Sanofi SA (SNY) 2011 Q4 法說會逐字稿

Okay, I think we're ready to roll so good afternoon and welcome to Sanofi 2011 Annual Results. Thanks a lot for those of you who have managed to come to Paris despite the snow that we had this morning, for a change. And welcome to those who are also following us via webcasts. This year we're actually allowing participants to answer questions via webcasts and so we'll add those questions in the Q&A session later.

As always I have to go through the forward-looking statements. So you know that our presentation today will contain forward-looking statements, which involves known and unknown uncertainties and risk. Those are detailed in our Form 20-S as well as in our document reference.

Today with us we've got Chris Viehbacher, our CEO, who will share with you the highlights for 2011 and provide you with an update on the execution of our strategy. Then Jerome Contamine, our CFO, will share with you the financial performance for 2011. We'll deep-dive into the performance of growth platforms with Hanspeter Spek, President Global Operations.

And then we've decided to keep enough time to actually cover a number of late-stage projects in the pipeline today. And this will be done by Dr. Elias Zerhouni, President of Global Research and Development. Chris will then wrap-up the session and then open up for Q&A. With that I will actually leave the floor to Chris.

All right, well good afternoon, everybody, let me add my words of welcome. Now, it was three years ago, almost to the day, when I had the first opportunity to present results of Sanofi. They were the 2008 results, to which I had contributed all of one month. But it was an opportunity really to lay out our strategy.

In 2008 we pointed out that actually, and I think this has been kind of the hallmark of what we've been doing, we did point out that while results were great in 2008 we could already envisage a time three years, four years hence when things would not be so great.

And that we as management had decided to be A, both transparent, but B, also to lay out a strategy that would prepare us for the patent cliff and would actually build a strong and growing company coming out of the patent cliff.

And we'll go through some of that in a minute. But I would say, three years later I think we've stuck to the strategy. I think if you look at 2011 results they should be really unremarkable to you, even though they're remarkable to us, because they should really just be in line with what we intended to do and where we intend to go.

Now it was a busy year for us. Clearly 2011 was particularly marked by the Genzyme acquisition. That was a big move for us in a lot of different ways. You know, anytime you spend $20 billion is a big deal. But doing a hostile acquisition of a biotech company, especially one that had manufacturing difficulties, was clearly an element of risk.

But equally it gave us an opportunity to create significant value. And I think as we look at 2011 we can already see that we're well down the track of creating the value that we thought we would.

2012, I've said on numerous occasions is a year that I've had circled in red in my diary for three years. The fact that we lose Plavix and Avapro this year, plus let's not forget Eloxatin, full year of Taxotere, second generic for Lovenox, not to mention a few price reductions in Europe and Turkey and the like, is not a secret to anybody. I think we've always been open that that was going to -- that was going to occur.

And I think really if I look at our investor base most people have begun to say, okay, but what happens afterwards. And you remember back in September we had an opportunity to really present where we thought the Company was going in 2013 and beyond. So 2012 is a transition year in some ways because we lose those blockbuster products.

But in some ways it's not because two or three years ago we said our future's not those blockbusters, and we stopped promotion from those. We've been essentially milking those. And we've been reinvesting in other parts of the business.

And so for us 2012 has certainly got plenty of challenges but we're going to continue to focus on those things that we have focused on for the last year, last three years, which is building a strong sustainably growing business based on our growth platforms and on Genzyme.

Now, the strategy is what it has been. There's always been three aspects to this, one is increased innovation in research and development. And in that we initially tackled development in the first two years. And we obviously dramatically reduced our portfolio of assets. I think with the benefit of time what we have seen is that a lot of those assets are still with us.

I mean it's one thing to chuck things out. It's another thing to decide what are you going to keep. And do you have the right criteria to make those decisions? I think the fact that most of what we decided to keep is still with us is an indication that we had the right criteria. And so that's how we've been able to file five dossiers this year while we've got 18 potential launches coming up between now and 2015.

Last year we tackled the R. And we've embarked upon an ambitious program, not only of restructuring, but when you look at things like the Warp Drive deal that we did in January, although a small deal in itself, is very much emblematic of where we see research and development going. And I won't say more on that because Elias will come back and talk about that.

Second part was to simply take the cash flow that we knew was going to go away one day and reinvest in those areas where there were growth opportunities. And the third was really to make sure we're adapting our structure. And essentially that meant we were going to disinvest where there was no more growth and we were going to invest where there is growth.

And strategy is all about making those choices. And it's often very easy to say I want to go here. But in making strategy choice you have to stop doing things, and that's what sometimes is very difficult with large organizations. And I think Jerome will show you that we've had some extremely impressive shifts in resources from those areas which no longer provide growth to those that do.

So let's take these a little bit one at a time. Elias is going to go through each of these products in a little bit more detail because I think there is an awful lot of value here that is not being recognized. What I'm particularly happy about is not only Aubagio but also Lemtrada, which we plan to file in the second quarter of this year.

By the way there's no real big difference between -- and there's nothing going on. It was first quarter. It's just slipped into second quarter. It was at the end of the year and there's just -- with the workload it's going to slip a bit. But we're still very confident in that

Lemtrada I think is yet misunderstood. I read an article yesterday in the paper. I mean I think people clearly don't really understand that Lemtrada is in a complete class by itself in Multiple Sclerosis, the only product that has ever demonstrated significant superiority over the gold standard, which is Rebif.

One of the things that I didn't know, really realize until even yesterday, which I don't think most people realize, the market is not dominated by Gilenya or Tysabri. 80% of the market is in something called ABCR, which is Avonex, Betaseron, Copaxone and Rebif. So the market is still to be had by those who come along with innovative products. And I think Aubagio and Lemtrada will do that.

The GLP-1 with Lyxumia will reinforce our diabetes franchise. Kynamro puts us down a path that will ultimately lead to PCSK-9 and Zaltrap will add to our -- as well as Visamerin, both of those products will add to our oncology franchise.

I will just say on those five I can tell you that actually getting five regulatory dossiers together in nine months is an incredible task. And I searched back. I couldn't find another company that had ever submitted so many regulatory files in such a concentrated period of time. So for a company that most people don't think has a pipeline I think it's a pretty strong achievement.

