Sanofi SA (SNY) 2009 Q4 法說會逐字稿

Hello everyone and welcome to the sanofi-aventis full year 2009 annual results. It's a pleasure to have you here. As always I'd like to remind you that today's conference is actually also available through live webcast and the slides that we'll show today are available on our website.

And I must remind you that today's conference will contain forward-looking statements and those statements will involve know and unknown risks and uncertainties and other factors that could cause actual results to differ materially. You can find details about those factors in our form 20-F on file with the SEC as well as in our (spoken in French).

Today with us is our management team with our CEO, Christopher Viehbacher, Hanspeter Spek, President of Global Operations, Wayne Pisano, Senior Vice President of Vaccines and Jerome Contamine, our Executive VP and CFO.

The presentation will be followed by a Q&A session and at this stage I will actually hand the conference over to Chris.

Thank you, Sebastien. Good afternoon everybody. Welcome to Paris. In some ways it seems a lot longer ago than one year that I think I stood up and presented the first set of results for sanofi and it's certainly a pleasure to think back now after certainly my first year in office and I think a lot's changed. I think a lot's changed in the industry and a lot has changed very positively within the Company.

So what's changed in the industry? I think one of the things that's getting interesting is that the famous cliff is now getting onto the spreadsheets. This is no longer something that's out there in the future, you know. We're now into '11, '12, '13 and beyond, and I think the entire industry is starting to recognize that really share price is not being driven by our quarterly results anymore, but more in the long term.

You know I was just talking to one of the bigger biotechs out at the JPMorgan conference and he says, 'It's incredible. We don't have any patent expiries before 2017 but we've already got people asking us about how we're going to replace our patent cliff in 2017.' And there is this element where the cliff gets anticipated and what people are really looking for is this sustainable growth. And so it's great. We need to have regular quarterly earnings but I think the whole industry is now kind of recognizing we need to address this issue beyond the cliff.

I think we're kind of innovative last year. We put out a floor guidance for 2013 which was really meant to have people focus on the fundamentals of sanofi-aventis and to really kind of dispel some of the myths, like for instance, if we could commit to the same level of profit as we did in sales in 2008, and it was also a commitment that we didn't believe the margins would erode on a net basis as we moved into more diversified businesses.

And I think we've seen some other companies now put some of those numbers out for the 20-- post patent cliff period.

I think we're all looking much more seriously at research and development. When I came into the Company, my view of where we were as an industry is that up to now we'd really only been doing tweaking, not real fundamental change. And I go back to some of the research I did before coming into the Company, which indicated that there were two things related to innovation.

One is that there has to be some element of disruptive thinking and two is that big companies not just in our industry but in other industries are not very good at innovation, partly because we do everything to avoid anything disruptive including disruptive thinking.

So I think there's a real rethinking of the model, how much we're investing in it. A lot is going to be dependent on how you execute on that. I think a lot of it is people related. It's not structurally related and people will come up with different solutions, but I think as we get close to the cliff, as we see that some of the tweaking hasn't worked, I'm certainly seeing some of our own colleagues and we are certainly doing the same.

It clearly is a global market. This was a business where the investor base really focused on the US. We can buy those weekly scrips. Sometimes some of you get really keen and buy the daily scrips and we've got analogs everywhere. It's a business that was very easy to value.

And now actually we're seeing markets in China, in India, in Latin America are real true growth drivers, although I would say when I talk to CEOs in other businesses, everybody's excited about emerging markets whether you're in cement, whether you're in transportation, whether you're in electronics. And I sometimes think that actually in the healthcare sector we still haven't really appreciated what kind of economic revolution is really going on in some of those markets.

I remember five years ago we had huge issues of image. Go back to the days when we sued Nelson Mandela, but we had issues on some of the marketing programs here and litigation and product withdraws and if there's one thing that at least has come out of the -- positively out of healthcare reform in the US, and your guess is as good as mine if anything else will come out of it, but I think we were not the bad guys.

When we worked our way through leading up to healthcare reform, we as an industry were very conscious that we did not want to be perceived as being the cause of the problems and I think as we went through healthcare reform, even though we have Democrats in power in the White House and Congress who are not the traditional allies of the pharmaceutical industry, we weren't the bad guys. And I think it goes some way to demonstrating what this industry has done in starting to repair its image.

And as I like to say, I thank the banks for their contribution to us having a better image and we also have the economic crisis.

Now the economic crisis, it's funny when you sit down with financial journalists who spend about 90% of their time covering the economic crisis and say, 'Well it's great to sit down and talk to someone in pharmaceuticals because you're not talking about the crisis for once.' And it's true that as an industry we haven't yet really been hit by the crisis. As I look at Social Security deficits in Europe, I wouldn't get too excited for very long as this will have a boomerang effect on us at some point.

But there have been a few hidden issues. With the economic crisis, the IPO market really definitively dried up for example. And with that it became obvious that the only way for certain investors to really exit from some biotechnology investments for example was through Big Pharma.

And so you've seen some changes in the valuations and ability to access assets in the biotech space. And I remember getting asked by a number of our investors the earlier part of this year about how we saw 2010. And I said, 'Well, one of the factors for me is interesting is does the IPO window open up again.' And I wasn't terribly optimistic at the time. There were others who were. Everybody I talk to today believes that that's not going to happen any time soon, which actually opens up opportunities in our industry.

So what happened with sanofi-aventis over the past year? I think I stood up in front of most of you last year and said if you thought about sanofi-aventis, you thought about Plavix and you thought about ACOMPLIA. One had just been withdrawn and the other was about to go away. And there wasn't an awful lot of real understanding about the rest of the Company.

And a phrase that I used very often in 2009 was it's not the 20% of the business that goes away that's really interesting about sanofi, it's the 80% that stays. And on the basis of those very strong fundamentals, we identified a strategy really to go after long term and sustainable growth, to move away from the boom-bust cycle of small molecule patents based in Europe and the US.

Out of that we grew the five growth platforms that were not only just promising growth, but because of the inherent nature of these businesses, huge capital investments, deep competencies, deep trust and confidence in brands, that you build natural barriers to entry that go beyond patents.

And those are the types of businesses that we wanted to be a part of in order to stabilize a little bit the inherently risky and volatile nature of the pharmaceutical business.

Now I think I was also extremely transparent this time last year. Stood up and said we do not have enough new products in our portfolio to replace those things that we're going to lose to generics. This was a revelation to none of you. But it was an important admission so that we could actually get on with taking a much more radical view to what we wanted to do with research and development and it became a strong rationale for entering into an external growth strategy because if we don't have enough, then we need to go and do deals.

And I look on the list here, 33 partnerships and acquisitions, EUR6.3 billion in actual cash flow out the door, a little more if you include Chattem, which we did before but for which the cash flow will flow later.

On R&D we went through the portfolio and governance and I'll cover that in a minute. We developed a new R&D organization which we are actually now able to roll out just this week as we've concluded, particularly in France, some of the social consultation. We identified a program of cost reduction, not just to reduce costs but because we are shifting resources, reallocating resources, getting into different businesses, getting into different businesses with different cost structures. We had to become leaner, more nimble and certainly more empowered when we looked geographically.

And so we identified that cost reduction program and we have some new blood in our leadership and I'll talk about that in a minute.

Now it's great to talk about strategy and it's great to talk about the long term. Sometimes you hear people talk about the long terms because the short term is not so good. And that's a trap. So the first message is yes, we're focused on building a long term business but we haven't forgotten our obligation short term and I think you see with a 13.1% increase in earnings per share at constant exchange rates that this is a very strong performance. We've got a nice little gift from the US government at the end of the year when the agreement was signed between France and the United States on taxation, which added about a point and a half of growth. So the underlying growth rate is pretty much in line with the guidance that we had given at the end of Q3. Sales at 5.3% also a very credible performance.

This is a slide that I think is something that we're going to use on a constant basis. For now the orange bucket on the right side of the slide contains only Plavix in Europe and Eloxatin. Later in the year we'll be able to add Taxotere. We'll certainly see the Plavix effect for a full year. We'll see the Eloxatin effect for a full year. Do we see something for Ambien CR? Don't know. Do we see anything for Lovenox? Don't know.

But what is true is that we know that between now and 2012 the inevitable is going to happen. We will lose sales to generics. But I don't spend my days looking at the market share for Plavix. I look at Plavix as an area under the curve cash pile that we have to reinvest in the business in new sources of growth.

And when I look at the left side, there you have those five growth platforms that we defined last year. And look at the growth rates. 19%. 19.4% 19.2% 26.8% And these are hundred-million euro businesses. You've got EUR7.4 billion almost business in emerging markets growing at 19%. I mean, EUR7.4 billion growing at 19% is pretty sexy. And we've got some new products being launched.

Today, those five growth platforms represent over 50% of the sales. And that green bucket is really what the future of sanofi-aventis looks like because as we lose those generic products, that business is the one that carries through. Is it always going to grow at 19%? Maybe not because as the base grows bigger, it'll be harder to do, but a number of those businesses we have set ourselves targets for doubling on - emerging markets, diabetes and vaccines for example.

Now of course not all of that growth is organic growth and I think we've been very good at doing the bolt-on acquisitions and Jerome will take you through what's organic and what's been acquired.

So let me just take some of those and just do a few things. Emerging markets is something that sanofi has a clear leadership advantage in. And yes, everywhere you're going to go in all these results announcements you're going to hear lots about emerging markets. But we've been in those places a lot longer than some other places. We've been in India for over 50 years. Been in China since 1982. First foreign company to set up in China.

And the interesting thing about that is you develop actually deep relationships with government that you have solid management, you've got training capacities to find yourself selling and marketing people. You've got a range of products. The fact that this Company said there's no such thing as a small product, no such thing as a small market, when everybody else was trying to trim and eliminate their [tailored] business is now proving to be a strength of the Company because you need a range of affordable medicines as you see emerging -- as you see a middle class emerge.

Now these are all of the emerging markets. We just don't show you BRIC-M. We don't just pick sort of the selection of the most rapidly growing markets. We put everything in there. This is everything that's not United States, Canada, Europe and Western Europe and Japan.

Now what was interesting is only a third of those sales are actually the BRIC-M, which shows you how widely spread the sanofi business is. We're also in the Indonesias and Africas and Thailands and Viet Nams and Venezuelas and Algerias, so it's a business that is also nicely diversified because you look at the different colors according to the different regions, we've got actually good balance across there. And of course we've got leading positions - number one in Eastern Europe and Latin America and in Africa, Middle East, number three in Asia, very, very strong basis on which to build upon.

And the other question of course is always well, how profitable is that? 42% is still a pretty nice operating margin and considering that I'm not going to invest 15% of those sales in R&D, we can keep developing those businesses without diluting our overall margins.

LANTUS - LANTUS was a clear issue for us this year. We had those articles published in "Diabetologia." Fortunately all of the world leaders of opinion, all the regulatory agencies stood up and said that these studies were not of high quality and could not really sustain the conclusions that some were drawing for them. And I think you see that in the sense that that business has continued nicely.

We decided to go the extra mile. We worked with leading physicians and regulatory agencies to do the right studies and we'll have results in 2011.

In the meantime, 285 million people worldwide are living with type 2 diabetes. You go talk to the Chinese Minister of Health and you'll hear their top three parties, type 2 diabetes, oncology and cardiovascular disease. India's got the biggest population of type 2 diabetes patients. This isn't just a western disease today. This is expanding everywhere.

We've got mega trends that have people moving from rural areas to cities, that's changing their lifestyle but it's also changing their income levels. As people get more money they not only spend more money on healthcare, they spend more money on food. And that also leads to risk factors in type 2 diabetes.

Clearly with LANTUS, a superb product, over EUR3 billion in turnover, growing at 22%. GLP-1 in the pipeline, not sure it's going to be that competitive on its own but I think it'll make a nice product in combination with LANTUS.

We've got a new insulin sensitizer that we brought in from Wellstat and obviously in creating a diabetes unit, what we're really trying to do is start with a type 2 diabetes patient and see how we can help that person.

