profitability, which reaches over 19% on sales in the first half. And I have to remind you that the second half of the year is traditionally more important in sales partly because of the seasonal flow. And therefore the profitability ratio will also be higher, bringing on a full-year basis, a profitability which is highly comparable to the total Group's we are delivering.

Moving now to page 51 and also referring to 52, I'm going to talk about base business and emerging markets. These two slides are dedicated to show the weight and the profitability of these two main components of our strategy. Base business first, around EUR4b, or you recall, as Hanspeter mentioned, 30% of the sales in H1 '08, showing only a small decrease, but more importantly showing a good profitability ratio, 40% to 45% of net sales when the total Group is around 55%.

Now with this level of profitability, I'm referring to the 55% for the Group or 40% to 45% for this business, corresponding to operating income current, before global R&D and central G&A, but including associates and minority interest. I am sure you can better appreciate with this kind of figures why we are so eager to keep our base business.

Moving to emerging markets, now on slide 52, we've been insisting a lot on this area where we are investing. [The Europe] represents EUR3.2b itself in the first half, 25% of the global sales. And Hanspeter showed that the portfolio of this market was roughly divided by two, between top 15 and base business.

What we show here is the profitability of these emerging markets. And as you can see, it's around 45%, once again when the total Group, following the same definition, is around 55%. So not only are these markets dynamic, but they're also profitable.

So as a conclusion on this second quarter we can say that it was a good illustration of the way we pursue our strategy. Despite further deterioration in currency environment, the Group delivered another quarter of solid growth in adjusted EPS, excluding selected items. It was supported by the performance of key assets and based on selective resource allocation.

At the same time, R&D moved forward. We submitted Multaq to the FDA and EMEA. And Pentacel received its license. And we've taken external growth initiatives to express or reinforce our position. So I guess it's a good illustration once again of our strategy.

Thank you very much. And we can now give you the floor for the Q&A session.

Thank you gentlemen. The question and answer session will be conducted electronically. (OPERATOR INSTRUCTIONS). We will take our first question today from Charles Chugbo from Morgan Stanley. Please go ahead sir.

Hi. Actually it's Paul Mann here from Morgan Stanley. I've just got one quick question. I'm looking at slide 28 at your Menactra. And you're highlighting the opportunity when immunization's at nine and 12 months. Now 2010 some of your competition are going to be trying to get vaccines approved for the two, four and six months immunization schedule. And clearly that's when meningococcal infection is most prevalent. So help me understand why someone would use a vaccine at nine and 12 months?

Also perhaps you could also explain how you intend counter-detail against the data presented in Hawaii comparing Novartis Menveo to Menactra?

Okay. I guess there is a number of questions there. And, first of all, I don't want to comment detail on Menveo. But then I would encourage you to go back and look at their filing plans because, like Menactra, they will be filing for multiple indications over multiple years. It is our understanding that their file is for the 11 to 18 year old age segment, as opposed to the full file that you're referencing of primary series. But that you can talk to Novartis about.

In terms of the first year of life, there are two serotypes that are most prevalent. And that's serotype B, which today there is not a vaccine for, and neither Menactra nor Menveo addresses serotype B, and the other is serotype C. So those are the serotypes in the first year of life.

Any vaccine that's given in the primary series, defined as two, four and six months, does not provide full protection until at least six months of age, which is why the two, four, six months plus a booster given at 12 to 18.

So when you look at both the level of protection, as well as the cost associated with a four dose schedule versus a two dose schedule, the policy makers basically are going to have to look at their options. And we think that they will allow healthcare providers to choose which product they want to use to provide the level of protection for the first year of life. Given that at nine and 12 months -- you'll have full protection by 12 months of age with a -- at least half the cost and half the [shot].

In the U.S., the serotypes W135 and Y become more prevalent after the first year of life. And that's where the quadrivalent, basically what they've given in the primary series, 9 and 12, 11 years of age, basically meets the need for those serotypes.

In reference to the comment about the data presented by Novartis on Menveo in comparison to Menactra, first of all we've not seen their full database. So it's difficult to make an accurate comment on the database.