Genzyme is clearly -- was clearly the focus of 2011. This time last year we were just in finalizing really the acquisition. We announced it on 15th of February. On the 16th of February we already began the pre-integration. And there were a number of aspects to this.

Obviously bringing a successful biotech company with a big pharma is not an easy thing to do, especially because this was not just any biotech. It was a very iconic biotech company and a big one with 10,000 employees. So as I stand here today I'm actually amazed at the progress that we have made on a number of fronts.

Clearly the value proposition of Genzyme was being able to bring production back on Cerezyme and Fabrazyme to those patients who need it. Central to this was being able to get Framingham, the new facility, approved. And so we achieved a major milestone this year when we had, within three or four days of each other, approval by both the European as well as the US regulatory authorities, and on the basis of really the first validation batch.

Now I think that's a very strong sign of the confidence that the agencies have in the work program that we have put in place since Sanofi and Genzyme have started working together on this. Just this week we've also received formal approval from the FDA of the work plan to get ourselves out of the consent decree.

If you think about a year ago in Allston, which was the site affected by the consent decree, we were still producing bulk for four products. We were still doing purification, and we were still doing fill and finish. By April we had moved the fill and finish out.

By the end of the year we're only producing two products, and by the end of this year we will only be producing one product in Allston. And so we have dramatically simplified operations, taken the pressure off Allston and I think that is what's really given me the confidence that we're getting back well into production.

Now, you start up a biological facility you don't go from zero to 100 in five days. That's why it's going to take a little bit of time, to the middle of the year, to really fully get supplied. But on Fabrazyme, for example, we will be able to get all patients in the US back to full dose by the beginning of March. We'll then start working on the waiting list.

We'll be able to also already immediately begin to treat a number of patients in Europe who are on Replagel but who are obviously not getting a full dose of the enzyme that they need. And so we will be able to start bringing Fabrazyme back.

Cerezyme will obviously benefit from the fact that Allston is simplified. And I think this morning you've seen that the [Phase II] data were extremely positive on eliglustat. And as Elias will tell you, that this is an extremely important innovation in the treatment of Gaucher's Disease.

So production was central to this. I think production I'm confident on. Next the metric is [to generate] synergies. We had proposed $700 million worth of synergies by 2013. By the end of 2011 we had already achieved $230 million of synergies. And obviously we feel we're on very good track with that, too.

And in fact, most of the integration will actually be completed in 2012. The only reason we give 2013 as a date is that that's the year where you get a full year impact of all the savings, because if you complete a task in July of 2012 you're only going to get six months of those synergies.

Third element is research and development. In this case we decided to get our synergies not out of Genzyme but out of Sanofi. So we completely reorganized our research and development operations in the US. Genzyme has clearly been selected as our principal source of research in the US.

I think Cambridge is one of the most promising areas in the world today to do research and development. And with the acquisition of Genzyme, but also past acquisition of Acambis, the creation of our oncology research and development, we are now the number one life sciences employer in this very promising area.

Equally we closed a major research and development facility in Bridgewater, New Jersey, and have instead selected to use New Jersey as our base for clinical development, regulatory affairs and pharmacovigilance.

Third element is really the new products. And we've talked about Lemtrada and eliglustat. Fourth element is really people, and I've spent a lot of time personally in Boston this year. And if you do the walking around test, if you talk about the meetings, I think what I'm really seeing is that we're -- not only our past, the we versus you process, but you've actually got teams working together with trust and confidence. And I think the success we've had in production is very much a signal of that.

Another signal that I look at is what happened to the businesses that we took out of Genzyme and put into Sanofi? That's where you had maximum turbulence. All of those businesses performed at double digits so that says that we're able to do this without disruption to the business.

Cost savings is critical. We obviously lose a major piece of margin leverage by losing the blockbusters. And to compensate for that we've embarked upon a program of cost reduction. Now, I would point out all of these cost reductions A, have come earlier than planned, but B, are net. I mean we have not decided to build our Company on cost reduction.

Within that there have been more massive cost reductions with a reinvestment in places like diabetes and in emerging markets. So there's been a massive shift of resources within the Company, roughly 10,000 people out of North America and Europe with an equivalent number into emerging markets just as an example.

So with all of that when we look at our sales in 2008 of EUR27.5 billion, 25% of that was under threat for generic. We've obviously grown that business and announced EUR33 billion. Now, yes, we have increased that through acquisition, but I'll show you later that actually the gross growth was EUR10 billion from our growth platforms. EUR4 billion of it came from acquisitions, but EUR6 billion of it came from organic growth. And the EUR6 billion is more than the EUR4 billion that we lost because of generics.

Obviously Genzyme has certainly helped in all of this, but I think you can't have a robust company going forward unless you're continuing to build your sales line. So there you see the result, the EUR10 billion on the left are the growth platforms and on the right you see what we've lost, EUR7.5 billion down to EUR3 billion. And obviously a major chunk of that is going to go this year.

In 2011 we suffered another EUR2.2 billion of lost sales due to generics. But you can see that the growth platforms have now moved from 43% when we first talked together in 2009, and they've now grown to 65%. So two-thirds of the company is Genzyme and the growth platforms. By 2015, 80% of the Company is this business. Equally on the right we've gone from 27% of sales being at risk down to 9%, and that will drop to less than 6% at the end of this year.

So when you look at all of these, obviously emerging markets is really, I think, an unbelievable story for Sanofi. We're the only Company to do more than EUR10 billion in emerging markets.

We are by far the leader in this and this is simply because we have historically been strong there. We have been for decades in India, in Latin America, we were the first foreign company into China. We have local manufacturing. We have local product lines that are adapted to those markets. And most importantly we've got depth of management in all those countries.

And you can see that between 2008, 2011 we've had 16%, and Hanspeter will show you the acceleration that we've seen in the last three years. Diabetes, we've gone from a Company that sells Lantus to being a diabetes solutions company. And we've seen very strong growth, particularly pleased by the fourth quarter growth in Lantus of 17% and 15% for the year.