I love the vaccines business. The first thing I told Wayne Pisano when we first met, the good news is I love the vaccines business. The bad news is I love the vaccines business so you're going to get lots of love and attention. And the reason I like it is because in a world where healthcare costs are spiraling, my personal view is that we will not get those costs under control until we actually do more in prevention and vaccinations is the sweet spot of that.

Ask Bill Gates where he'd rather spend his next dollar out of his foundation, he'll tell you it's vaccines. In fact at Davos you saw that he doubled in commitment to vaccines from $5 billion to $10 billion. We're certainly going to be looking for our market share of that.

It's a fast growing market. It's an increasing share of our business, up to 12% of total sales now and we decided to strategically strengthen that business last year with the acquisition of Shantha. That brings us a portfolio of new vaccines in development that are adopted to the emerging markets. We didn't have a rotavirus vaccine. You don't have a rotavirus vaccine, you will never be big in emerging markets.

We have now an ability to produce a polio vaccine at a very low cost. Bill Gates is putting $400 million into India to fight polio and I'm sure you've heard me talk about the 25 million babies that are born in a country where there's 600 million cell phones so it tells you that there's a huge potential in pediatric vaccines.

Consumer healthcare. Consumer healthcare is an important business for two reasons. The first reason is inherent in its business. We have a brand like Nospa in Russia that's been around for 60 years. You have other brands in other countries that have been a long, long time.

It's that faith and trust in a brand that protects the business. There's no patent on Doliprane. It is the number one selling paracetamol in France. It is our number one selling product by volume in France and soon to be the number one selling product by value as well.

So that's one reason. The other reason is if you ever look at what happens when you do surveys of employees in companies in different industries, one thing that is particular to the pharmaceutical industry is that we always score low on any kind of customer orientation. I think being in a consumer business is extremely important to bringing back a customer focus which has sadly been lacking in this business.

We would start with a technology and then go find a customer. Now we need to start with patients. Now we were missing obviously a presence in the United States which is obviously one of the key markets. We had an opportunity to acquire Chattem. Other people had tried to acquire Chattem and they said no thanks. Our team came up with the idea, well, you know, we have Allegra to switch. Chattem does about $450 million of sales. Over the counter Zyrtec and over the counter Claritin today sell over $400 million each.

Now if Allegra can get anywhere near that level, we can dramatically impact Chattem sales. Plus we're obviously going to look in that portfolio and see what we can launch in Latin America or in Canada.

Another point down there, obviously it's not just in the US we want to expand but I know Hanspeter will come back to it. We've done this in China as well.

We are also not -- we are also still mindful of our core mission, which is to bring new hope and new medicines to patients. And we made a very good start on that, launched a product called MULTAQ for atrial fibrillation in the United States. Big milestone for us because after the whole ACOMPLIA debacle, there was kind of a sense of could this Company get a major product approved by the FDA. And we managed to get that hurdle out of the way with it and showed that we can and we're off to an extremely strong start on the launch, getting very good reimbursement pick up, tracking well to our expectations, had a very strong launch in Germany and we'll be rolling that out in the rest of Europe throughout the year.

We put two cancer products to the FDA who provided us with approval to file a fast-track submission. These are basically rolling submissions. Now there's not too many companies can say they got two fast-track approvals, process approvals in one month. And one is obviously our home-grown cabazitaxel for which we've had some extremely positive results in second line prostate cancer, and the other is obviously the PARP inhibitor, first in class, which is progressing well, phase III, tracking ahead of progress in terms of recruitment in phase III.

Pentacel, pentavalent vaccine which took over 70% of the market, Panenza, which was our non-adjuvanted H1N1 vaccine, and of course we extended our LANTUS franchise with very successful, award-winning devices, notably SoloSTAR and ClikSTAR.

So these are -- this is where we have been with our growth platforms. Really to drive those things I set myself three objectives. Where was I going to spend 90% of my personal time? You know you come in to a new company, there's all kinds of things you can look at. You can get distracted in a lot of things.

I wanted to spend personal time in three areas - increasing innovation in research and development, external growth because we don't have enough new products short-term to fill -- to create growth, and third was obviously transforming the Company because it's one thing to say you want to be in OTC. It's another thing to say you want to be in emerging markets. But the resource and the drive of the Company is still Plavix, Taxotere and Ambien, so you've got to shift a 110,000 person organization in a different direction.

So if we look at R&D, we've had four products approved, 15 new projects in clinical development, 30 projects terminated. So as you saw, our research and development expenses declined in the fourth quarter by about 7%.

Nothing to do with our commitment to R&D, it's just simply that we weeded out projects and we had savings. We have actually reinvested significant amounts of money in the projects that we have brought in. We have really boosted the R&D budget for vaccines. But despite that, we were able to recover money. Now this is just mostly variable costs that were associated with the projects that were terminated.

One of the other things I remember saying last year was nobody thinks of sanofi-aventis as having any interest in biologicals. 60% of our development portfolio today are biologics and vaccines.

Now Partnerships was another area where there's been absolutely massive cultural change. You go outside into Paris, go ask ENSAM, go ask somebody at a university in Paris, go ask a French biotech company, go ask an American biotech company - what kind of a relationship did they have with sanofi, and they'll tell you well actually, not that much.

We are a company like a lot of pharmaceutical companies that believe, hey, we have everything we need, thank you very much and we'll work on an internal basis. Credit to Marc and his team in the midst of actually redesigning an organization, we have also been able to sign a significant number of partnerships and in-licensing deals where clearly R&D have to be there as champions.

To me the biggest single change that I think I've seen in the Company is this rapid opening up of being willing to sign on partnerships. Now it's easy to sign deals but if you go talk to a CEO of a biotech anywhere today, they're looking at sanofi with completely different eyes.

The way we did not integrate BiPar, the way we did not integrate Fovea is a model actually of how Big Pharma will need to work in collaboration, not in domination, with smaller, more creative companies.

And of course the new R&D organization, as I say, is already being rolled out.

So for 2010 where 2009 was kind of a cleaning up process, getting some cultural change going, signing some deals, 2010 certainly where I'm spending my time, where Marc's spending his time, is now building that pipeline. And our objective and our ambition is by 2013 not necessarily to have all of those things launched because that wouldn't be realistic, but I do think that we can move an awful lot more assets into phase III and have a reasonably robust phase III portfolio by the time we get to 2013.

So we've moved things in progress. We've got new regulatory submission. Wayne will talk about some of those in the vaccines and of course we have had a number of approvals this year.

What's also heartening to see is this is not a company that was previously known for life cycle management. Life cycle management has an important role. It's not a substitute for innovation but you can't ignore it. And I think things like the flu high dose in the US are a great example of that. I think if we look at the Plavix for atrial fibrillation, that's another example.

So when you look at it, we've actually been busy. We've got not only the existing partnership, but an enhanced partnership with Regeneron, which is our platform for creating monoclonal antibodies. We've got cancer deals going on with the Exelixis and Merrimacs of this world and you see the other molecules.

We have partnerships with some of the most prestigious academic institutions in the world. CalTech will -- apparently views us now as their preferred partner. We're in China with partnerships here in France. We've talked about BiPar and Fovea, which becomes our ophthalmology platform and of course vaccines has already led that and we've already just signed our first deal in sanofi pasteur this year with the KaloBios deal.

Acquisitions - number one question I got all year 2009, are you going to do a big deal? I said never say never but what we're really focused on are small to midsize acquisitions that fit with our growth platform. I think we have been boringly consistent with that message. We have developed acquisitions and partnerships in vaccines, consumer healthcare, generics, which really for me is an emerging markets story, not real generic diversification.

Of course we have the other half of Merial more or less drop in our lap when Merck decided to acquire Schering-Plough and we're obviously now in the end phases of discussions with Merck as to whether or not we take the next step and merge our animal health business with Merial with Merck's Schering-Plough Intervet business. I would expect a decision in the next few weeks on that.

So I'll finish and say we also have -- none of this was possible without a highly engaged and motivated team. When you come into an organization, especially if you come into a CEO, you know nobody. You do the first budget reviews, you don't know who's a sandbagger, who's a hopeless optimist. And yet you have to create massive change rapidly.

What do you do with your leadership team? You can fire everybody, bring in everybody new and then they're all as blind as you are in terms of what's good and what's not in the organization. You don't do anything, you don't get any new blood, any new energy.

I think we've got a good balance. We have nine members of the executive committee. Three have come from outside the Company. Three we have promoted from within and three bring that solid experience and expertise that we desperately need.

We are as international as our Company. 90% of our sales are outside of France. We have a global team. We've got more passports than members of the executive committee.

So this is a team that did it and actually as I sat back over Christmas and thought about the year, I was amazed and impressed at how well this Company responded to the challenge to transform. Changing a 110,000 person organization is like steering a big tanker ship, but it is turning and we are making progress and I'm not about to declare a victory yet but I think we've made excellent progress.

And with that, I'll ask Hanspeter to take us through some of the details on some of our operations and he'll be followed by Wayne Pisano.

Thank you, Chris. Good afternoon. As Chris said I will try to guide you through our performance results in 2009. Evidently let me start with sales. You see the overall sales figure of EUR29.3 billion and an overall growth of 5.3%.

You've heard (inaudible) that there has been a growth in all parts of the world, 3% in Europe, 2.8% in United States, 12% in the rest of the world. You also (inaudible) that the first quarter brought an acceleration of growth with the exception of Europe due to the increasing generification of Plavix but our sales in United States accelerated to nearly 10% growth and in the rest of the world sales accelerated to 18%.

This is partially but not only explained by what you see then in the first quarter for vaccine sales, 65% of growth which have largely contributed to the increase of sales in the United States, but to a much lesser extent to the acceleration of growth in the rest of the world.

Overall I think it's fair to say that we have well resisted the generic competition. I will remind you that this is the kind of competition which we had originally not planned for 2009. We were not supposed to lose the protection of Plavix in Europe and we continue to fight against it on various levels and we were not expecting to lose by a court decision the protection of Eloxatin in the United States at the point of time when it happened and also again this we continue to litigate.

Now how has this been construed overall, by a broad set of strong growth rates and I start with Lovenox and LANTUS, both products have now overpassed EUR3 billion of annual sales. While this may be to some extent for LANTUS being nearly normal given the underlying disease and its increase, as outlined by Chris, Lovenox is from my point of view really remarkable for a product which is about 20 years on the market to continue to grow by nearly 9%.

Taxotere continues to do also very well. One of the truly leading oncology products, eight indications now as oncology track would have more of indications and Lovenox -- excuse me, Taxotere selling this year for the first time in more than EUR2 billion of sales.

I have not seen (inaudible) on the vaccines. Evidently Wayne after me will go into detail but let me make two comments on consumer healthcare and generics.

In both fields we have undertaken important steps. We have made acquisitions. We have made organizational changes. We have made also management changes and you see very impressive growth rates, consumer healthcare on a level without Chattem achieving EUR1.4 billion sales, has been growing 27% and our generics mainly through Zentiva but also through Medley in Brazil and Latin America, has been growing by nearly 200% from a small base but meanwhile also achieving EUR1 billion of sales.

For the first time you see a figure for Merial, which we started to incorporate by applying the outstanding 50%. You see a modest growth rate of 0.4% which clearly indicates that Merial was struck by the economic crisis. I'll give you some more insight on Merial in an instant, but I would like to indicate already here that Merial sales according to the overall recovery of the economy nicely reaccelerates in the fourth quarter.

Talking about organization, Chris also has mentioned it already, we have decided to create two divisions, an oncology divisions and a diabetes divisions, and the underlying motivation is quite evident. We have competitors who perform strong and when we analyze them, why are they strong, it's simple to say because they focus on one disease and the reference competitor in the field of diabetes is of course Novo Nordisk.

Now it's good to see that to get between their sales level of total sales in diabetes, it is getting smaller and smaller. You see then from the chart in 2006 there was a gap of 39% and in 2009, we have closed this gap to 25% and yes, it is true, it is our ambition to become the leading company in diabetes. And I believe we are in a good way.