The one thing we can tell you is that in our clinical studies, which are over 10,000 patients, Menactra has provided 98% to 100% sero-conversion and protection against bacterial meningitis. So seeing a higher immune response in another product or in another study, the question is what additional level of protection will you get compared to something that's providing 98% to 100% efficacy? So its immune response doesn't necessarily translate into better efficacy. I think that's data we get to see from the Novartis product. And again, with Menactra providing 98% to 100% protection, there's not a whole lot of room for improvement there.

Thank you. And also perhaps you could just talk about whether or not you're seeing issues in terms of filling your flu vaccine yet? Maybe you've actually started filling your vaccine for the upcoming flu season.

And also could you talk about the capacity expansion you expect for Menactra in your EU plans?

Okay. Okay. So it's flu -- in terms of flu, Fluzone which is produced in our Pennsylvania facility has received its license. The first two lots have already been released by the FDA. And we actually shipped those lots yesterday.

So we've begun the -- not only the filling of the product, we've actually begun the distribution of the product in the U.S. And it's like a pump. When you prime the pump it starts to flow. And the product will now flow. We expect to deliver virtually all of the product in the U.S. by early October.

As relates to our manufacturing facility in France, which is Val de Reuil, which delivers for Europe and most of Asia, there's different licensing requirements for the EMEA. So there are clinical studies required for licensure of any vaccine that's distributed in Europe. And so it's a longer timeline until licensure. We're on track with our production in Val de Reuil, and would expect to begin having the product shipped as early as late August. And we think that's comparable to what the other manufacturers have.

So, at this point, the prognosis is very encouraging for the northern hemisphere campaign. It's -- with the flu business, until the product is produced, filled, distributed, there's multiple steps to moving 150m doses in a 12 week period. So it's a little premature to conclude how the season will end, other than all signals are very positive right now in terms of what's going on in the U.S., where we're licensed and shipping, and in Europe where basically yields have been good.

As relates to the question on Menactra for Europe we're in discussions with our joint venture, Sanofi Pasteur MSD, in terms of the registration strategy for Europe. This will be -- the registration will be coupled with the licensure of the new facility in Pennsylvania. And that facility is expected to be licensed by the end of 2009, allowing us then to roll out the licensure of the product around the world.

Okay. Thanks very much.

You're welcome.

Thank you. We'll take our next question today from Kevin Scotcher from HSBC. Please go ahead sir.

Hi. Thanks very much for taking my questions. My questions are firstly on Germany. Two questions. One is, can you go through what is happening to the [title] of products there with increasing commoditization of generics.

Secondly, has there actually been a launch of generic Plavix yet in Germany?

Well on the more general products, your questions, I believe, unfortunately, that there is very little light on the -- positive light on the German market. All the negative trends continue. The hurdles in terms of access increase. If you look to the latest development on (inaudible) and the comments from the Health Minister on the way (inaudible) works.

If you look to the continued increase of the importance of contracts between the (inaudible) and the manufacturers which of course has again a negative -- regressive effect on the overall prices. So I'm sorry to say, but I see no positive signal for the German market as of today.

Now on the more specific question concerning Plavix and its competitors, it depends how you define is a competitor on the market. From a legal and regulatory point of view, the answer clearly is yes, because [Cologne] has confirmed the market authorization for two products one of CP, which is a subsidiary of [Avatzer Pharm] and the other one for Sandoz. So legally those products are on the market.

If they are physically on the market I cannot confirm, because there is a need to register those products in a public list in terms of price and pack sizes and so on and so forth. This will only appear August 15. And we will see if -- when those products will be made available.

What we hear today is that there is pre-selling by both companies by Sandoz and by Avatzer Pharm CP in the market in anticipation of such publication as of August 15.

Thank you.

Thank you. We'll take our next question today from Tim Anderson from Sanford Bernstein. Please go ahead sir.