On human vaccines very good growth, on average of about 6.8%, I think vaccines is going to be a really strong contributor to growth as the dengue vaccine comes along, as Shantha comes back online, and with products like c. difficile coming along. But I will say that I think Sanofi Pasteur has done an extraordinary job in aligning extension strategies in our flu franchise.

Consumer health is the one I'm happiest about. When we started with EUR1.2 billion, quite honestly, this was a little bit of a hope and a prayer because we had a product here and a product there. Nothing in the US, nothing in China, and yet we've been able to acquire companies like Chattem, really on the basis of our desire to launch Allegra ourselves. That was a risk. We could have launched this with a more established partner.

I can tell you that the -- not only were the sales of Allegra such that we could obtain, almost within three weeks of launch, the second spot in this highly contested allergy market, but we actually exceed some of the sales projections from the more established players who are pitching to be our partner on this.

Obviously with the acquisition of BMP Sunstone we're into traditional Chinese medicines. We've opened up new channels of distribution, and we're doing the same thing in India. And so we're now starting to have a global presence in consumer and we're one of the top five companies in this.

Animal health, you've heard me talk about for a long, long time. The growth of 4% is pretty much the way we see this business growing to 2015. But I think you'll also see that we'll be very active in business development in this area. I still want us to be strong in production animals, and I still want us to be strong in emerging markets.

And finally innovative products, you will see that that contribution grows. But the objective of this has been that we don't depend too much on R&D and patented medicines in our growth. We want that to be accretive to a sustainably growing sales line and not be the only story to the company.

And so you see the well-balanced portfolio, one of the things that I keep close attention to is, particularly in these times of economic austerity, we have roughly 50% of our sales are reimbursed by government, but 50% which is not. And right now, the 50% that is not is looking a lot better than the part that is.

So we haven't been able to completely mitigate the loss on this, but if you look at that EUR5.59, which was our earnings per share in 2008, if you take the EUR4 billion of generic expiries that we've had, plus the EUR2 billion of after-tax profit related to Plavix and Avapro, you can see that essentially in 2008 -- and I didn't say this when I announced it because there's only so much transparency that everybody can tolerate -- but essentially 50% of the profits of the Company were at risk at that point. So to me, when I look at EUR6.65 and even for 2012, we are well above what the profits would have been if we had not chosen to implement the strategy.

We have talked about our payout going up to 50%, and one of the things that we have done is to make sure that investors are confident in our future, and we believe that we can do that by regularly improving our dividend. This year we're increasing our payout to 40% with a 6% increase in the dividend to EUR2.65. We also purchased EUR1 billion of shares, and I would remind you that that's largely due to the start to mop up the dilution that was created when we issued the stock dividend.

Why do we call them opportunistic? Well if you can issue shares for EUR49.60 as part of a dividend and buy them back at the same price or less, then that's probably a good deal.

So with that, I'll turn it over to Jerome.

So thank you, Chris. Good afternoon everybody. As Chris has already commented, the dividend I'm just wondering what I should say now, but however I will go through the P&L for 2011, and give some details on the financial performance for this year.

Well, you're used to this graph which we present quarter after quarter, and I still feel that it is quite impressive. Just over t the year 2011, we have lost EUR2.2 billion of sales from the key productions are being genericized year-on-year. And as we all know, I mean these products are not only safe, but also high profit. On top of that, we still booked EUR450m of sales of H1N1 vaccines in 2010.

So we started the year with a sort of handicap as compared to where we expected to be for 2011. I mean, as impressive is the contribution of the growth platforms, and Hanspeter will go through that later on. EUR1.9 billion of new sales created organically from the growth platforms, 10.8% growth. I think that's really signaling that these are really the drivers of Sanofi for tomorrow -- today and for tomorrow.

On top of that, of course, we bought Genzyme. Genzyme has put (inaudible) over the three quarters on which we have booked the sales, 7.6% increase of sales including double digits for both renal, Synvisc as well as Myozyme. The FX impact, there's always a lot of volatility as we know in the exchange rate. Actually the FX rate impact negative, as mainly driven by the US dollar.

We tend to look at the US dollar being a strong currency against the euro today. Just six months ago it was exactly the reverse. So in fact out of the EUR700, EUR600 is coming up precisely, EUR593 is coming from the US dollar against the euro, which precisely brings me to the next slide.

Yes. I think that it's important at a time where we are looking at very precise guidance for 2012, to remind you where are the main drivers in terms of currency exposure. So still the dollar is the main currency, as you can see. In 2011, it represents 28% of our the other currencies, which in rank of order is the Japanese yen, the Brazilian real, you see interestingly -- and also it's demonstrating how the shift of the company's taking place.

And for instance the British pound is just coming at the end of the list. So we are really now more exposed to emerging markets really than we are exposed to European markets, and in particular to European which are not denominated in euro. So there's a sensitivity which I think also which will be kept into mind, is 0.3% of the net income, resulting from a valuation of $0.01 of the franchise.

You know that if you take the 2011 exchange rate which was on average 1.39 and you assume for instance in 2012, you will be 1.30, it means that it is $0.09, or $0.09 is 2.7% of our net income for 2012. It's a 2.7% variation. So 2.7% of EUR6.65 is roughly $0.20. So this gives you an important point on really assuming what is the sensitivity of actual results [brought] in 2011, but also for the forecast of 2012.

A few words on the fourth quarter, of course, as usual when you speak about annual accounts, you tend not to look so much about the quarter. However, I think the quarter is proof to show strong performance. So sales have been up 9.2% on not only sales but also the profit we had was 9.2% on the business EPS basis.

So the increase of sales is basically driven by Genzyme, so you can say that in the first quarter, we lost around EUR387 million from key genericized products, the same as the ones which have contributed to the 2.2 we have seen on the previous slide, at the same time the growth platform has basically compensated for that, slightly less than that. On the right is really the contribution of Genzyme.

So yes, Genzyme has contributed to the growth of the sales in the fourth quarter, but at the same time you can say that the growth platforms have compensated for the loss of the results of generic competition.

The second noticeable element in this P&L is that we have been able to show a strong increase in profit, showing that by the way of saving costs, and in fact, having a minor impact of the tangible mix of our growth margin. I mean that the net profit has increased in line with sales, slightly higher than sales. There is slightly more share outstanding which brings us to the 9.2% increase of business EPS, which is exactly equivalent to the one we are posting for sales.