Overall our sales have achieved nearly EUR3.8 billion in diabetes, composed of approximately EUR3 billion, growing by 22.5% for LANTUS but meanwhile also Apidra is doing well with a growth rate of nearly 39% and sales of EUR137 million.

Beyond we have more than half a billion additional sales from our other products which are historical products of the Company but still a very important role especially in the developing markets.

We have undertaken important efforts in the field of devices. We sell and we give away today our devices which are entirely developed and produced in-house so we control the total value chain and we control innovation and it's fair to say and it's recognized from the external world that our devices today have market leading positions because of the practicability for the patients.

So we put all of this together - industrial development, commercial resources, R&D resource and we have regrouped it around our insulin production in Frankfurt, which is by far the leanest -- the largest product site for insulin in the world, so we focus, we build a company inside the Company of sanofi-aventis and we believe that we leapfrog towards our competition and we see that we are in a good way already in 2009 when we have started to do so.

Similar in oncology, in oncology we have undertaken the same endeavors. The headquarters will be bi-national. We will have an headquarter here in France and another one in Cambridge, Massachusetts, United States. We went to Cambridge despite the fact that we have various installations in New Jersey and in Pennsylvania but we believe that Cambridge is really the heart of oncology today and we intend to benefit from this as an environment as a neighborship.

As I mentioned before, Taxotere is the local motif of this portfolio today with sales of nearly EUR2.2 billion, with a solid growth of 6%. We are active in life cycle management. We have filed for a (inaudible) indication early stage breast cancer and we have new forms which will be launched as of now in Europe and in the United States. And finally, we have also applied for a pediatric extension in terms of protection for this product.

The new oncology division which we have created in 2009 has an extremely good start and a lot of headwind because we have three products which approach launch. One, JEVTANA, cabazitaxel, which comes out of our own research, supposingly will be indicated in prostate cancer where we have a huge franchise. Prostate cancer is the lead indication for Taxotere and Taxotere is mostly used in (inaudible) indications so JEVTANA will go in the second line therapy after Taxotere.

We have received fast track designation by the FDA and we have a rolling submission which will be finished by the end of the first quarter, so we are optimistic, confident that we'll be able to launch this product by the end of 2010 or very early in 2011.

BSI-201 is a totally different story. It comes from acquisition. It is one of the most fortunate acquisitions at least this Company ever has made or perhaps it's even a reference in the industry because very shortly after the acquisition the acquired company came up with very, very positive phase II results.

And on those results we have received another fast-track designation in triple negative breast cancer which is a (inaudible) disease today with nearly no treatment at all and we have been granted this fast-track by the FDA and the relative trials are very, very well progressing and we are supposed to submit the final findings and the final details by the end of 2010, so we are looking forward to a launch in 2011.

Last but not least Aflibercept, all three phase III trials are progressing exactly with -- in line with our planning and we are supposed to conclude all those trials by the end of the first quarter with the subsequent submissions. And approximately three months after Aflibercept goes to another major indication in cancer which is colon cancer, which is a historical position. We have still today evidently with Eloxatin and we are eager to continue then with Aflibercept.

Some comments on MULTAQ, I have said earlier today that MULTAQ of course is a classical cardiovascular product. The performance in terms of penetration is in line with those products and you see that we are progressing quite well in the United States. We have achieved 90,000 scrips in approximately four months. We do better than the competitors. We have been launching in the same months as Onglyza and for us more importantlyprasugrel.

And what we see today in dollar-wise, the new prescriptions is -- sets a performance of MULTAQ is approximately twice as strong as the performance of those two competitors and especially referring toprasugrel. We continue to followup this with interest also from the angle of Plavix of course.

We are in the market in Germany since two months and I can only say with all prudence after two months, I said we are doing extremely well. We believe that we have very well prepared this market. Germany is a very interesting market historically, very sensitive for anti-arrhythmic drugs. Once again we have the same benchmarks and we do so far much better than the other products, but of course, I have to remain prudent because it's only two months, but nevertheless, it is a very strong beginning we see in the second major market.

We launch -- the launch in France is imminent and of course we will continue to launch over the year in all other European markets and also overseas.

A little bit more of detail for Plavix and Lovenox. I gave you the overall figures already before. Now on Plavix I think it's impressive to say that the US sales are growing by nearly 13%, once again a product of this age, once again to be underlined. The product is facing for the first time real competition, prasugrel. For the last ten years we hardly had any competitor except aspirin of course, so the product continues to do extremely well.

We have filed for de facto patent extension by pediatric extension. We are supposed to file in the third quarter for patent extension.

You see sales performance for Japan, EUR339 million and I think it's worth to put just a little bit in perspective is what we are losing in Europe. In very simple terms, we have compensated everything what we lost in Europe through the unexpected appearance of generics by increased sales in Japan.

So we have lost approximately EUR150 million and you see with a growth rate of nearly 60%, we have fully compensated this is Japan and that's even more remarkable because in Japan we don't share anything with Bristol-Myers Squibb and Japan has been not part of the overall agreements, which means that the gains in Japan are entirely ours while it's in very simple terms we share the losses with our partner in Europe. So overall, at least in 2009, this was a very well balanced performance due to an excellent performance in Japan where yes, I strongly believe Plavix will become a blockbuster product on the market alone.

On Lovenox, I have commented on the really fabulous magnitude of product. Nevertheless let's keep in mind that this is what we are discussing permanently in the US is only nevertheless but only 60% of those EUR3 billion.

The other 40% are the factor in generic or competitive situations since years, since more than ten years we have either generics in some markets or we have products which are very similar. There is Pfizer on the markets. There has been historically Sandoz and Novartis on the market. Nevertheless in those markets Lovenox continues to grow at nearly 10%.

For the US we have nothing new. We know as much as you, nevertheless we believe that this is a subject of public health and it is in this respect that we continue to fight, that we continue to defend the positions that we are convinced it is necessary. If the FDA gives access to generics as a substitutable or non-substitutable that they should be based on clinical evidence as the European -- or sorry, it is the EMEA, have decided within their guidelines.

In this respect we have informed the US Pharmacopeia and have received positive feedback. We have to see what the final stand of the FDA will be in this respect.

Consumer healthcare. We have today in 2009 without and before the integration of Chattem sales of approximately EUR1.4 billion and they have been extremely doing well with a growth of nearly 27%. And since we have achieved more or less this household remedies, we have done some life cycle management. We have started to structure our portfolio. We have optimized our portfolio. We have started to organize from a local level and yes, we have also reinforced our management team. By the end of 2009 we have made a recruitment and have nominated an overall worldwide responsible for CHC development and with the direct responsibility for the European market.

Chattem has finished the year 2009 well, very well. Sales results are public and we are working today in line with the overall opportunities and business necessities because it still is not closed to integrate Chattem in our strategies. And a major part of this strategy of course is, as mentioned by Chris, the switch of Allegra which without any doubt is an extremely strong brand not only in the US but especially in the US it's an extremely customer friendly brand because it has lowest rate of sedation.

It has a very, very attractive package insert from a customer point of view, and we will file for switching in the first quarter 2010 and are confident that we will then switch the product early 2011 and the Chattem management is eager in doing so because it gives Chattem the opportunity to double its size over a number of years to come.

I promised to give some insight into Merial. I'm experiencing Merial with a lot of pleasure. It's a real excitement and not only for the decision which is imminent, no because it's a business which is close to pharmaceuticals and nevertheless it's very different than pharmaceuticals and for me the most impressing is the strong correlation with the business and the overall economic condition of the market.

And then when you see here that approximately 66% of Merial sales is our companion animal sales, cats and dogs, largely driven by Frontline, which is the leading brand, which is by far the leading brand of the total animal health business selling more than $1 billion, it is clear that this type of product is sensitive to overall economic recession and so yes, it is true that during the first three trimesters of 2009 Merial had negative sales.

The fourth quarter came back with a growth of nearly 4% and then so overall sales have been stabilized as far as the total year, which in respect to our competitors is a good, even very good performance because all the other major companies, we are currently number three in the animal health market, are in regression for the total year 2009.

You see first I said according to the portfolio around companion animals, of course Merial is strongly US based. That's the good and that's the bad news. The good news definitely is that there is significant potential outside the United States in the rest of the world section and we believe that sanofi-aventis can contribute in guiding Merial or as a future combination with Merck, given our experience in the emerging markets.

And here we are, the chart on the right side gives you some illustration of what the recession meant. Yes, I think it's easy to state that the first quarter 2009 had an impact in terms of overall economic conditions. But then you see that our sales strongly came back already in the second quarter and we continue then to the fourth quarter.

Overall at EUR7.4 billion sales, 19%, if you focus only on BRIC + M even 24% and overall with a market share of 6%, and also this figure has been mentioned before, it's for us to be repeated, 25% of our today's sales come out of those parts of the world and this is without any doubt a strong promise for our future.

In wrapping it up, I think it's fair to say we had a strong fourth quarter supported by vaccines but also by underlying growth, overall 5.3% of sales growth in 2009. We have a very, very good start with our ambitions in consumer healthcare and generic, which we are boosted by targeted and well fit acquisitions. We have a very encouraging start with our new product coming from research, MULTAQ, in the US and also in the first major market in Europe.

And we have given out a different direction in terms of organization for our growth platforms, diabetes and oncology, oncology with a very, very promising short term future, end of 2010 and 2011, and yes we have continued to build up our historical strengths in the emerging markets and also this gives us a lot of confidence and trust into the upcoming years.

Thank you so much.

Okay, taking a look at the vaccine division, 2009 was both an exciting and overall excellent year in terms of our performance. Revenue was slightly over EUR3.4 billion, up 19%. We had strong performance across all of our franchises. As Hanspeter referenced, we had an exceptionally strong fourth quarter, over EUR1 billion of sales. A lot of that is linked to H1N1 and the pandemic and I'll address that in a moment. But before that, I would like to look at our base business.

In our polio, pertussis, Hib franchise, our pediatric franchise, we had over 20% growth. Business today is over EUR0.75 billion and this business is being driven globally. In the US, the first full year of the Pentacel launch, Chris referenced that our market share now against one other competitor is now at 70% after a first full year in the market place.

A product, PENTAXIM, another pentavalent vaccine that is used throughout the international markets, continues to grow significantly. This was introduced in 2005 in Mexico and Turkey. It is now being introduced throughout the Latin American region, throughout Eastern Europe and the Middle East.

Our pneumo -- and meningitis franchise was up 6%. The catch-up market for bacterial meningitis is -- has probably, has reached its peak in the US. We continue to grow. The greatest opportunity for bacterial meningitis now will be in the international market places long term and new indications in North America.

The emerging markets was up 16%. Our business is approaching EUR1 billion now in the international markets, and so strong growth there.

Now total sales on H1N1 in the fourth quarter were EUR440 million and this was in line with the guidance that we gave when we had projected sales to be about EUR1 billion between the end of 2009 and 2010. So let's take a look at the influenza market place.

This was a record year for the vaccine division. Sales for seasonal and H1N1 were in excess of EUR1 billion. I think the thing we're most proud of is our performance in the seasonal market place. Nearly EUR600 million of sales, market share globally at 45%, in the southern hemisphere over 70%.

On the chart we are showing the seasonal vaccine sales of sanofi pasteur, GSK, AstraZeneca. Novartis does not report their sales by seasonal or H1N1 so we don't have that data. Directionally we think it's similar to GSK.

The importance of the seasonal business is that this is a sustainable business. This is the business that is repeated year in and year out.

A pandemic is a global health emergency. It is opportunistic. It's our role and responsibility as a manufacturer to meet the expectations of the World Health Organization and the governments but it's not a business that is going to repeat itself year in, year out. That's the seasonal business.

We were the only manufacturer to deliver 100% of their seasonal commitments in the US and this was an interesting year from a seasonal manufacturing perspective because the B strain that was selected by the World Health Organization was an exceptionally low yielding B strain based upon historical norms.