Thank you. A few questions. So just more on Plavix in Europe, can you give us an idea of what we should expect in 2009 for European sales of Plavix? It's an important franchise. And I don't think there's much visibility beyond what may happen in Germany. So what other countries might fall next, for example?

And then two questions on your pipeline. One question on your cholesterol absorption inhibitor. You talked about four Phase III trials. Are any of those active competitor trials, so head to head trials, versus another cholesterol reducer?

And then on Multaq, launching that product, does that require you to hire a significant new sales reps? If not where will you pull those reps from?

I think I may start with Multaq and sales reps because it's the most easy one. No. There will be no need for additional sales reps. First of all, we believe that the Multaq approach will be rather selective approach, at least at the beginning, which means we will largely of course target on internists and specialists in charge of vascular medicine.

Second, we have a lot of synergies with our existing portfolio, if you think about Plavix or of course the other products like Aprovel, where we see those target groups anyway.

And yes, of course, thirdly the product will be a relief also for products which have lost their patent protection during 2007 and during 2008.

So once again there will be no increase in terms of headcount.

Now the future of Plavix in Europe, as you see it's really not possible to give an outlook for 2009 here today, in the mid of 2008. But nevertheless I think it's worth to recall what are the most important elements.

The first element, and that's the one that we are still fighting for, is the fact that we believe that the registrations given by the German BfArM are profoundly illegal. And we will continue to fight for that. And in this light we have made an appeal. And we have activated the European Commission and we have activated other means, because we feel that BfArM had no right to work on these files during the period of data protection which just ended a couple of days ago, July 15.

Now that's the first issue. And this of course is, time-wise now, over because evidently we are at the end of the month and at the end of data protection. But, of course, there continues to be protection from a patent.

Now the second aspect of the German situation is that those companies have made registered a product which is a different salt, using a registration process which is not a typical generic process. So there are numerous consequences from this -- despite the fact once again I would (inaudible) continue to believe that this is illegal -- one of the consequences is that those products have a different scope of indications, because the products approved in Germany cover only the indications as given by the first landmark trial for Plavix, which was [copied] or negatively formulated. Those products have no indication today, in the major indications of Plavix today, which is for example [standard] and acute coronary syndrome where we realize the large parts of our sales.

Second there are very different attitudes towards the question is a salt equivalent to another salt within the European community. We have of course carefully investigated this with various authorities inside those European markets. We have a total nihilism in the newer member states like Poland, where we have today already generics of clopidogrel on the market coming from Eastern European companies like Krka.

And there is the German attitude, which you are aware of, which is more or less the same, let's say, from Portugal. And there are more or less strong reservations for this equivalence of different salts coming from major countries like France, the United Kingdom, which is clearly refusing it, and also Spain, but also the United States where the FDA has a very clear stance in saying there is no possibility to make a transfer from one salt to another.

And of course this is a battle which will continue. All of this to tell you that for us today it is impossible to give a precise outlook for Europe. But I am cautiously optimistic that there will be no overall acceptance of the German situation in this respect.

I think there was a question for Multaq sales force?

So I think there was a question for Multaq (inaudible). So now for 5530 I think we have already shown during our Phase IIB, that (inaudible) efficacy it will be difficult to beat the competitor in the market. We shall be comparable. We might have an advantage in terms of safety because the product is less absorbed than the competitor.

And at the same time we think that in terms of differentiation we have to -- what we have to look for is cardiovascular outcome of cardiovascular events. And so we are planning some study. We do not believe that the initial study (inaudible) in terms of cardiovascular outcome are truly reflective of the (inaudible). So it's one point where we want to make a difference.

Thank you.

Thank you. We'll take our next question today from Sebastien Berthon from Exane BNP. Please go ahead, sir.

Yes, hello gentlemen. A question on the guidance.

You are implying given that you published a plus 2.6% growth in EPS in H1, your guidance if we have the current rate to the end of the year will imply a decline of 2%. Obviously this is not only Plavix in Germany I guess.

Is there anything that would explain your cautiousness for your guidance for the second half of the year?

And regarding Plavix in Germany what will you do with the [sales] that are pushing that product? What is your marketing strategy there?