Now, if I look at the full year, so the full year is a 5.3% increase of the constant exchange basis of the sales. It's gross profit which is basically stable, slightly increasing, which is clearly the result of the change of mix. I will come back on that on the next slide.

R&D has increased by 7.4% and SG&A by 6.7%, but of course, you need to keep in mind that this includes the consolidation of Genzyme for three quarters. So clearly this is not a like for like basis but just on a current basis.

So this brings us to the slight decrease of the BOI, the business operating income by 3.9% as you can read. I don't think there is many comments to make on the other lines. Basically they are driven by the contribution of Plavix, and the joint venture with BMS on Plavix on Aprovel.

And then I will make some more comments on the various margins on the ratios. So to start with the cost of sales, so the cost of sales-to-sales ratio for the first quarter, has been 32%, just 0.4% above the level equivalent for last year. And we should even remember that not only have we lost over this period significant sales for highly profitable product, but also we had the shift of sales for the vaccine business between Q3 in 2011 and Q4 in 2010, in terms of flu vaccines, which is unfavorable to the cost of sales-to-sales ratio.

So we can say basically that we have been able to stabilize the cost of sales-to-sales ratio despite the shift of the business mix, which is a positive element on showing that there is underlying cost savings on this line.

Now, if I look at 2012, I can give you as guidance that the cost of sales-to-sales ratio should be around 31.5%, probably slightly higher than that, but below 32%. So very much in line with what we have achieved in 2011 in terms of ratio and probably slightly better than Q4.

R&D, we have continued to benefit from the transformations that we took and initiated now three years ago on our existing on the business. As you can see the R&D expense excluding Genzyme has decreased by 2.4%.

For next year we will see, and Elias of course, we will tell that, some impact of the reshuffling of our research organization around four hubs, and the restructuring we have embarked on which will be a positive, or let's say which will reduce our fixed cost base and help to monitor our R&D costs. And of course also help to improve innovation the way that we handle it.

At the same time as you see, you have also the contribution of Genzyme and for the three quarters Genzyme has been consolidated. The contribution to R&D costs has been EUR419 million.

SG&A, a bit the same story, so here again we have the contribution of Genzyme, so excluding Genzyme the SG&A has been down in 2011 by 2.6%. This is clearly the result of our cost savings.

This is a result of the reorganization we have implemented in our mature countries, both in the US, but also to a large extent in Europe, but that at the same time we have re-invested significantly in new businesses behind our growth platforms, in particular in emerging markets. So on the one hand, is EUR300 million to EUR400 million of cost reduction or spend reduction on the mature market, and on the other hand, it's reinvestment in other markets.

The second thing that you can draw as a conclusion from these graphs is that we really start to see an increasing impact of our control on our SG&A costs in Q4, and also the result of the synergies being generated between Genzyme and Sanofi. And as you can see, by good monitoring of our costs we have been able to limit the SG&A-to-sales ratio in Q4 to 26.1% as compared to 28.1% in the Q4 of 2010.

Well, here again, if you go down from the net -- from the operating income to the net income, I mean here I will also give a few comments. The first thing which is striking is that there is only a slight increase of financial expenses. I mean, you could be astonished by that when we have just raised $20 billion to finance Genzyme acquisition.

Clearly, we have been able to reduce our average cost of debt, and this is also regardless of the fact that we managed to finance Genzyme on an average cost of 1.4%, and also because of a better allocation or reduction of the unbalance between cash available on debt, the net impact of the carry has been less negative in 2011 as compared to 2010. So all-in-all, I think it's impressive to say that we've been able to basically not increase that much our financing expenses, in spite of significant increase of our debt.

On the income tax, as you can see, we end the year with slightly lower than the guidance I gave at the beginning of the year. This is the result of the positive outcome of the final agreement in terms of a transfer price between France and the US, which finally appeared to be more beneficial to Sanofi, as compared to what we anticipated and has contributed to 1% improvement as compared to 2010.

For 2012, we will still benefit from this environment, but on the other hand, we will have less revenues coming from royalties linked to patents, and these revenues are taxed in particular in France at a lower taxed rate. So by now I expect an increase of an average tax rate in the range of 1%, rather 1% close. So basically, we should have most probably something like 28% tax rate for 2012.

The number of shares, outstanding shares has increased slightly from 1.305 billion to 1.321. This is really, of course a result of the dividend we pay in shares. We have created as a result of that 38 million new shares, but at the same time, as you noticed, we have bought back over the fall 21 million of these shares.

So at the average price, which has been very similar to the price we have issued these new shares. So you can see that the average of the resulting dilution of the payment of the dividend in shares has been very limited in 2011, and will be limited also in 2012.

Okay. I'll take you to the full P&L, down to the net IFRS income. I mean I do that once a year. Some elements I will not go through all the lines, which are all very technical. We have amortization of intangible assets. This is resulting from the intangibles which were allocated to products at the time of the Aventis acquisition, but also to the allocation of the purchasing accounting price of PPA, through the recent acquisitions we did in particular for Genzyme and Merial.

The second thing is that because of that we have also re-evaluated our inventories in the opening balance sheet, which then creates some charges which are non-cash charges, which will disappear time passing in 2012. So this is the expense of writing those -- those are write on the work down of acquired inventories.

So restructuring costs have been basically very similar to the previous year, very much driven by the restructuring in Europe, but also the recently announced restructuring of our research organization. And we have some positive and some negative elements on the gains on low season disposals and litigations.

On the negative side, in fact, we had to resume the amortization of intangibles when we decided not to finally strike the deal with Merck in the venture between Merial and Intervet, which then we had to resume five quarters of amortization of intangibles, meaning that we have a negative impact, which was 517, if I recall properly.

And the other hand, we had some positive elements, one of which has been announced today that we got a final outcome of the trial between us and Apotex in connection with the launch of Plavix by Apotex, which created the positive one-off gain of EUR210 million in our P&L in 2011. And actually we received yesterday the check for this payment which in dollars represents $270 million.