We were able to use one of our facilities in the US to continue production of seasonal into September and deliver in excess of 50 million doses in the US market place, and again, we're the only manufacturer to deliver their full commitments.

As it relates to H1N1, we began production in France in September after we completed our seasonal production. We began in June with one of our facilities in the US and switched that over to the second facility over in October. We produced over 200 million doses of bulk antigen and delivered slightly over 100 million doses of H1N1 in the fourth quarter.

We had a contract with the US government. It was our largest contract to deliver 75 million doses by the end of December. That's exactly what we did. We had also delivered 5 million doses to Mexico by the end of December, which was our commitment to Mexico. We fulfilled the remainder part of that commitment, which was for an additional 15 million doses, in the first two months of this year.

As we look forward in to the influenza market place, clearly H1N1 is an issue still in the first quarter, particularly in the southern hemisphere as they now move toward the influenza season in the late second quarter. We expect sales to be comparable year-over-year 2009 to 2010 as it relates to H1N1.

We have a number of new products that we'll be introducing for seasonal vaccine. The Fluzone High Dose IM product was licensed in late December. This product provides superior immune response for the elderly. This is important because the elderly do not get the same level of protection as healthy adults. Their immune system -- they're older and their immune system doesn't respond as well. This product clearly provides superior Immunogenicity and we have very high aspirations for it starting in 2010.

And then in Europe and Australia, Australia actually in three months we'll be launching an intradermal seasonal vaccine. This provides tremendous patients' convenience because it's a dermal injection so it's not intramuscular.

We also are expanding our overall flu capacity. We brought a new facility online in the US this past year. We're building facilities in Ocoyoacac, Mexico and in Shenzhen, China. These facilities are on track and scheduled to come online in 2012.

Looking at our pipeline and the progress in R&D, in the upper left hand corner are the products that were approved in 2009. Fluzone High Dose I mentioned, that was approved just before the Christmas break. We licensed the H1N1 vaccine, Panenza here in Europe as well as an H1N1 in the US. And Intanza, the intradermal vaccine was licensed in the first half of the year and will be launched in Europe this coming season.

The upper right hand box is the submissions that were submitted and are under review right now. IMOJEV is the first once-a-day or single injection vaccine for Japanese encephalitis. We filed in Australia and Thailand. As it relates to Europe and North America, this will be more so a travel vaccine. The real need and opportunity is in Asia-Pacific where the disease is endemic. There are over 30,000 deaths a year from Japanese encephalitis.

We have filed with Pediacel. This is a pentavalent pediatric vaccine. It's an all liquid product. It is standard of care in Canada, the UK and The Netherlands so we have a full European dossier that was submitted.

And we have filed for our adjuvanted pandemic vaccine, Humenza. That's under final review now here in Europe.

In the lower left hand corner gives you a perspective of the projects that were added to our pipeline in 2009. There's been a lot of work being done in the nosocomial area. We have -- Chris referenced the deal with KaloBios. That is for a disease called pseudomonas aeruginosa. This is a disease that -- it's a bacterial disease predominantly found in hospitals and this is an issue for patients who are on mechanical ventilators. 60% of patients on ventilators for more than four days contract this disease and this is a project that now is in phase I.

We also have a staph aureus vaccine that is in an exploratory phase and through the acquisition of Shantha, we have basically strengthened our IO platform for the developing world but more importantly, have added to our pipeline and it's very complementary.

Rotavirus is in phase I and actually will be entering phase II this month. HPV is another product in the pipeline from Shantha.

And then we added a periodontal vaccine. Periodontal disease is caused by bacteria and so we have a product that is now in the exploratory phase for that.

Looking at the milestones and there were many but the two I'd like to focus in on are basically Clostridium difficile and on the Dengue vaccine. Both projects have entered phase IIb. Our Dengue vaccine has a very large clinical program and last week we completed the enrollment for the pivotal efficacy study in Thailand for the first dose.

Now looking forward, we expect the vaccine industry to experience significant growth over the next five years and sanofi pasteur is poised to participate in that. We expect strong sales performance in 2010. The role of the emerging markets, same as pharmaceuticals, is going to continue to grow. Coming off a base of EUR944 billion we clearly will be over EUR1 billion in 2010.

We have a very strong position in our key franchises, polio, pertussis, Hib, meningitis and of course influenza. Our pipeline continues to progress as planned.

And the final piece, which is very important in vaccines is to have the capacity to produce the vaccines for the large populations of the emerging markets. We have 15 capital projects underway right now. I mentioned the two influenza ones in China and Mexico, but we have a new Hib facility under construction in Marcy. We have expansion of our polio facility in Marcei to meet the needs of our associated polio eradication, a number of new filling facilities will be coming online and of course the Dengue facility in Neuville is under construction and it will be online in time for the launch by the end of 2013.

So I'd like to thank you and at this point turn it over to Jerome Contamine. Jerome?

Thank you Wayne. So good afternoon. I will now go through the financials. You had already a lot of comments about the sales and I'll add just here to emphasize the contribution of those organic acquisitions and forex impact for the full year and then for the fourth quarter.

So for the full year, the overall growth, organic growth has been 4%, which is quite good and the contribution of acquisitions are -- of general structure, has been only 1.3% as long as I just remind you that last year we were still consolidating sales of Copaxone which we are not consolidating anymore this year. We just get the payment from Teva, so this has a negative variation or impact on a like for like basis. So the other arm clearly you had a positive contribution of both Zentiva and Medley.

We do not consolidate Merial as you know because we are planning to go for the phase II, which is a combination of Merial with ISP, therefore we are continuing to just take the net result of Merial in our P&L basically and not consolidating the sales.

The Forex impact for the full year has been rather limited at the end of the day, only 1% but as we all know there have been high fluctuation of the currencies and this is continuing during Q1 2010. The overall positive contribution of the dollar has been around 2% and the Yen also had 1% positive contribution, the other currencies having a slightly negative contribution leading to this overall 1%.

When it comes to organic growth of 4%, in fact includes the impact of the generification of course of both Plavix -- Eloxatin and Plavix EU on Eloxatin. If I take out that just to see what is the underlying growth for the overall group, that Plavix in Europe and Eloxatin in the US, we come to around 6% organic growth, which is I think a very good achievement.

Now for the fourth quarter, some more variations, first of all on the Forex because if you recall, if you remember in 2008 Q4 was very high for the US dollar against the euro so we are in exactly the opposite situation as compared to the one that we had during the first three quarters. So we have a negative impact of the currencies.

On the other arm, in general structure we have the overall contribution of the full contribution of both Zentiva and Medley and also Oenobiol, which has not been listed here because it's smaller. And we don't have any more by comparison any more negative contribution of Copaxone.

And the organic growth has been above the average 5.6%. If you go into this 5.6% I can say that on one hand is that it's been helped by the pandemic flu sales by EUR362 million but on the other hand, it has been hit with the full impact of both the generic competition of Plavix in Europe and Eloxatin, so if I exclude these two elements in gain the underlying organic growth of the rest of the activity as being 6.4%.

I go quickly through the P&L because you have been now you have been looking at it since the morning, the overall gross margin has been slightly above last year, helped by more Other Revenues. As we all know, Other Revenues are mainly royalties we get from our partners and particularly from BMS in connection with Plavix and Plavix and Aprovel, and also of course helped by the increase of net sales.

The R&D expense for the overall year has been slightly down at the constant exchange rate level by 1.4% and I will give some more comments later on on that. Our SG&A has been kept flat, in fact +1.1% despite the contribution of acquisitions. The acquisition have contributed by a bit more than 200, EUR230 million so if I exclude acquisitions the SG&A overall absolute spending has decreased as also compensating for inflation and salaries and so on, which is really the result good cost management that we have embarked on and will continue to do.

The other operating income and expenses has been up and here you find the payment, mainly the differences due to the payment made by Teva on Copaxone, so we end up with a very nice increase on the operating profit margin from 35.4% to 38.1%.

A few comments on the various ratio, the valuation of cost of sales, SG&A and R&D, first of all cost of sales, when you look at the overall year we are basically flat from 26.6% to 26.8% ratio of cost of sales to sales.

Now if you look at Q4, you will see something which is slightly different as the ratio has gone up from 27.2% to 30.2%. Here I think it deserves some explanation because some of them are just one off and some of them will continue next year.

What are one-off? One-off are mainly this impact of the the donation of H1N1 to the vaccines to WHO. You remember that we had taken this commitment. We have taken the cost of that into our cost of goods some others have taken it with the SG&A, doesn't change much, so this is -- this counts for 1.6% of the -- on the negative side.

Also the counts here, the variations which was positive, although the first three quarters have been slightly negative of the first quarter, clearly we are producing more in Eurowhen we are selling in dollar, it would go the other way around in Q1 2010.

And there are two things which will last over 2010, the first thing is clearly the mixed effect. We are selling less blockbusters in the US. We are selling more products, more volume in emerging markets. We are selling more generics and as we have the opportunity already to say, this will have some influence despite of all the efforts our industry and colleagues are doing in the cost of sales to sales ratio.

So looking forward, looking to 2010, you could consider that the overall impact of both this mix effect linked to the switch of the business but also of the acquisitions will count for around 1.5% increase of the cost of sales to sales ratio if you compare 2010 to 2009.

The other impact, which will last over 2010, maybe not forever, is the increase of raw material cost in particular for raw heparin. You know that the raw heparin cost has increased since the heparin crisis last year, very significantly. This has started to go first into inventories and now is going into cost of sales. So you have not seen that immediately in our cost of sales in 2009 to a lower extent, you start to see it in Q4, and if I look for it all in 2010, you should expect here again around 0.6% to 0.7% of impact of these case of raw heparin. Of course it could come back but I think this is sure because this isn't in the inventories today.

So all in all, if I want to give you sort of guidance, you could assume that the cost of sales to sales ratio should be in the range of around 29%, let's say depending upon the exchange rate situation, depending on various elements.

And as you know, when we gave these long term guidance for 2013, we clearly said well, there will be change of mix so clearly we'll see some increase or decrease of the gross margins due to this effect of mix and we will see some compensation both in terms of industrial reduction costs but still you have a net impact on the gross margin and also some compensation both in terms of SG&A and in terms of R&D costs so that at the end of the day on the bottom line you will see stability of -- basic stability of margins in 2013 as compared to 2008.

So we are really now in this story.

And fortunately figures for both R&D and our SG&A are going the right direction. R&D, there is no magic figure and of course we always said we don't aim to spend either 15% or 16% or 14% of sales. The point is to make the R&D more innovative, to have more products and to make it also more efficient. This is what we have started to do as part of the transforming program, which has been largely commented upon already.

If I just stick to '09, it's something to see there is a start of shift of the R&D spending to less internal spending, more spending into partnerships, more spending into vaccines and overall a slight decrease on the overall spending of R&D and even more if you look at the ratio of R&D to sales.

Another term that you can see here, the pharma R&D has gone down by 6.5% and if I exclude all what we spend on new partnerships, we have been even down more than 10% and we have reinvested into new partnerships in the range of around 5% in 2009 and this time we clearly continue as part of transforming in 2010 and you will see a real shift in the way we spend the R&D, in the way we could use our fixed costs and in the way we put more contribution into external research and also external products which are coming from external sources.

SG&A, it is a tradition at sanofi-aventis, we are among the best and we continue to be among the best so one point more and we are down at 25%. This is really the result of all efforts we've made to cut down costs. Of course we adjust our sales and marketing spend to products and to the generification when it comes but it goes beyond that. It's a new way of doing marketing it's having a more efficient sales force. It's also shifting our production, our business, our activity, our sales from high cost countries to low cost countries, from the mature Western World to emerging markets.

And also we have embarked when it comes to G&A into a series of cost reductions for sharing of expertise, sharing of common, shared services and this will go on in 2010. So once again, it's not -- it's quite notable that we have stabilized our SG&A while we have increased our sales and while we have done acquisitions which by construction have brought some new SG&A, new sales and marketing costs and general costs as well.