And lastly, one -- just two quick follow up questions, one on Multaq. When we will get the DIONYSOS data?

And on AVE5530, could you tell us which statin you have chosen for the fixed dose combination? Thank you.

Okay, I'll take the first one on the guidance.

I remind you that the guidance is on a full year basis so it's a little bit quick to compare directly the H1 result to what we're saying for the full year.

In addition to that, I'm sorry but it's once again a currency issue. The first half, the U.S. dollar euro parity was as you know $1.53. When you're telling that we might end up the year at minus 2, you're implying that the euro dollar parity for the full year might be $1.57. So -- and I'm not saying it's wrong or right because we don't know. It's the reason for which we try to keep it out of the dollar parity effect.

Now I said that we've included our best estimate of the evolution of the situation of the Plavix in Germany as mentioned earlier by Hanspeter. And no, I'm not implying that we're going to have a weak second half per se. Once again, I could rely on what Wayne Pisano was just saying about the flu season and what I told you about the vaccine business in general meaning the second half being more important (inaudible). So we are in a normal course of a year.

But as you've noticed each quarter is not equal to the next one. So there is consistency between the achievement at the end of the first half and our upward revision in guidance for the full year.

Perhaps, I may give you a little bit of additional information from a figure point of view on clopidogrel in Germany. First of all, the clopidogrel sales in Germany are about EUR350m on an annual basis. And they are flat in 2005 due to the various interventions from the German authorities. What is important to note is that nearly 40% of those EUR350m annual sales are imported sales coming from the other countries of the European community with lower prices.

So I think if you have a model it's important for you to know that of course on those products we have only a minor effect because as I said before 40% of the German sales are imported from other markets. So any price adjustment in Germany would have to take this effect into account, which of course is [favorable].

Sebastien, could you please repeat the last part of your question on R&D?

The question was when do we expect DIONYSOS results? And what is the (inaudible)?

DIONYSOS is in fact they are not fully part -- DIONYSOS is a study in comparison with amiodarone. They are not really fully part of this submission because we are looking for an indication which is not within the scope of amiodarone indication. But the results should be expected at the end of the year, beginning of next year.

The second questions was what is the reference statin in the --

We do not comment on it. I think it will appear very soon because we'll start the study in combination very soon. So it will appear on clinicaltrial.com. Of course we do a statin which is patented and with patent expiry close to our [submission filing].

Okay, thank you.

Thank you. We'll take our next question today from Jo Walton from Lehman. Please go ahead.

Good morning, a few questions please.

Hanspeter I think you said that Plavix generic wasn't accepted in the UK in a different sort. Does that mean that you believe that it's been filed and rejected?

You've given us some insight into buying consumer products in Australia. Can you just give some idea or broadly speaking of how big your consumer or semi-ethical business is as we stand today?

On Lovenox in the U.S. is it fair to say that really one of the biggest issues that would preclude any generic there is still the citizens' petition. Can you give us any update on what is happening there?

And a final question just in terms of the finance. You've got three acquisitions either in anticipation or concluded. I'm assuming that your guidance excludes any financial impact of those. And if you were to be able to get Symbion, Acambis and Zentiva altogether, broadly speaking what would the impacts on your numbers be?

Thank you Jo.

So starting on Plavix, I don't want to make a comment if Plavix generics has been filed in the UK. But we have very carefully investigated this with the authorities in the UK. Their overall position was it was (inaudible). And so the decision is negative as I said before.

Now on the OTC presence in Australia first of all, the to be acquired business is maybe about EUR110, EUR120m. And we have additional approximately Maalox and others.

Now in the Australian markets there is a growing influence of the pharmacist in terms of substitution. So this is part of then our objective to get closer to the pharmacist via OTC products in using this as a kind of engine to also benefit from the substitution power of the pharmacists.

Now on a more globalized basis, yes it is true and I read some comments from analysts during the weeks that our overall position in OTC is a position a little bit overlooked. [Definitions] in these field are not easy as you know. But we have OTC sales of approximately EUR0.5b existing sales. And we have three or four brands which are close to the global brands and Maalox is one of it. Aspegic would be another one of it and (inaudible) a third one of it.