On the tax aspect, beyond the systematic impact of taxes on all the elements which are described on this slide, we have in particular what I mentioned before, which is a positive one-off contribution of the finalization of the transfer price agreement between the US and France. So the final outcome is a slight increase of the IFRS consolidated net income, as you can see, by 4.1%.

We continue to generate strong cash flow, despite the shift of business as we can see the free cash flow after CapEx expenditures and variation of working capital has been close to EUR8.4 billion. We financed that part of our acquisitions, I mean the main acquisition of course being Genzyme. On top of that that we had acquisition of BMP Sunstone, and more recently the small acquisition of Universal in CHC in India.

The payment to shareholders in cash has been the part of the dividends which have has been in cash plus the repurchase of shares for total amount of EUR2.4 billion. And as you can see, the cash out linked with restructuring has been a bit more than EUR900 million.

So finally, we end the year with a EUR10.9 billion of net debt when we started by EUR1.6 billion, which means that when we have invested in acquisitions EUR14 billion the net debt has just increased by EUR9 billion which shows the ability of the group to generate free cash flow.

As I mentioned before, the average cost of gross debt has decreased down to 2.6%, and we have now a debt-to-EBITDA ratio which is significantly below one which make us comfortable to sustain, as mentioned before in particular at the time of our September investor meeting that we can sustain around EUR10 billion of debt net going forward.

So finally, a word on the new plan. If you remember that we announced in September that we have the plan to launch -- we aim to save another EUR2 billion that each and every details of that plan were not already identified in September.

Now, we can say that we have gone through a comprehensive exercise to identify new ways of working on new ways of saving costs all across the Company, generating more synergies between businesses, using Lean approaches more systematically in the industrial operations, continuing to restructure R&D in particular the R on variablizing our cost base in R&D, continuing to shift the field forces between the mature and the newly growing market and being more accurate in the way we spend our marketing expenses, generalizing an approach to a generalized shared services approach to all our support functions.

We have implemented that in the US, around mid-year, serving all our businesses. We are progressing in the same direction in Europe but also in Asia and Latin America. And of course this EUR2 billion includes the savings -- or the synergies we expect to generate from the Genzyme integration we have mentioned before, should contribute toward $700 million, EUR500 million by the end of 2013.

We can say also that out of this EUR2 billion part of it - should be not just split another four years. Part of it will be frontloaded in particular of the result of the Genzyme integration or the Genzyme synergies and then also our efforts to implement the sustainable structural reorganizations over the year 2012.

With that I pass the wheel to Hanspeter.

Good morning, good afternoon. I would like to lead you through the performance in essence of our growth platforms in 2007, and I start with the total picture. As you see here we have achieved EUR33.4 billion, sales growing by 5.3%.

On the left, the positives in essence the growth platforms achieving an additional growth of approximately EUR2 billion sales compensating there nearly the total losses on the right side of the picture caused by newly genericized products, most of them being Taxotere, Lovenox, but also a series of smaller products mainly in the United States.

For the first time coming incremental sales for Genzyme EUR2.5 billion to nearly EUR2.6 billion, giving a total of EUR4.7 billion new sales against EUR2.2 billion sales coming from genericization.

Now to focus on the growth platforms achieving EUR19 billion spending such for approximately 60% of our total sales over the total year of 2011 growth platforms have been growing by 10.8%, and you'll see then rise of remarkable growth for each of them, most importantly as mentioned by Chris earlier of course consumer healthcare with nearly 23%. Animal health was a relatively modest growth, 4.3%. You will see later that we have a nice acceleration of growth for animal health in the fourth quarter getting around 7% of growth.

Important to see the way we really get through the cliffs, the patent cliff. You see here for the last five quarters the impact of genericization, which has been in the fourth quarter 2010, nearly EUR1.1 billion for the third quarter alone.

And you see then that this is coming down and has been coming down to less than EUR700 million in the fourth quarter. Actually we were losing 14% of sales by the end of 2010. It went down -- still it's a remarkable 8% but nevertheless just a little bit more than half of what we have been losing about one year ago.

Now, more focus again on the growth platforms. Here you see our performance on the emerging markets. You see very nicely that this is not something which is recent. You see that evidently this is something which is accelerating as of 2008, 2009.

We have an average growth rate of 16% and you see also that it is sustainable. It has all started in 2005 already. So this gives us of course some confidence concerning the future sustainability of this business.

More in detail we achieved more than EUR10 billion of annual sales in the emerging markets, 10% growth at an average growth rate excluding Genzyme. It's a little bit more if you exclude Genzyme and the H1N1 sales.

And if you focus charts on the famous BRIC countries sales are approximately EUR3.5 billion and growth rate goes further up to 15% respectively, even 20% if you exclude the Genzyme which is less at present in those markets. But of course we see this as a very important upside for future growth of Genzyme.

Now, we were a little bit suspicious in the third quarter. There were some question marks also coming from you is this already is the beginning of the end of accelerated growth? And I am happy to report that this is not the case. In fact we had a very strong fourth quarter. You see 13.8% respectively 18.7% at constant exchange rate.

And you see then yes, they are very consistent. I had repetitively said that I believe it's the variance which makes really the strength of the emerging markets because the emerging markets are not at all uniform in their structure, in their opportunity and potentially also in their sustainability of growth.

This seasons that we have had in the fourth quarter is the strongest growth, 21% coming from Latin America with sales well above EUR800 million, relatively moderate 4.9% growth coming out of Eastern Europe and Turkey. I think it's fair to say that in Eastern Europe of course you have economies which are relatively closer even being part of the European community, and we have the issues you are very well aware of.

We also have on top of it Turkey. Turkey has been seeing a extremely difficult year with two consecutive price cuts of altogether nearly 40%. Asia continues very strong in the fourth quarter, nearly 16%, and Africa and Middle East very, very close to 10%. Remarkable growth I believe if we keep in mind that we have very strong positions in those countries where we have seen the Arab Spring in 2011, being it Algeria, being it Tunisia or being it also Egypt.

Then once again, a little focus on the BRIC countries and you see that also in the BRIC countries strong acceleration of growth of plus 20%. So no bad surprises at all. I believe even more a very good surprise because we have further accelerated our growth and so far our market leading presence in emerging markets.