A few more words on the cost savings plan, which is part of this whole story and if I say that we are able to compensate for the evolution of the mix of business it's clearly that it's coming from the cost savings program. We are more than on track. We are ahead of schedule. In 2009 we have already saved EUR480 million on the base of activity of 2008, which is our reference, baseline.

And obviously if you remember we said that we aim to save at least EUR600 million in 2010. Obviously it has been achieved -- having achieved EUR480 million in 2009, which are recurrent cost savings, which will continue to its end, we should clearly save more than EUR600 million in 2010 and continue to the guidance and the evolution of the net results case we comment in a few minutes.

So we can say that we are ahead of schedule for the whole plan and that most probably we will achieve the EUR2 billion savings before 2013, whether it be in 2012 or it be 2011, it's a bit early to say, but this is where we are.

All areas, and I mentioned it already, I don't need to spend more time maybe at this stage, all areas of the Company have contributed to this cost savings plan and will continue in 2010.

For now I go down to the net income. Here I go very quick. First of all, clearly what is most noticeable is an increase of the net income to sales ratio, from 26.1% to 28.9%. From this slide I will just comment on one thing, which is the profit coming from associates. It's firstly what we get from our partnership with BMS, which is our -- our interest in the BMS profit in the -- or BMS venture profit in the US mainly and here you will now see, and in clear if I could say so, the contribution of Merial.

Merial is 50% over nine months and it's 100%, sorry, over three months so all in all it makes a nice increase. Also somewhat helped by some translation impact but still there has been an underlying increase of the contribution of Merial, despite the fact that Merial has been in a sort of a bit challenging year with a stability of sales as Hanspeter described a few minutes ago.

Also two other comments, more financial, first of all on the cost of debt, the second on tax. The cost of debt, of course we have increased our overall debt due to acquisitions, not that much but still, and we have been able to stabilize basically our cost of debt, our net financial expense. This is due to the reduction of the cost of gross debt from 4.8% to 4.1%.

We have done two bond issues which were nicely placed all over the year and which now gives us a high visibility in terms of maturity from four to ten years. On the other side, to a lower extent, the emanation we get from the Treasury the cash is very limited so it somewhat compensates this improvement of cost of debt, but still we have been able to stabilize the overall net fund for expenses.

Tax rate, we had a nice, of course we expected that, let's say for a while but we had a nice gift let's say from both sides of the Atlantic from the US and from France. Going forward we are not going to pay with earnings tax on the dividends we pay from the US to France and it has a retroactive effect back to the first of January 2009. So this is why we have revised our tax rate for 2009 from 29% to 28%, and going forward this will continue.

So another trend for 2010 I think we can plan today to have a tax rate which should remain around 28% instead of the 29% we were used to before. So this is where we stand today and so I think you can take that into your computations for 2010.

While just a comment on Q4, we have had a best performance with, on a constant exchange rate basis plus 18%. You could wonder how much is the contribution of the tax rate evolution. In fact, not that much because in my news of last year, end of 2008 for different reasons, more German situation also on, we had also revision during Q4 of the average tax rate, so if I compare the like for like basis, the positive contribution on the valuation of the quarterly EPS from the decrease of rates has been around 3.4%.

So if I exclude that we are still at 15% during Q4 and on an overall year this is a contribution of a bit more than 1%, 1.3%, 1.4% so as was said at the very beginning underlying operational performance has been in line or slightly ahead of the guidance we gave at the end of Q3.

I just remind you that as of 2010 we are going to report on one aggregate which is not any more adjusted EPS but is business net income. The reason for that is to make it simple and not to struggle about the fact to know where our amortization of intangibles should go. Is it up above or below the adjusted net income?

Basically if you do an acquisition, it goes -- it used to go below. If you do an in-licensing you used to go above. Now everything will go below what I could consider more as a cash earning per share.

It doesn't make a big difference. I think this has been disclosed to you so on several occasions including end of last year. If I take the 2009 figures as you can see, the base will be EUR8.629 billion and in terms of earnings per share, the business earnings per share has been in 2009 [EUR6.621]. The rate of growth has been exactly the same if I take the adjusted EPS or the business EPS and you will see you get your documentation the trend for the previous years and you will see that there is also not very much difference.

So once again, the guidance that we are going to give and the quarterly results we will give in terms of aggregate will be based on this business net income going forward and not anymore onadjusted net income. Of course the consolidated income is not changing due to that. It's not just a question of repartition of the various lines of the P&L as it is described, once again, from the slide on which maybe are we not comment precisely.

A few words on cash, actually we have generated a very strong free cash flow. I must say that when I came in the one year ago I was really wondering can they really generate EUR4 billion of free cash flow? Yes, they can. Yes, we can.

So we have generated EUR4.3 billion after dividend of free cash flow this year, which is really a record. After spending CapEx, CapEx on new plants and vaccines, new plants in biological plants, for industrial, and back before acquisitions, so we have been able to finance a large part of acquisitions through this free cash flow. And the overall EUR6.6 billion of acquisitions have been financed let's say by more than two-thirds by the free cash flow.

So after net debt, even if it does increase, remains very low at EUR4.1 billion as compared to EUR48 billion of equity and that's compared to an EBITDA which is around 12, so this is a ratio of net debt to EBITDA which is around .3 which keep us among the best in the industry, obviously shows that we still have -- we do have the financial strengths to do acquisitions so the question of acquisitions is not the question of financing. It's a question of attractiveness of these acquisitions both from a strategic point of view and from a financial point of view.

And finally dividend, so what we are proposing today and what we intend to present to the annual general meeting is an increase of the dividend to 9.1%, round figures, come to 20% to EUR2.40, makes things simple.

As we've said on many occasions, we will -- I mean we don't want to go for a payout policy when we know that there will be fluctuation in our P&L quarter after quarter, du either to exchange rate valuation are due to immediate impact of the generification and one quarter.

So we have taken the view that we should have more median term strategy when it comes to dividend evolution which is compatible with the median term or long term sustainable growth that we want to deliver and along with what we have said when we released our long term guidance.

So what we clearly say today is that we want to be able to continue to at least maintain and regularly grow and of course grow progressively our dividend and this is our commitment going further why we are increasing the dividend by 9%, a nice 9% for 2009 to be paid I think on the 25 of May 2010.

So that's a short wrap up. You have heard already a lot of that so very solid performance, continued cost management, EPS growth ahead of sales and slightly ahead of guidance, strong cash flow generation and as Chris mentioned already, the transformation of the group is on its route.

If you just look at the evolution of the contribution of the growth platforms into sales, if you take the overall 2009 as compared to 2008, it's 47%, as compared to 42%, but if you take just Q4, it's already 53% as compared to 45%, so clearly you should look at 2010, the contribution of the growth platforms which will be much more than 50% of the overall sales of the group. So it will be the main contributor and shows how we are transforming the group.

Chris?

Thank you Jerome. Again, so what does 2010 look like? Well I'm not going to apologize. It's going to look like 2009. We've got a strategy. You don't change your strategy every year. I think where we really are focused on execution. I think I've said before, strategy is actually the easy part. Execution is the hard part.

So our formula for growth remains unchanged and we're going to continue to pursue it with the same passion and energy that we did in 2009.

In R&D, as I said, I think whereas we were looking more at cleanup, change, getting some cultural change to occur, we want to put some rungs on the board now in terms of actually bringing in more innovation into research and development. We clearly have an opportunity to accelerate, high potential late-stage candidates like our PARP inhibitor.

There are some exciting things in early stage and I think our policy is not going to be to say let's go do big pipeline reviews and everything else. My experience is that you can talk an awful lot about R&D structures, you can talk an awful lot about R&D portfolio and you get zip for it in your value and then you give an awful lot of information to your competitors.

So we'll probably not talk an awful lot about anything that's in early stage and really wait until we're a couple of years from market.

But there are some interesting things. I was talking with one investor recently on (inaudible) we had our PCSK9 in there. What, you have a PCSK9? This is hot property in the pharmaceutical industry and yes, we have one of those and these are things that we would clearly be looking to to really accelerate and bring forward.

Obviously Wayne has a very robust vaccines portfolio. sanofi pasteur really started to look outside and do their research collaboration before the rest of the Company.

There is a significant shift in budget going on. One of the things actually I look at most is not so much how much we spend in R&D as a percentage of sales. That's going to go up or down depending on what the opportunities are. I'm not committing to a number and we will spend it even if we don't have something to do, which is something I've certainly seen in my career.

But what is important is to me the fix to variable cost ratio. This is a business in R&D, wherever you are, whether you're in biotech or you're in Big Pharma, we fail more than we succeed. And what you really need is flexibility to move resources. You give a team some money for a number of years, not ten, but probably more than one, and you measure that and if you got something, you continue to finance them. If you don't, you want to pull that money back and put it into an opportunity that looks even better. You can't do that if you do not have more flexible spending.

And of course we're now just actually starting the new R&D organization. Again, we're moving from 11 management layers to six, Marc?

Six.

Significant flattening of the organization, empowering of people, putting scientists into scientific jobs instead of management jobs.

We're going to continue spending. If you want to know what we're going to do, look at what we've done. I think it's a model that works. One of the things that we're able to do is we can buy an insulin plant one day in Russia, buy a vaccines company in India. We can then go buy a generic OTC company in Brazil. We can buy a biotech company on the West Coast, do a few research partnerships. There's an awful lot of stuff.

I had one investor tell me, 'Wow, 33 deals. For some people that's a whole career. For you guys, that was one year.'

We could only really do that for two reasons. One is I think Laurence Debroux, who is sitting up here, has an absolutely incredible team, I think best in class in the industry in being able to screen, evaluate and close transactions.

But the other thing is by doing those size organizations and having them as bolt-ons to your global -- to your growth platforms, you can then quickly pass them into the line management. So if do a medley, it goes off to our general manager in Brazil and that's his job to make sure it all works. Buy the insulin plant in Russia, that's up to our general manager in Russia to deal with afterwards. And we have I think extremely high quality general management in our operating companies.

You can't do that if you have these giant deals where you're going to get bogged down, but you can do that when you've got a crack team up front, hunting, searching, closing and then a team to actually drive the value out afterwards.

So we're going to continue to do that. They are going to be consistent with our growth platforms and you know, the R&D model will continue recognizing that you can't have those kinds of deep relationships with 100 companies. So we will continue to do that but you need to be selective and really be partnering with the best, because it is actually an awful lot work managing these partnerships

The growth platforms are there and we've been able to acquire companies. I remember people asked me a year ago, 'Well, can you really buy anything in OTC?' I have to say if you'd asked me a year ago, I'd have said, probably not that much to buy in OTC. I remember my US team saying, 'Well, we're interested in OTC.' I don't think there's anything to buy in the US. Guess what? We found something to buy in the US.

A lot of people say is there anything really to buy in vaccines? Well, we found something in India. So if you hunt, you will find and I think we'll continue to do that and I think we've been very good at that. Yes, we are seeing -- we are ahead of track on cost savings. I think that's a natural fallout as we move the business into other areas and we will evaluate and see whether we need to update our targets at a later stage.

So, guidance. Jerome and I have had one conversation, it's been a hundred conversations on guidance. We thought we had it nailed and then all these rumors came out about Lovenox and how do we deal with Lovenox and does Lovenox actually face a generic before we get to guidance and so here's what we decided to and we'll be very open and transparent with you.

I tell you, we really don't know what the impact of Lovenox generics will be in 2010. It depends on whether this is a substitutable or a non-substitutable generic. This may depend on whether there's one or there's two. And if you're out there, you hear all kinds of things so rather than try to come up with multiple scenarios, what we decided to do is say let's take Lovenox out of the equation, because quite honestly, you know as much as we do about what's going on with the Lovenox generic.

So let's give you an anchor point, a reference point that you can then take as to what's happening in the rest of the business. So we have taken into account generics in Europe for Plavix and for Eloxatin in the US, for Taxotere later on and the others, but we haven't taken Lovenox into this number. If you don't take Lovenox into that, then we believe we can do 2% to 5% earnings per share growth at constant exchange rate which we believe is a little bit more than most of you are expecting.