So yes we believe that we have a good basis to further expand our presence in OTC. And this is in most markets as in Australia, in combination with the growing importance of the pharmacist also for the other business, especially of course the so called base business.

Now Lovenox citizens' petition and the overall situation in the U.S. shows there is absolutely nothing we could signal. There is no development at all. We have no reaction to the citizens' petition which we believe to continue to be a strong argument in the existing situation.

Of course we have read as you the communication coming from Momenta and Sandoz, where we read a more and more cautious trend. But besides this (inaudible), there is absolutely nothing material I could report.

And now Jean-Claude on the three acquisitions and our guidance.

Obviously the impact on -- in 2008 of these three potential acquisition is very small. I'll give you a few comments.

Beginning by Zentiva, as you all know on this operation we have to get the clearance from the anti-trust authorities not only in the European Union but also in other countries. So it will take some time. So we do not anticipate if everything goes well to be able to close such an operation before, I would say the fourth quarter of this year. So any contribution on Zentiva would be immaterial to the level of the result of the Group.

Coming to Acambis and again, once again assuming that we would be successful in this operation, as Wayne described, they are conducting six R&D programs right now. So it's rather R&D spend which is translating into a loss and I would say a small loss. So we may encounter -- if we were to close this operation sometimes, in the very next coming months we would encounter a small loss.

When the other way around, coming to the Australian situation and assuming that we would close this operation by the end of the summer we would get some positive contribution for the remaining part of the year at the bottom line. So all in all we're talking a very immaterial amount when it comes to 2008. And obviously this is included in our full year '08 guidance.

Thank you.

Thank you. We'll now take our next question today from (inaudible) from Societe Generale. Please go ahead.

Yes, good morning, (inaudible) from Societe Generale. Just a couple of questions on Plavix.

One is the European sales in this quarter look relatively light. And I was just wondering if that was entirely driven by the parallel import situation in Germany or whether there were any other weaknesses or contributory factors in other European countries.

And then just to clarify on your guidance if generic Plavix were launched tomorrow, what sort of a one-off charge do you think you would have to take. And would you then exclude that one-off charge from the EPS number before selected items that you're guiding for? Thank you.

For the first one on Plavix, there is no overall impact from parallel importation. It is a matter of fact that what you see in terms of growth for Plavix in Europe is what the market does. Please keep in mind that it's literally no country where we could increase prices for Plavix in Germany, countries with the U.S. But in countries there are a number of markets where we have to decrease our prices in Europe.

There is a technical effect also in the figures which has to do with the sale of our raw materials to Bristol-Myers Squibb, which has been relatively low in the first half for purely technical reasons. But overall we have to estimate that the prescription growth of Plavix in Europe is somewhere between 5% and no more than 9% depending on the market, with the exception of some Eastern European markets because the product is at the -- towards the end of its life cycle in Europe. It has maturity position in many European markets being number one for example in France and in Germany. And yes, we have continued pressure on the price.

Okay, thank you.

Now on the one-off charge.

I have to say that coming from -- once again to Plavix, you may remember we do not have any intangibles concerning Plavix in the balance sheet. So were we to lose Plavix here or there, we would not have to have any special charge one-off or not to the P&L. So I guess the answer is no, we wouldn't be hurt from this perspective on the -- any bad news coming on the Plavix front simply because it is a product which is originated from our R&D. So according to the, I'd say the good accounting principle this has not been put in the balance sheet.

Wouldn't you have an inventory charge just from having to scrap batches or from having to take products back from wholesalers?

Products back? No we generally do not take products back from wholesalers. And for the rest, when you have raw material or inventory, we've seen that there are instances where there has been generic and you can see that in other companies, it takes longer to sell your inventory. But that doesn't say that you destroy your inventory and therefore taking one-off charges. So I don't feel that this would be a relevant situation coming to a one-off -- concluding in a one-off charge to the P&L.

Okay, that's great, thank you.