Second good news of the fourth quarter and 2011 overall, without any doubt, is the performance of diabetes. And within diabetes, we are extremely proud on the performance of Lantus. You see that we have succeeded to accelerate Lantus' performance on evidently a growing base compared to last year.

From quarter to quarter we finished the year with nearly 18% growth. For the first time, Lantus has achieved more than EUR1 billion of sales in a single quarter. And yes, we have been also extremely pleased to read and to hear from the so-called Nordic studies says there is continuously not at all any evidence concerning the safety of Lantus.

And so we are looking with a lot of confidence as there are still outstanding studies and their results during 2012 and 2013. So all over very, very strong performance of Lantus and therefore overall for Sanofi and diabetes with EUR4.7 billion growth and 12% over last year.

CHC, Chris has alluded to it, was hardly anything let's say three years ago. In CHC we have put emphasis on our organization, and yes, I believe we have made very good choice in acquiring Chattem and trusting in Chattem to launch successfully Allegra.

Allegra has been brought to the market in the OTC segment of the United States in February 2011. The product has taken immediately the number two position in an extremely competitive market, and we have achieved sales for approximately EUR230 million in the first year.

And of course it has nicely and strongly even contributed to the overall sales growth up to close to EUR2.7 billion and the growth of nearly 23%. We can state that we have today a rather solid, strong position in CHC all over the world, ranking approximately number four or number five in this market segment.

We continue to do also generics. We don't call them generics. We prefer to the term perhaps of affordable medication because generics are not necessarily the same. If you go the emerging markets most of the business you see on the chart in emerging markets is in a branded generic business. And you see that we do extremely well also this kind of product, growing by 16% to above EUR1.7 billion.

You see sales in the United States on the bottom of the two bars for 2010 and 2011. Those are the sales of our authorized generics in the United States being it Taxotere, being it Ambien, being it, once again, Lovenox.

Due to the recent decision of giving Amphastar access to the market we have reintroduced our generic of Lovenox in the United States and you see that those products altogether have significant sales. Besides, we have no ambition to become really active in this market segment in the United States beyond authorized generics of our own product.

We have continued to roll out Medley. Medley, part of our success story inside acquisitions overall, but evidently also inside affordable medication. And we have rolled out more or less all over Latin America, and we will see in 2012 if we can really successfully export this concept from Brazil to the surrounding markets.

One word on Merial. I said already said overall the growth rate 4.3% looks relatively modest but is in line with the overall animal health market. We are happy to report that we had a very good fourth quarter which was so to say the first quarter of Merial being integrated inside Sanofi.

This has been an integration which went extremely smooth, and so we had very nice growth of 10% in the fourth quarter. Inside when you look to the charge you see that we are underrepresented with just 25% of sales coming out of emerging markets. And yes, of course, this is part of our overall strategy to expand Merial stronger into the so-called production animal segment, but also stronger inside the emerging markets, where with 25% we feel there is significant room for growth.

Vaccines are a little bit difficult to read. You see a negative growth rate which is due to a one-time event potentially, which was lower sales of H1N1 of more than EUR400 million in 2010, which could not be repeated of course. But if you correct it you see that vaccines had a good growth with 7.2% on a very, very high base.

Vaccines succeeded to make another record year with flu vaccines, but beyond also the other products did extremely well. To be named Pentaxim in the emerging markets as emerging markets overall continue to contribute to the growth of vaccines nicely with close to 11% growth, but also Menactra reaccelerated its growth due to new booster recommendations in the United States and extended global launches due to increased production capacity.

Finally on Genzyme, you see that Genzyme had a good quarter with more than EUR800 million in the first quarter of 2011. You see then that those products which will be taken care of inside the Sanofi portfolio which are in essence Synvisc and Renagel play an important part.

We are very, very confident that this larger footprint of Sanofi will first accelerate their growth in 2012. And I think it is clear and it has been already mentioned that the most important news around Genzyme, of course, easy approval of Framingham, which should help to lead the Genzyme in an even further accelerated growth into 2012 and the years to come.

And mentioning the years to come, it's probably the perfect bridge to pass on to Elias Zerhouni. Thank you so much.

Thank you. What we wanted to do in this presentation is focus a little bit more on R&D. And the reason we wanted to is because 2011 has been an extraordinary transition year for the R&D organization. But first, I'd like to share with you some of the principles, the underpinning of the strategy that we followed.

First and foremost, our global R&D goals are really based on the fact that we for the first time created a global R&D organization. And the fundamental reason we did this because, one, there is an enormous convergence in science in terms of vaccines and understanding immunology or in terms of multiple sclerosis, animal health.

And the convergence of biology gives us some ideas about how to synergize between the different components of what has become today one of the largest biopharma companies in the world because we can produce insulin, biologics. We can do vaccines, monoclonal antibodies and now with Genzyme, one of the best biotechs in the US, we have a spectrum of capabilities that where we think we can get synergies that would not have been available to any other organization.

It allows us to exploit the economies of scale. And more importantly, as I will describe to you, we've had a deep exercise in terms of restructuring our R and our D and improving our cost structure, which was inherited from the integration of multiple processing entities.

The second strategy has been to focus on high value projects, and what does that mean? It means fundamentally that there are only three things that will make an R&D organization successful. One, create products with high added medical value.

And that is a very profound statement because we don't know at this point what the market is going to look like in five to ten years, but it's clear that payers are changing their behavior. And it is clear also that healthcare costs are going to grow at a fast rate.

Ten years from now the total healthcare expenditure, despite all of the controls that are out there are predicted to double. About 75% of these costs are related to chronic diseases. And so payers, patients, providers are really expecting us to provide integrated solutions to the needs of their patients over long periods of time.

And this is where I think what we did was to focus our portfolio, and we stressed tested the portfolio in 2009, to really carve out of the portfolio, prune out of the portfolio things that didn't have legs in the context of a new world.

But we did focus, and you will see the results of that, on the execution of late stage projects. We accelerated that execution. We felt it was very important to change how we operated in R&D based on the medical value, but more importantly based on the quality of the science. And quality of the science in this context means taking advantage of all the emerging capabilities that allow us to understand human disease in humans and not just in mice and with low predictability of translation.