Obviously we don't bring that in to account. We don't really know what is happening. I think Hanspeter talked about certainly letters that we've had with the US Pharmacopeia. We remain firmly convinced that there are significant safety issues to a substitutable generic and we will continue to do what is needed to make sure that those in decision making situations are aware of that.

However, a Lovenox generic, in particular a substitutable one, would have an impact that would probably, depending on when it came, have some impact on our 2010 numbers. It doesn't really have an impact longer term.

When we did our 2013 numbers, we didn't assume that Lovenox just continues to grow at 8%, 9% as it has the last 20 years. We didn't assume that the new two oral medicines that come along, take a share of that. And we decided to put in there really from the point of view or reorienting the Company, a non-substitutable generic.

It turns out that actually when you do that, there's so little left of Lovenox in the US that we're a substitutable generic for Lovenox to be approved, we would not change our guidance for 2013 in terms of our minimum floor on sales and profits.

Now while we're on the subject of 2013, a number of you have wisely pointed out well, your guidance is versus 2008 and you just did 13% and now you're offering another 2% to 5%, look if this goes up and I go down here to 20-- what happens in the meantime?

We don't want to get into the game of giving long term guidance every six months. We will update it at the right point in time. I would point out that it's always been a minimum guidance. There are a number of levers that we could look at. There is going to be some turbulence over the next two to three years. I think I mentioned last year that our goal is to try to continue to exceed expectations. I think we were able to do that in each and every quarter this year and that's going to be the way we're going to do it.

But I would say I stand here before you extremely confident that no matter what happens on generics we will be able to, at the minimum, have achieved that 2013 guidance.

So with that, I think we'll turn to questions. Obviously in addition to Wayne, Hanspeter and Jerome, we've got Marc Cluzel who heads Global Research and Development and Laurence Debroux who heads our Mergers and Acquisition team long range planning as Chief Strategy Officer.

All right, Sebastien.

Yes, Sebastien Berthon from Exane. I have two questions please, one on diabetes and one on emerging markets. I noted your target of overtaking Novo Nordisk within the next few years in diabetes. There's a 25% gap on sales as you mentioned. I hardly see how you can throw the gain market share against Novo given that they are launching their own GLP-1 analog in probably two years before yours. And also how the next generation of insulins, which are probably three or four years ahead of yours, so should we assume that this gap will be plugged by acquisitions? That's the diabetes question.

And regarding emerging markets, obviously growth has picked up over the year. It still seems -- I mean your gross sales seems to be slightly below the emerging markets pharma sales gross. Any particular regions where you see particularly intense competition and should we assume in the future that as a big leader in emerging markets, which you are right now, you will have to give a little bit of market share to your competitors or do you feel confident that you can grow at least in line with the market there?

I start with diabetes. You may have noticed that I didn't give a year when we takeover Novo Nordisk. Still it's a target. It's overall a target. Evidently Novo Nordisk will continue to grow. It depends on various aspects. I believe that we have a certain advantage in the developing parts of the world where we are usually stronger, even much stronger than Novo Nordisk so it will largely depend, can we take advantage of it and will we even enlarge the distance.

The second element is definitely new products. They have tried to launch a new product in the US which took them some while, probably we all know we have to see how this product and the whole class will perform. In any case they have a new product. For the time being we have to manage with the products we have on the horizon of let's say three years from today, we believe, that we are in a better position once again.

We have a number of single agents under development and yes, I personally have quite some expectations of the combination which was already mentioned earlier today by Chris, our GLP-1 with LANTUS. It's very good, it's a long lasting LANTUS so it will be rate of new products which will contribute.

And the third one is the environment of pharmaceuticals which means mainly blood glucose monitoring and other devices like pumps. I believe that everything is for the time being open but I am confident that we will be a little bit faster than Novo Nordisk on blood glucose monitoring, which is not a simple blood glucose monitoring but it is who will succeed to connect best those devices with the individual pharmaceutical product offering, who comes up with it first will have definitely once again an advantage in this space, but overall if you look we have gained about 15 points in the last three to four years so I think it's fair to say it will take us another three to five years to match up with them.

But it's a nice (inaudible) as you say in French.

On the emerging markets, I think we have to be really careful when looking to IMS and the emerging markets. We know that the IMS figures are entirely wrong in those markets which have high shares in free goods and natural rebates and any kind of discounts, payments advantages and so on and so forth. So as a consequence the data for Brazil for example is totally misleading.

It's misleading so what we have started to do, we really benchmarked ourselves with our own sales against what our major competitors report in their financial reporting. Who are the major competitors? I think once again it's easy. Our major competitor in those parts for historical reasons is GSK. They have an edge today still in the English-speaking Africa whereas we have a leading edge in the rest of Africa. In Asia-Pacific we are really head to head and in South America once again we are in front of them.

Novartis is third best and then there is from Pfizer, I see a lot of communication but when you go to the markets, you see a lot less. This is easy to say but not so easy to do. When you are a company like ours, being 20 years in China, this is really a large advantage because you have really cultivated, you have developed your structures and you have the adequate management which in all of those markets is the key. If you have good management you can conserve your advantage, which is what we intend to do.

And I would just add on that, to me it's not a market share gain. Market share is really if you have a developed market and you've got to go steal share from somebody, there is going to be an element of competition in those markets but the real issue is really the growth in those markets.

You take China for example, there's pretty much everybody on the east coast of China but the further you go inland and particularly as you go west of the Sichuan provinces, not everybody is there and so you're not interested in whether your market share is bigger or smaller than Bayer or Pfizer at that point, it is how do you find reps, train them up, get them in the front of physicians. Do you have a range of products that you can use to match that?

You take a Brazil, there is more of a market share gain and a Mexico but you've got other markets where it really is a market expansion, market development issue and so for me I think one of the core things is how well is that business growing. If it's growing at nice strong double digits then you do what to benchmark yourselves in some ways but it is also all about growth.

We also know that not all the products, not only do you not have the issue in IMS because of the rebate mechanisms, you also have a whole range of products that aren't always covered. Vaccines are actually very poorly covered even in places like the United States. You also have very poor coverage of some OTC products in that regard.

So it is a benchmark. We have a kind of a look at it but personally I'm looking at top line growth and making sure that that's growing. Generally the best way to measure this is what's macroeconomic growth doing? If macroeconomic growth is good, you've got more emerging middle class and they're going to be spending more and are you really -- do you have the organization and the product portfolio to go after that growth?

Thanks. It's Graham Parry from Bank of America Merrill Lynch. Three questions. The first one's just going back to your commentary on generic Lovenox. You sound a little more cautious than perhaps in the past. I just wanted to clarify whether that was just due to the chats that we've heard about the wholesaler requests or whether you're hearing anything specifically from the FDA that indicates that a decision may be coming soon.

Secondly, your former colleague at GlaxoSmithKline just recently put some hard numbers out there on internal rate of return on acquisitions and also on internal rate of return on R&D expenditures. I was just wondering if you had any similar metrics you could share with us.

And then thirdly a question on emerging markets growth, I think in your press release you refer to about 8.9% fourth quarter growth at constant exchange rates if we exclude acquisitions. I was just wondering, could you segue that to the 19% which includes acquisitions and how much is acquisitions and how much is currency and is there anything specific that you can point us to as to why that growth was relatively slow just in the fourth quarter. Thanks.

All right, so with Lovenox we don't know anything more than the chatter. FDA talks to the generic applicants, not to us so we're just prudent in listening to that and we've heard the rumors that they're talking to wholesalers and the like. We had a fire drill early in December where there was all kinds of chatter that this was going to be a Christmas present to Momenta and Santa Claus didn't deliver. Then we had another fire drill in the second week of January so we just said well, there's lots of chatter out there. It seemed to be more intense than typical chatter but we have no information on that.

In terms of IRRs and things like that, you know to a degree and I'll let Laurence and Jerome take a crack at this, it depends on, to me, a little bit about what type of business it is you're buying. An IRR makes no sense on a -- to me, on a biotech company. It's either a valuable investment or a total waste of money. And there is no medium happy ground in there.

If you're buying an OTC company, however, then I think you can get into more traditional return on investment criteria but Laurence, maybe I'll give you a crack or Jerome if you'd like to answer that.

We do calculate a number of metrics including IRR on every project. I cannot tell you there is a magic number that we apply and we discuss each project on an individual basis and based on its merits and based on the type of project that you're looking at, whether it's more R&D oriented or totally OTC type of project and we discuss that with Jerome really in depth to see what should apply on a project by project basis. So I don't think we will give you a target at the company level.

We can say that of course all projects have to be, or acquisitions let's say have to be -- have to have an IRR, which is a significantly evolved, the cost of capital of the group, then you need to think about what is the cost of capital you should take and here you have to weight that with the area, the geographic area you are in so clearly you would do that, inspect the IRR for project in Thailand, is it right or now, much higher than the one we would get from the US.

Second, one important issue is also to what extent is it long term to have a long term perspective or not. So here I would say because very frequently you have the question - When do you get regional capital which is above your cost of capital? And here I would say if you are into an OTC business like Chattem where you have a five generation of production and you have a very, very long horizon and you can really accept to have a return on capital which is evolve, the cost of capital let's say after your seven or your eight, and if you go into a more narrow product, clearly you have to assume that you need to have the cost of capital -- your return on capital above the IRR in your three or four.

So, and that means you will be around your five, your six, that it could be a range and we would accept to go to this type of range when going for business which offers long term visibility.

Personally, I think if you ever make an acquisition decision on that type of analysis, you're not going to get very far. I think I'd like to look first at a company and say, what do we bring as management that current management isn't doing? What can we do in terms of sales growth? And where is there a good business rationale for synergies?

If you can really come up with a good equity story around that, then the numbers will generally work if it's a good margin business.

If you have to go and decide on an IRR, quite honestly, I'd rather not touch the business since it's probably too close to the line to call.

On the growth rate of the 19. whatever and the H1N1 --

The overall growth rate for the whole year has been 19%. There is no currency effect. All this is on a constant exchange rate basis. If I recall properly the organic growth rate for the full year has been 7.5, keeping in mind that this includes the impact of the economy crisis at the beginning of the year and specifically in Latin America. And you remember that during the first quarter I would say or the two first quarters, the growth in Latin America was slightly lower particularly in Mexico and to a certain extent Brazil. We are really recovering from that so the first quarter organic growth rate has been above the average growth rate of the year so we are catching back to the 10% average we were aiming at.

Once again this year, people tend to forget but we're in Q1. We're still at the end of the financial crisis and we're -- the consumption was going down so yes, the key thing I'd like you to get from that is we are seeing an increase in organic growth rate in our emerging market sales over the year and in particular Q4 as I compare to the previous quarters. And I think on average a 10% objectivewhich we have, organic plus acquisitions is definitely something which remains our objective and remains achievable.

Do you want to add to that, Hanspeter? You had a slide that actually showed --

The slide is the only thing that you will see again. You will definitely see a strong dip in the first quarter. Second quarter which was at least on the level of the previous ones and then an acceleration in the third and fourth quarters.

It wasn't just the economic crisis. Mexico in particular was hard hit also because they suffered particularly hard from the H1N1 crisis. They went through a two-week period where they shut down travel and businesses and I think the Mexican economy was down something like 7% at the beginning of the year.

Brazil was, who started also in negative territory and moved into neutral zone and sort of halfway through the year and came back into growth in the second half.

When you consider that we have a huge exposure to Latin American economies in particular, we have over -- we have a billion euros of sales certainly in Brazil and close that in Mexico, that will actually start to weigh on the results but I think Jerome is right, that we would expect to be growing in double digits in those markets and enhanced by acquisitions.

Oh my. On this side.