Thank you. We'll now move to our next question from Amit Roy from Citi. Please go ahead, sir.

How are you? Just a couple of questions on Multaq and Plavix.

Firstly on Plavix, you've said that the package went based on the monotherapy indication of Plavix based on the [CAB 3] studies, two questions around that.

Firstly why do you think they didn't get the combination or did they not apply?

And secondly how is it possible to enforce the generic Plavix to be only used in monotherapy? Or will it actually just end up being used in combination as well. That's the question on Plavix.

And secondly on Multaq and the DIONYSOS with amiodarone, my understanding was that the European regulator was looking for a comparison to amidarone. You've mentioned that you're going to be -- have a slightly different indication from the original. Can you just please expand on how that's going to be more different to the original application? Thank you.

I take the Multaq. For Multaq, in fact the basis of our submission is the result of the ATHENA study. Looking at the ATHENA study and at the result at least at the primary end point, it was not too much a question of maintain of rhythm, or normal rhythm. It is much more in terms of prevention of morbid mortality. And so we are looked -- we are trying to make a labeling to parallel the results of the primary endpoint of ATHENA.

Okay, that makes sense.

Now on Plavix combination, yes I'm not sure but I assume when you say combination you mean in combined use with other products. So to avoid any kind of confusion there has been a decision from the (inaudible) in Germany against the combined use of this product, which has -- which we deplore because we believe it is wrong. But it has nothing to do with the appearance of generics.

Now the question was will generics have only limited indication. I can only speculate. But if I speculate I would say simply because they had only access to this part of the file, which was the first part which we have deposited about 11 years ago with the European authorities and we have solid proof that this has been copied by the applicants. Everything else would be speculation.

So is there any way that that can be enforced actually in the marketplace?

Yes, I believe very much because somebody who would -- either prescribes or dispenses this type of generic in an non improved indication, I believe would not only act unethical but also unlegal.

Thank you very much.

Thank you. We'll now move to Graham Parry from Merrill Lynch. Please go ahead, sir.

Thanks for taking my questions. The first thing is on Lovenox in Europe and just thoughts on how you might defend your franchise from the upcoming launches and also in the orthopedic indications. And also any concerns over the potential off label usage for medical patients. So if you can run through any pricing strategies that you might be following there.

And secondly on Symbion, does this mark a real strategic change in direction? Your previous strategic priorities have been biologics in Japan. Based on recent history should we be expecting more consumer and generic acquisitions instead?

And then finally on clopidogrel besylate could you highlight whether you'll actually wait for the outcome of the appeal to the court enforcement order before you file infringement proceedings? Or have you filed infringement proceedings immediately? Thanks.

Let me start with the last one. I kindly ask you to understand that we don't want and we do not describe our legal strategy in this respect not only but also because of course we have to coordinate this with our partner Bristol-Myers Squibbs. And everything that you've seen today is very technical and technical also.

Second on Symbion, yes we believe that there is a growing opportunity in OTC in combination with the, let's call it prescription business. And yes, it's an opportunity we would acquire. But I think it's fair to say that there is limited opportunity in OTC simply because there is limited offer but very strong interest. But whenever we see an opportunity and this is opportunistic to our existing business, we will go for it.

Now for Lovenox and the upcoming competition in Europe, I think first of all, it's important to point out that the European market in this field is much more price sensitive than the other markets. And that we are today already in a kind of generic situation because Lovenox has a number of competitors which are technically not generic but are directly competing with this. And most of them compete through price. So the conclusion of this is that we believe that any competitor in Europe of course has to benchmark the existing base of treatment in terms of [pharmacoeconomic] outcome.

Second what we see today as upcoming competitors and here I refer of course to the (inaudible), our competitors which are targeting two indications which are important indications from a clinical point of view. But nevertheless they represent no more than 10% of our existing sales. And it will take if at all, take years and years for those competitors to show superiority to Lovenox.