We also established new models of external innovation. It's clear that if you look at our strategy, it has two components, that is a D component, which is the development of what we do has to be outstanding, excellence, executed on time across the very complex chain of events that you need to control when you're doing clinical development. So we've focused on the excellence of our development.

On the R side, however, it is a more profound change that we needed to accomplish. Fundamentally, if you look at the productivity, internal productivity of the industry it has been quite low in terms of new products, innovative products in the research side. And the reason is in my view not just an organizational reason.

I mean everybody thought it's because the organizations are too big and unwieldy, but I can tell you, it's not just a question of a small size versus big size. It's also a question of smart. And smart means that you have to change fundamentally how you do innovation because there is no way with the emerging complexity of biology that any one company, any one country can have all of the resources needed to master the fundamental biology of the disease process like cancer or diabetes.

So it's clear that as the explosion of innovation outside of the Company occurred, we were not taking advantage of that. So over the past year, two years we have exploited this, and we have promoted the concept of external opportunities and partnerships.

But also we are really changing the model by creating an open end model of interaction with both biotech and academia and the Warp Drive Bio example, which we created, now in the past month actually, is a good example of what we are trying to do is not invest in others. We do not want to be passive investors. What we want to do is using the principles that we talked about is to have the clear idea of where and where we can build on our strengths.

And so, when you look at R&D, and you will see this in the presentation, we are not going to be everywhere. I mean diversification does not mean dispersion. And to us what is very important is to stay focused on the greatest opportunities we have. So diabetes is one of them, rare diseases is another one, immunoinflammation because of the strength we have with vaccines and with other components of the group.

And so we're going to focus on areas where we can internally provide value to an external innovation pathway, but also access patients as early as possible in the process to understand the mode of action and know how to measure it to diagnostics or biomarkers.

This is why, for example, Warp Drive is a unique example, because the scientists who develop the method to read out the genomes of natural products or organisms have a technique but they had no way of really using that until we realized that we had internally expertise that was accumulated for 50 years that was essentially not being used because we didn't have a way to read out what our libraries were doing.

So we created one plus one equal to three by putting our internal team with the external team and co-funding with an external partner something that we have hope will provide breakthrough products.

Having said that, let me go back to the short term and the medium term, because at the end of the day, we can all talk about concepts of R&D, but at the end of the day what needs to happen is executing on what we have in front of us. And that has been the focus of 2011.

So we focused on delivering what I consider a promising development portfolio. So in the short term, we focused on achieving regulatory milestones. And if you look at the data that you have, we had five products in the submission stage, and we submitted eight submissions, five in the European Union and three in the US in the past 12 months.

And for those of you who know what it involves, very few organizations I know -- organizations I know can do this. Each application is hundreds of thousands of pages of documents, but on top of that we have Lemtrada was coming in 2012. We have another four submissions in 2012 to complete the six products that we think have a potential for approval in the near future.

But at the same time, we decided not to just have a sort of generic development approach to the rest of the portfolio. And so we decided to have some high value, high priority projects that we would fast-track, that we would work on in a way that will guarantee, if you will, excellence in execution. Operational excellence is also a factor, and these are the next wave of late stage projects , which I'll talk about in greater detail for most of them.

So let's just look at the two concepts, focusing on an emerging portfolio that is actually promising and combining this with our strategic intent, which is to build in focused areas across where we have value to add and in opening up to external partners.

So the first franchise, if you will, that is emerging is multiple sclerosis. And this is truly an emerging franchise for us because we can in fact envision the ability for us at Sanofi, because we have the capabilities across the spectrum of tools, to really address the full spectrum of patient needs in multiple sclerosis.

And you have to understand, multiple sclerosis is not one disease. It's a multiplicity of phases and types of disease and it's multiple phenotypes, if you will. At one end, you can have the patient with early MS and very limited disease, where really you don't want to take a lot of risk and you want to find treatment that are convenient and safe at the same time.

And then you have the relapsing form with remission in the middle. That's an intermediate category where you still want convenience but efficacy as well. And then you have the more severe cases where what's important here is to stop the disease, have the most efficacious treatment at a reasonable safety level.

And basically that spectrum is covered from Aubagio to Lemtrada. And we have other follow-on ideas about how to fill in the blanks, if you will, in the entire multiple sclerosis franchise, if you will. But remember that for us multiple sclerosis is an autoimmune disease. It is in the world of what we call immunomodulation, and we want to build a very strong franchise in immunomodulation as the top number one or two company in that field.

So Lemtrada, what is Lemtrada? Lemtrada is truly a unique, unique product in the entire spectrum of products in multiple sclerosis. First, it has superior efficacy demonstrated in two Phase III trials, but more importantly it's an annual dosing mechanism. So in fact, you treat the patient at the beginning of one year and then you don't treat the patient anymore.

Now as Chris said, 80% of patients today require regular injections. This would be a yearly treatment essentially, first year, second year. And I always like to point out that this kind of dosing is quite unusual for an autoimmune disease but is quite common in vaccines. That's what we do. We vaccinate and then we boost the vaccination.

And I think the efficacy demonstrated in Phase III against the comparator Rebif is clear. You can have the results from CARE-MS I and CARE-MS II with a 55% and 49% reduction in the relapse rate, but also it's a statistically significant sustained accumulation of disability reduction and that is becoming a standard in the care of patients with MS.

I think the safety is understood. It is well characterized and consistent across studies. It's effectively managed. So from my standpoint, at one end of the spectrum high efficacy, manageable safety, very convenient once-a-year dosing.

Then Aubagio at the other end is an oral molecule, once daily therapy with comparable efficacy to an injectable interferon. That's the value proposition. I mean you can't complicate things too much. It is important to realize that we are going for efficacy and safety at the different components of the spectrum of multiple sclerosis.

And we have demonstrated that efficacy. We see, for example, that patients have a lower rate of discontinuation with Aubagio at equal efficacy to others. And I think the safety is manageable. We've had patients on it for up to 10 years. We understand exactly what we have to do. So that's one area of focus autoimmune disease, autoimmunity, immunomodulation.