Jo Walton with Credit Suisse. A couple of general questions and a few little product ones. The general one though is really to do with R&D expense. I wonder if you could tell us of your EUR6 billion of licensing and acquisition spending, how much of that was effectively buying R&D externally that other companies who did the same worked but did it internally would have put through the P&L. I'm particularly concerned that we see a reduction in the R&D as a percentage of sales. We're not actually seeing a reduction in spending and I wonder how investors are supposed to mark you to this because now you're not even including the amortization that might ultimately come out of it. It seems to be getting a free ride on this spending that's never going to appear in an earnings number that you ask investors to look at.

Could you also give us some help on the profitability of Lovenox in the US, just very, very crudely? If it does go in the US, is this a more than averagely profitable product, a less than averagely product? Do you have any variable costs that you can remove from it in terms of promotion or would the loss in sales pretty much go through in the short term to the bottom line?

And then I'd like to just ask on MULTAQ, can you tell us whether a 34% tier 2 for the Part Ds is actually access, is that good or bad? I don't know. It doesn't sound brilliant but I guess you feel that it is so what could that go up to?

And a final one for your flu product, you talk about your high dose flu for the elderly, can you give us some sense of what portion of the market for flu vaccines is delivered to the elderly? Is that like a big opportunity and could you get a price premium, any sort of ACIP type endorsement that would actually drive the market share towards that product?

So let's take the R&D question first. First in terms of whether you put the amortization in or not isn't going to make a difference for quite a while because you don't start amortizing until you actually launch a product. So, and if we get there, we'll all be happy.

Two is we actually do disclose the number as far as I understand. We're not putting it in that number, it's just to be consistent and we've actually looked at what our peer companies do so we want to be in line with that.

And sometimes, by the way, that amortization number, in my experience, doesn't actually end up on the R&D line. It lands up on a cost to sales line for example, so I think we'll try to do that.

The -- we have had a net reduction in R&D spending internally and we have added back on projects, so if you see a reduction in the -- the minus 7% is actually a net reduction in spending. Yes, you buy in R&D but it was R&D that you didn't spend from the past and I think that number, Laurence, was around 600?

No, we have invested in in-licensing EUR325 million.

That's right.

For 18 partnerships, so I think you have to compare what you can compare, think about what it means in terms of a range of products coming from exploratory to phase II. This doesn't include investment in BiPar. BiPar, as you may recall as has been disclosed, the overall spending, if we go to approval to prologation is $500 million but we are not yet there. We are far from that.

So if I put all of that together, we discuss that regularly with Marc, I think the cost of external R&D versus internal research part and bringing a product in any phase where it is, remains definitely quite competitive.

And also as we have done some early agreements on R&D which are really research collaborations, you put in your assets what you pay as milestones but then after that, our R&D is going to work on this product and that's going to flow through the P&L. So what you put in the asset will of course be only amortized the day you launch a product or if you're not lucky, getting buried at some point and that's going to be below the business net income.

But then when you get them in a portfolio, they continue their life within the portfolio so you have the expense.

And I think, so if you take Regeneron as an example, Regeneron flows through Marc's budget. If you take BiPar, the cost of developing now this asset in phase III is sitting actually in R&D expense.

What we're also doing is hey, we're going to do an R&D partnership, wonderful, but that doesn't necessarily come on top so we're also looking at allocating resources according to where the best project is. If we're going to do this, we will probably stop doing something else.

I don't know any other way to actually present it. We can certainly look at how we do it. For me the biggest advantage is if you buy this, it's a different thing than if you spent it yourself because by the time you buy it, you've discharged a huge amount of risk, whereas if you've been expending it, you've got a lot more risk because you're still in that process of not having discharged risk.

So for me, net-net, you're in a better situation.

Now you had --

Lovenox.

Lovenox, yes.

So Jo, as you know we don't publish individual profitability of products so I have to remain a little bit cryptic. Lovenox is a very profitable product for us in the US but we have even more profitable products.

Now you can guess.

We have significant costs allocated. We have a massive sales force behind it. We promote the products of course in the hospitals and we also promote it in the retail segment which depending on the outcome, we would cut. I think we discussed the issue before and I say it's a huge difference between a substitutable and a non-substitutable.

I heard today said somebody from Novartis, seems to have said you say would have a substitutable, they see a big opportunity. If they want to have a non-substitutable, they would perhaps even hesitate to commercialize it. This is perhaps a little bit exaggerated because then they would have to write off their participation in Momenta.

So it's very difficult to say, but if you would have a non-substitutable we would very, very moderately adjust our spending. If you would have a substitutable, we would radically of course reduce the head count and also variable expenses.

So 34% commercial are reasonable, are reasonable given the fact that we had less than six months to achieve it and then we had launched in the second half. I understand that it is getting more and more difficult to get on the coverage as more as a year has progressed because you have more and more difficulties to get access. I think a maximum coverage would be 70% approximately, which is what we have with our top products.

I am much more proud about the fact that we have nearly 60% coverage in managed care, which is definitely a very good result.

I'll echo that. Pretty much now most managed care organizations will want to have an experience with the product for six months before the P&T committees meet. And to the extent that you're on Part D formularies, that's even worse. And when you think that the average person with a-fib is over the age of 70, you've got quite a bit of exposure to Part D.

Now, 57% is not good compared to say a product that has been on the market for three or four years. I mean, the big blockbusters typically get to 80%, 90% tier two coverage, but to do that before that even six-month window is up is actually pretty good.

If the number is on one of our slides, it's usually good news.

Are you with high dose or I am?

Oh yes, high dose.

Okay, so the high dose formulation in the US, 75% of the population over 65 is immunized for influenza in the US. Like most developed countries, that is the large market segment.

US market varies in size from year to year because of the supplies and shortages but ballpark, 120 million people immunized, at least half of that is the elderly population.

We have been in discussions with regards to reimbursement with Medicare. It will be reimbursed. Your question on premium price, yes, it will have a premium price. I'm not ready to give it a specific price other than to say more than double intramuscular vaccine.

And in terms of ACIP, ACIP is scheduled to meet in June. That's when they make their recommendations for the upcoming influenza season and we feel very strongly that they will be recommending this product for the elderly population.

The data comparing Immunogenicity is absolute. This product provides a superior immune response and that's irrefutable and I think the thought leaders are pretty excited about that.

Someone over here? We'll take this side of the room.

Eric Le Berrigaud, Raymond James. Three questions, the first on operating cash flow, it seems that in 2009 a break in cash flow was flat versus 2008 at EUR8.5 billion on the back of working capital negative by EUR350 million. Could you sort of (inaudible) what you're doing in terms of working capital to make it -- to make some improvements there, especially in terms of inventories for instance for the years to come beyond profits?

Second, on Merial, is it fair to expect that you would exercise a second option to merge Merial and Intervet if and only if accretion is larger than the three or four percentage point EPS accretion that you mentioned for Merial as a stand alone company? Or is there any other metrics that you're looking at to whether or not exercise a second option?

And lastly, in terms of diabetes, could you elaborate a little bit further on the next generation insulin that enters into phase I, the concept behind it in terms of very long acting?

And also on PM2034, just to tell a little bit more on what kind of mechanism of action it is.

Operating cash flow?

On operating cash flow, first of all you should -- well, I would like to enter into many details but the first thing is that the operating cash flow take into account the restructuring costs since we are going to -- we are just spending. So if I include thiselement, you can include it or not, but you know that we have embarked a certain number of restructuring so this impact is around EUR500 million plus EUR550 million. So if I exclude that, it would see an improvement of operating cash flow by EUR500 million.

So second thing in terms of working capital, yes you're right to say that the working capital has increased by EUR840 million if I quote properly, but first of all the activity has grown by -- so if you think the inventory to sales ratio, actually here you have some variations because we took some provisions on some Clexane last year linked to, so if you compare on the net to the gross basis, it varies, which remains that we have inventories in the range of nine months and I think Philippe could comment on that from industrial activity that while we have some plans to reduce that but still in this business, what I learn is that the first thing is never be short of product if you're able to sell it, so it's different to other businesses. We have rules and balance to keep for many reasons, most for public health reasons and some from just business reasons.

So that's my comment.

In terms of receivables, we are -- we see a slight increase of receivables to sales and this is basically due to the extension of activity of different areas such as genetic business, typically Zentiva so we have some plans to which we work together with Zentiva to reduce their receivables.

Now let's be clear. There are some countries where the payment timing is decided upon by states so we can't measure on that particularly with hospitals so the last thing which has been negative this year, but it won't be the case the other year is because we are spending much less -- sorry, we are spending less. We have less debt to our suppliers which is negative on our working capital.

So in short, we are working on our receivables. We have some plans to reuse our inventories but still I think this would remain an advantage or so to have product available so I'm not that concerned when we see our working capital level but we have some plans to reduce it in 2010.

So concerning Merial, obviously it is going to be a factor as to what does a combined unit look like versus a Merial stand-alone. And I'll let perhaps Laurence comment a little further. I think you would say that if you looked at a Merial with a significant part of its business really in two products in pets sectors, particularly in the US, now we don't expect to see generic activity in animal health liked you see in human health, but there are some generic activities which would be expected to affect growth.

If you look at an Intervet business, this is a business that's really production animal based and in fact, in that part of the business, they don't even really think of themselves as being in the animal business. It's protein production. And essentially if you look at the emerging markets opportunity, the fact that you've got a growing world population that is expected to expand by 3 billion people over the next few decades, there's a huge increase in interest in productivity around food supply and food chain which also has a direct factor related to that as being the underlying health of the animals that generate the protein.

Also is you have emerging market macroeconomic growth. People tend to want to have better food and what you see is as people gain more money, they want more protein.

So you have to look at first of all a strategic element and come to some conclusions about the relative value of both propositions but perhaps Laurence you'd like to comment.

When we gave you an idea of accretion of the step one, if we stayed at step one it's obviously quite a short term metrics. And whenever you compare two projects, if one of them includes combining with someone else, so having to divest some products immediately for competition reasons, and the other one is staying stand-alone if you compare only on these kinds of metrics, you handicap the combination project if you look very short term.

And accretion is by definition something that you look short term, which is kind of a sanity check which of course we will take and we are taking when we look at this project. But I would say it's definitely not the driving metrics.

Driving metrics is generation of value long term, perenity of the business and long term growth that we can have with this project.

For the diabetes, so our product from Wellstat is a PCKS inhibitor. It is an insulin sensitizer. To give you an idea of its potency it's exactly the potency of the PPAR but without the side effects of PPAR and it is definitely not a PPAR. We have FDAconfirmation on this side and it's extremely active on the diabetic site restoring sensitivity to insulin and at the same time we have proof of activity on this compound on top of most of the active antidiabetic oral, antidiabetic compound, with a very good activity.

Before going to (inaudible) which is our long acting insulin I would like to go back a little bit to what was already said by Hanspeter about the association of our GLP-1 and LANTUS. We have more and more the feeling in speaking with key opinion leaders but also with patients, that what is more important is not the best control of HbA1c but in fact it's also the control of peak of glucose during the day and that you can achieve only with a good association of already with short-acting GLP-1 which is our case, and in fact I should say so GLP-1 without too much side effect and I should say in terms of the limiting effect, we are really at least with what you've observed so far in the low range of side effects so it's really an association which is willing to address not a problem of HbA1c but it's a problem of control of HbA1c and the peak of glucose and so it is of interest a once a day GLP-1 because you cannot achieve that with a once a week GLP-1.

And for LOLA, which is a long acting, you have to consider two points that one day it's perhaps not enough so we are looking to increase the duration of action of insulin so we do not know exactly how long it can be but should be definitely more than one day and at the same time you know you can always (inaudible) so we are very few hypoglycemia with LANTUS but we have seen some kind of hypoglycemia with LANTUS and so we are aiming with a longer duration of action to reduce at the maximum is a possibility of hypoglycemia with insulin, which is quite (inaudible).

And we'll try this side of the room.

Philippe Lanone from Natixis, three quick questions, sorry. First on the combination of LANTUS with the GLP-1, what -- can you elaborate a little bit more on the time frame? As it is a combination product, will it be faster to go to the market or are we looking at three or four years before market?