And I insist on superiority and I go back to the specific economic environment in Europe. It will take some years of clinical research to show superiority. And meanwhile our lifecycle management for Lovenox will continue and will go on. And as you have also remarked, yes, we are also working in new directions with other favorable profiles and we will have to see. But for the time being, and the time being for me is clearly 2008 and 2009 and probably also a good part of 2010, we may see competitors which are aiming for no more than 10% of our sales.

And if I could just ask one follow up question on generic Plavix, and you indicates that in certain countries you've got a very clear negative response on the different (inaudible). I think you cited France, UK and Spain. Can you just clarify what proportion of your European Plavix sales come from those countries?

Well, let me estimate this, as I said before Germany is about EUR350m, which is about roughly 15% of the overall -- 15% to 20% of the European sales of clopidogrel from Bristol-Myers and from us. And so to make it very simple, the French sales are about EUR50m superior to the German sales alone. Then the other markets like Spain, UK and Italy about half of France. So if you take all three markets they are approximately twice the size of Germany.

Great. Thanks very much.

Thank you. We'll now move to our next question from Michael Leacock from RBS. Please go ahead, sir.

Thank you for taking my question. Just clearly as a pipeline question, we've seen perhaps more overt movement and progressively in an outward direction for some of the products in your pipeline.

I just wondered is this perhaps a reflection of any new initiative to concentrate the pipeline or to focus on more product where there's more opportunity.

And could you perhaps tell us about any projects in the pipeline where they've actually met or should I say exceeded your expectations? I guess quite a bit of the press release is talking about drugs that perhaps have not met your expectations.

I think it's a good question. I think it's clear for everybody that the environment in the pharmaceutical world generally both in terms of safety requirement or (inaudible) is the decrease of the (inaudible). And at the same time that we have pressure from the [buyers]. So I think as with everybody within the pharmaceutical industry we look to our portfolio with these two windows. And we try to focus of course on the product with the best safety profile, based on the [result] of course. And also we have (inaudible) where we have some arguments in fact for the [buyers].

I think the results better than expected Multaq clearly was better than expected. And I think it's a strong basis for our submissions. Also the results so far with idrabiotaparinux are also a little bit better than expected. Again I would like to remind you that the study we did, idrabiotaparinux in (inaudible) versus anti vitamin K was superior in terms of efficacy and better safety profile.

And when you're looking for atrial fibrillation with idrabiotaparinux, in fact we have also I think 20% -- little better than 20% risk (inaudible) solution in terms of effect versus anti vitamin K. We have the same mortality event than the anti vitamin K. We just have an increase of intracranial bleeding within the total mortality for idrabiotaparinux. So if you consider that in the EQUINOX study, we have in fact statistical significant difference versus idrabiotaparinux so we have a dramatically less intracranial bleeding. It is very promising.

At the same time we would like to be cautious because it is only one study. So we need to compare it with EQUINOX. But if this result is confirmed with EQUINOX on top of the fact that we have the potentiality to neutralize -- if we have the same result on CASSIOPEA on top that we have the possibility to neutralize in fact an important (inaudible), I think in atrial fibrillation,, we will have a very important compound. And the big market in (inaudible) because we don't feel at the present time there is too big market. One is medical prophylaxis for products a little bit like Lovenox and the other big market is atrial fibrillation for products like anti vitamin K.

Thank you very much.

Thank you. We'll now move to our next question from John Murphy from Goldman Sachs. Please go ahead, sir.

Yes, good morning. I have three questions please.

How would your strategy be impacted if the Zentiva deal didn't go through.

Second, Jean Claude, you made a comment with regard to buyback. Can you give us any guidance on buyback for the second half of the year, because it was strong in Q1, not so much in Q2? Is it related in any way to the acquisitions?

And then finally in terms of Eplivanserin fourth quarter filing, are you awaiting any data for that? Or is just finalization of the package? Thanks.

To take Zentiva first of all, we are very confident that this still will go through in the sense you have probably seen that our competitor PPF has withdrawn its offer. So at least as of today I don't see any competing offer. So we are of course not only confident but also dedicated to get this deal through.

If not it will not change our overall ambition to further accelerate our presence and our growth in those parts of the world. Which would means we would probably invest more into what we have and we would continue to look to other opportunities which exist in this part of the world because there is still a local or national industry which may become available for association or acquisition.

Buyback, share buyback, the EUR1.2b spent during the first half of the year was once again the end of the EUR3b program which was launched at -- during last summer in '07. And as said at that time, which are to be completed before the general assembly which took place in May.

Now what are we going to do during the remaining part of the year? As you know first the Board decided to authorize a program of up to EUR3b up to the mid next year. It is obvious that at the same time we are trying to be active in the business development area and simply to take the three year operation or potential operationg which we are working. We are talking about something which is close to EUR2b investment at the Company level.

So my answer would be that yes, we may do some share buyback during the second part of the year. But obviously priority is to be given to business development. So for the time being I'll say that there is no big anticipation of what we might do, no big volume anticipated. Once again this (inaudible) depending also on other factors like the market situation but the priority once again to business development.

That's very clear, thanks.

On Eplivanserin I confirm that there is no additional study to be performed. It's just a question of wrap up of the dossier (inaudible) some extra requirement of the FDA in terms of causing some events. But there is nothing. So that dossier will be submitted in fourth trimester of 2008.

Right, thanks very much indeed.

Jo, I think we have time for one last question please.

Thank you, sir. We'll take our final question today from [Daniel] from Dresdner, sir.

Thank you for taking my question. There's just a couple on R&D and a couple of others.

Just on Multaq I was wondering did you have meeting with the FDA post your data, but before filing? I was just wondering whether you now know whether the latest filing package meets their previous concerns.

And then secondly just on Saredutant, I realize the decision for filing will now be in the first half of 2009 depending on the combination trials. But what type of result is going to be needed in those trials do you think for you to be able to file?

And then just on the financials, looking forward into the second half of the year, just on restructuring charges, there were some restructuring charges in Q2, which we've seen from the restructuring in Europe. Should we be expecting further restructuring charges in H2? And is there any visibility on that?

And just finally, just coming back to Plavix in Germany. I know this has been covered slightly already. But just to confirm, in your view Plavix is not substitutable in many indications in Germany. And therefore what would you say is the percentage of Plavix sales at risk from the potential generic and the indication that it has?

Thank you.

I start with this Plavix again. So I repeat what I said before. Approximately EUR350m annual sales in Germany out of which about EUR130m are imported from outside Germany.

Second, yes, I confirm that it is our strong prediction that a product which has limited indications cannot substitute a product which has larger indications. If this would be not the case, any kind of life cycle management would be obsolete.

We have made first calculations to your questions, what is the part of indications of Plavix in Germany which may be affected by generics and we come to an estimate between 40% and 45% of our sales.

So for Multaq, it's always difficult and we do not discuss too much on this. But of course we have discussion with FDA and as I can say we are confident with the product.

For Saredutant it's a good question. I think we will look at two parameters. One is of course the Hamilton Depression Scale. But I think much more important on top of existing (inaudible), it will be the number of patients cured at least going down 12, less than 12 and 8 on the Hamilton scale. Because the biggest problem at the present time is that only 50% of the patients are cured of the first events by (inaudible). And it is -- there is a clear link between relapse or not good treatment of the first event and [chronicity] of depression. So I think the main parameter will be in fact the number of patients cured at the first event.

And coming to the restructuring perspective -- charges perspectives, as you have seen and as Hanspeter has explained we are taking a certain number of initiatives in this area in the major market. This has been true last year. This has been true in each of the two first quarters of this year. Yes, you may see additional charges to come during the rest of the year. Things are under discussion as you know with the various (inaudible). We are not going to give details since it's not our policy. But thanks to the fact that from a financial perspective we classify the charges as selected items, this has no influence on the guidance we've been providing to you.

Thank you very much.

That brings an end to our conference call. If you have any other questions please don't hesitate to call us in our offices here in Paris. Thank you and bye-bye.

That will conclude today's conference call. Thank you for your participation ladies and gentlemen. You may now disconnect.