Second question on Taxotere, when did you file for the pediatric extension and are you confident that we'll get it in time before the generic arrives in May? So should we put in the model that actual generic for Taxotere in November?

And last point I noticed that the Others line in the sales model which is EUR6 billion in sales was only declining by 2%, which is better in the past and actually in the fourth quarter it was up so does it mean that generic -- that emerging markets are catching on here? And should we project growing or stable sales here versus declining before that?

Okay.

For Taxotere, pediatric exclusivity we did our jobs so I expect that we'll get an extension up to November.

For GLP-1 plus LANTUS we started already in fact the work and not with the definite device so as a reason I would say is close to 2013 for the combination of GLP-1 plus LANTUS.

The GLP-1 will get approved and be launched first and then the combination will follow. So on Taxotere we've answered. And then the Other revenue.

Yes, you're right, that part of it comes from the fact that we have -- we benefit from higher sales in emerging market but looking forward, you have always two -- now you have two ways to make your positions and one is to really look by product and the other one is to look by growth platforms and try to combine these two to see where we are hiding because we are really another way to look at the metrics of sales, which is to say well he has the gross products, he -- the other main products which are due to be generified and then there is a (inaudible) product in mature countries and then (inaudible) from mature countries and still in doing very well but probably still continuing to decline.

So but basically you answer is your point is the right one, yes.

One of the reasons I think it's good to look at emerging markets and you're going to have products that are growing rapidly, some that aren't but there is a portfolio effect in some of these markets where you need to have a range of products. Some of them will grow well and so it depends on what matrix you're looking at.

If it's part of the growth platform, it'll get lost because the high growth products are offsetting that but you need those other ones to be present in the market place and but that's also why we show you the line by line so you can see that yes, there is still a part of the business that is stable but it doesn't decrease much and in some cases can grow.

Next? Alexandra.

Thank you. Alexandra Hauber from JPMorgan. First question is just a followup question to the GLP-1 combo product. When I first saw it I said well probably you're going to do, once the GLP is approved, you can probably do some sort of paper NDA so that's going to go quite quickly. But then you were talking about potentially looking at a different endpoint as in the glucose peak so I thought well that's going to delay it but still you talk about 2013 so how should I reconcile the two things. Is it that you're just going to try it on the market and then generate the data later on potentially on that endpoint?

Second question is on coming back to the Fluzone High Dose. Let's assume you get a tremendous recommendation from the ACIP, would you be able to ship something like 30 million doses of that?

And could you just go through how we should think about this what's happening on the distributor versus the doctor level because I understand the typical flu vaccine you actually just sell to the distributor versus this one you probably would market to a doctor. So maybe you could win on both fronts this year but how would it look like next year?

The third question is completely different. I think on Greece, one of the reasons why the debt numbers got so bad is because all of a sudden they include the healthcare payables. So I was just wondering given that we know it's a particularly high, these figures in a hospital business and since you have Taxotere and Eloxatin, what's your exposure to Greece if anything and how you deal with this, as in have you been taking very many write-offs? Is this a number we should worry about, at some point in your P&L?

GLP-1?

I will reassure you that still for registration in diabetes HbA1c is still the gold standard. so we will register GLP-1 and HbA1c results are all together with all the cardiovascular study which are being done at the present time. This is true in terms of positioning which is a little bit different thanregistering. We will try to position the association of LANTUS and GLP-1 as a treatment of choice in order to control in fact the daily peak of glucose and it will be studied to demonstrate that we have good -- we have the better control of the peak of glucose then with any kind of an association.

But I think, I'm not sure that we need definitely to have that in the label at the time of the launch. Definitely we need to have data to support our assumption that we need at the same time to have better control of HbA1c but also a better control of the peak of glucose.

There is a lot of that happening in this direction by the way.

And high dose flu?

Okay, we're clearly not going to sell 30 million doses in 2010 and I think it's going to take a couple of years to build this product in the US so will there be 30 million in peak sales? We believe so, which is one of the reasons why we built the new flu facility in the US because the high dose IM consumes four times the amount of antigen as a typical IM influenza vaccine, so you have to have the capacity to handle that first.

And in terms of the distribution, you may recall, maybe not, but ten years ago there was a severe influenza vaccine shortage in the US and the entire industry shipped through distributors and the spot market for flu vaccines went from $5 a dose to $30, $30, $40 a dose. After that year we took all of our distribution direct because we bore the brunt of the complaining of the price gouging and yet it really was -- it was in the distribution channel where that occurred.

That's given us a couple of advantages. One is we have a much closer customers intimacy because we do ship direct so we have more consistent loyalty. Customers -- we know who cancels orders. We know who basically sticks with us, good year and bad year and obviously we rank those customers and it's a loyalty that builds both ways.

So I think in 2010 will be the launch year and peak sales probably three years out and that will be when the facilities are fully online and operational to support that kind of volume.

And Jerome on the Greek hospital debt.

Well, first of all the beauty of sanofi model is that we are present everywhere so we are dependent in any country or area or whatever, so actually Greece represents a bit more than 1% of our yearly sales. We of course -- sorry --

I understand these have been partly accumulated over many years, those payables.

Yes, in terms of sales it represents a bit more than 1% so I made a mistake. 1% of all of our sales. In terms of outstanding receivables, actually if I take the ratio of outstanding receivables to sales, it has even slightly decreased last year and it is, all in all if I include the public and the private sector, much bigger one year and we've improved the situation all right again beginning of this year, and I think that goes for Hanspeter and myself (inaudible). We are following that very carefully.

We have taken some provisions, some reserves against that but not much because experience has shown that we have always been paid so the exposure is at the end of the day rather limited and I think that well, even if there is some concerns about the future of the Greece economy, should you still believe that you are not going to be paid by your -- by Greece hospitals? I doubt that it would be the case because at the end of the day it would mean back to where all question around, the risk of bankruptcy of a country belonging to the euro zone.

So yes, this exists. We are going to face -- we have been facing crises in Venezuela, in Russia or maybe one day in India or one day over there, but at the end of the day, the risk is really very, very mitigated and once again, the overall outstanding receivable is around EUR200 million of which we have taken already a reserve and within that only a small part of it is hospitals.

Back there?

It's Naresh Chouhan from ICAP. Question on emerging markets please. GSK said they have had to walk away from a number of merger market deals because the price is becoming too high and it starts a lot of activity. Your 2013 guidance includes further emerging market acquisitions as you just said so how do you plan to extract more value than you pay so you don't destroy value in emerging markets?

And then a question on the debt level after CapEx and debt you have around EUR4 billion left. If you plan to continue acquiring, should we assume the current debt level is one which you are comfortable with?

I'll start off with the emerging markets. I can certainly say that we've looked at a few deals that GSK did that we didn't get anywhere close to even looking at so I would say if anything, our hurdle rates are much lower than they were because we're scratching our heads as to how they could justify doing the ones they did do.

Do you want to take the -- I mean the reality is that there's an awful lot of stuff out there and the deals that you're talking about are things for instance that another Big Pharma company like BMS have been selling off.

There are other deals out there and you do have to go looking and for us, I think you've heard, we put higher hurdle rates on some of these investments. If it's an emerging market it's got a much higher hurdle rate to achieve than elsewhere.

And we haven't actually done that many deals actually in emerging markets, not because there aren't companies. There's 4,000 companies in China alone. There's 400 pharmaceutical companies India, but you do have to, to find those ones that really do add value, and I would say that when you look at what we have done, and I think we actually have met what shareholders would expect us to do in terms of driving value.

Do you want to take the debt question, Jerome?

Yes, we (inaudible) very low level basically we were up EUR8.1 billion in debt. As you said, because of acquisitions we have increased our net debt up to EUR4 billion. Still, take this EUR4 billion and think about the EUR4 billion of free cash flow we are going to generate over one year after dividends. It means basically that if we were not to do any deal in 2010, which won't be the case, we have already done Chattem, we would be able to bring down the debt to zero by the end of 2010.

So I really feel that we are very definitely still very comfortable. All the rating agencies also share this view, we are in regular discussion with them. You know that we have a double A rating with Standard and Poors and an A1 rating with Moody's and they both agree that we have headroom to do some -- to do further acquisitions and of course it will depend upon which acquisitions you do how strong is the cash flow generated by this acquisitions, how visible also is the cash flow that you are going to generate.

But clearly I feel and if you compare to the competition, a lot of our competitors are large competitors are in debt to a bigger ratio which are much beyond 1.0, even 1.5 or even some of them 2.0, not to speak about smaller companies so I don't say we are going to go to 2.0 but I feel that with a .3 ratio of debt to EBITDA we are really on the lower end of the level that we can bear so once again, I think that it will not definitely should not limit our ability to do deals and acquisitions to the extent these deals make sense both from a strategic point of view as this was largely discussed today but also from a return point of view on a case by case basis.

All right. Any other questions?

Jean-Jacques Le Fur, Oddo Securities. Some question about BSI 201, the first one is if I understood Hanspeter, saying that the filing date is expected to be late this year for breast cancer, so my question is, is there any chance you would try to file with a phase II earlier than late this year? So that means a few weeks or months.

The second question is will we have a chance to see the phase II data in lung in the next few weeks and which manner we can see this data?

And last question on BSI is could we have an update on the patent situation, as if I remember when is the patent is to expire in 2013 so what is your expectation for the US to get probably a five year addition or extension?

And I have another question on the combo LANTUS/GLP-1. Just to try to understand the advantage of a GLP-1 is not to have any [dosage] of glucose in the blood so when adding an insulin you will have to do such a dosage so don't you think you will lose the advantage of having a GLP -- of the GLP-1 combining with an insulin?

Thank you.

It's a good question but I think you need to look the other way. It's a once you need insulin. In fact the risk with a quick acting insulin is in fact is to get rid of the peak of glucose but sometimes you expose your patient to hypoglycemia. So if you're able to add in patient who needs insulin LANTUS plus a GLP-1, you get rid of your peak of glucose without hypoglycemia and on top of that, with a potential advantage on weight because you know that with an insulin pretty soon you are gaining weight.

In terms of BSI for submission, no it's based on an interim analysis of the ongoing phase III study which is in fact going more fast than expected but still I do not expect that it will be possible to do soothe internal analysis, also we need to be absolutely sure to have a definitive advantage in terms of survival and so because it might be the drug is active, we have less event than expected and so we are increasing a little bit the time in order to get these events.

The third question that I don't --

(Inaudible) phase II data.

On breast cancer, we should see results --

On lung cancer.

On lung cancer, the phase III are just starting.

(Inaudible)

Sorry. Phase II data, for that I apologize. I don't know exactly when it's supposed to be published so I cannot answer this question now but I'm sure that Sebastian can tell that and the third question, the patent.

It is true that we have one patent in 2017 but we have many other patents so we are not commenting (inaudible). So not commenting on patent, that we've submitted that we are expecting. It's why we are in fact making these large life cycle management programs. The patent will be extended after 2020.

We know that 2013 date is absolutely irrelevant anyway because you would have at a minimum five years of data exclusivity from launch plus the fact we can't launch it -- you can't file for generic in that five year data exclusivity period so you're typically going to be working with at least seven years from launch.

We know that there's a patent extension that could take you out to 2018 depending on what indications and general counsel is sitting right over there but I think you could even imagine a patent situation that goes beyond 2018, but I think, what we certainly said is we're going to have those seven years in the US and then obviously in Europe, we got the ten years and (inaudible).

We have the patent for the use in cancer which goes up to 2018 plus the extensions then --

But we have also, I will not go into all the details but we can -- because when -- since all the patent are not still registered but we have patent which is covering some product likely above 2020. It's while we are starting life cycle management.

Right, so you've been very patient. We thought we might, if you'd like to continue to discussion and questions in a little bit more convivial fashion we'd like to invite you to a drink outside afterwards. We'd certainly like to celebrate our first year as a management team together. I think we had a great year.

We appreciate the support of investors and analysts alike and look forward to having a drink with you.

So thank you very much everybody.