The second is one of our best growth platforms, diabetes. We completely have to make sure R&D serves the needs of that platform, and so the first product that is coming out of the pipeline has been filed in the EU this year, will be filed in the US towards November 2012 as Lyxumia, lixisenatide.

Why is Lyxumia something that we believe in? Because it's GLP-1 agonist with a very unique post-prandial effect and a one step titration. It's simple and it's very effective in the post-prandial period which is when you ask physicians who treat patients with diabetes that's one of the variabilities that is the most important to treat.

So how do you treat it? Well, short acting insulin, but GLP-1, especially this one, has the ability to dispense from the use of that short acting insulin on top of basal insulin. That's why we think there is a very good effect here, because it also has a weight loss component to it which balances the effects of insulin.

So it is a consistent GLP-1 effect and was demonstrated through a series of trials including one that is going to be published today, that in fact we are reducing A1c and having a weight loss effect and a favorable safety profile with much lower risk of hypoglycemic events. And it's a simple peptide to use.

Now why is that important in this strategy? I mean, people think is that just a copycat or? In fact it turns out that from our standpoint what's really important here is that it has an optimal complementarity to basal insulins. And that's why we see an additional benefit here.

And we have three trials which really tested lixisenatide on top of basal insulin, because if you really look at the patients, again treated Type 2 diabetes patients and is this what I have been trying to do in the R&D organization this year, bring it back to the patient.

Science is great. We understand that, but at the end of the day, what does it mean? Well if you look at people treated today with basal insulin about 8 million people treated, half of them on Lantus, half of them on other basal insulin.

But when you look at the results how many are really treated well and are getting to target? You realize that only half of them really reach targets. Half of them do not. They still have A1c hemoglobins over 7%. So we need to find a solution to that.

We can't have 50% of our population not using our treatments effectively. And so what we found is that by combining Lyxumia on top of basal insulin in three trials we find that in fact we can bring these patients within closer to goal. And therefore we -- this is why we're developing an injection device for combining Lantus with Lyxumia, a fixed dose Lyxumia, which is on track for Phase III initiation early in 2003 with a device that will do that.

Now, when you look at the diabetes franchise you realize that you have to look at patient needs, and if you really look at the patients who use insulin, a large number of them really do not get to target. Why is that?

Because when you look at the pharmacokinetics of aninsulin, what you have to be careful about is the peaks, because the doctor is going to actually titrate the patient according to the peak not the base. And because of that what tends to happen is that if you have a treatment you want to be safe, and therefore the great majority of patients on basal insulins are undertreated.

And so what we've been always looking for is an insulin that has a flatter PK/PD profile and this one U300 has a PK/PD profile. But more importantly, 20% of patients with advanced diabetes use very high dose insulin, so they have to stick themselves more times than once. And the lower injection volumes allow us to envision a way of helping these patients. But you're going to say it is just a formulation. It's not just a formulation. It's a different bio-physical principal.

The crystal of insulin inside of a hypo of insulin is really different in a normal formulation where there is fewer molecules of insulin per unit of space whereas in the new formulation we have been able to pack more insulin in a much smaller volume.

So one, we can address the clinical need, but two, because of that it elutes at a different rate, and that's what gives us the unique flat PK/PD profile. And that's what we are focusing our first Phase III trials on high dose insulin users to see how we can, in fact improve the treatment of these patients.

Now, diabetes is a major franchise area for us. Cancer is also such a franchise. You know about all the currently marketed products, and this year we have strengthened our portfolio with Zaltrap.

Now why is Zaltrap aflibercept something we think has potential? Because unlike the other in the market that hits one receptor, this one is a trap. It really traps the ligand which means that it's really affecting every angiogenic targets in the process. That's what we wanted to really push this one with positive results in metastatic colorectal cancer. And we have ideas about how we expand the utilization of Zaltrap for patients with different conditions.

And next to that is Visamerin or Mulsevo, which is the -- I mean fundamentally what we have to understand is that treating the cancer patient is not just giving an anti-cancer drug. It's also managing the complications inherent to the cancer state. One of them is that a large number of patients when started on chemotherapy will develop venous thrombo- embolism, and these can be quite lethal conditions.

And this product is the only ultra low weight molecular weight heparin that is effective in reducing the particular state of patients with cancer and coagulability issues and reducing the risk in chemo-treated cancer patients.

It doesn't have an impact on major bleeding incidents and the treatment effect has been consistent across tumor types. So that's, again, a reinforcement of what we consider one of our platforms, if you will, in R&D oncology.

Clearly, when you look at the history of our Company and you look at our ability to play in cardiovascular areas, we had a historical success in thrombosis and arrhythmia is another condition. So there's quite a bit of inherent knowledge, and when we looked at what Genzyme was bringing in the rare disease space and then what we had in the portfolio with PCSK-9 we realized that in fact we may have a very favorite franchise there.

Why? Because if you look at the 40,000 patients with familial hypercholesterolemia that comes from genetic causes, about 5,000 of them are homozygous. In other words, they inherit the gene from both their mother and their father, that increase cholesterol to levels that are unbelievably high and about 35,000 that have a severe but heterozygous condition.

Well, this is what Kynamro is focusing on. This is a novel type of therapy because it suppresses. It's what we call an antisense RNA. It goes directly to the liver and blocks the production of cholesterol.

And that significantly reduces LDLC and liver fat is stabilized at 12 months, and we really see a significant reduction in apolipoprotein B production and Lp(a), which are really important characteristics for these patients to have a good outcome. So this is one component. Again rare diseases at one end with the Genzyme approach to rare diseases.

On the other hand, we have in our portfolio something that we are putting a lot of attention to, and that is the PCSK-9 monoclonal antibody. This is the first in class monoclonal antibody addressing unmet needs in hypercholesterolemia. And this is a common pattern of development today.

When you look at your R&D you have to define a significant unmet need. No, we know that 30% to 40% of patients are not at goal with statins. And there are many reasons for them, some familial, some compliance, some tolerability, but what is clear is that we have reached a plateau in reducing mortality and morbidity in atherosclerosis.

I think the landmark study that I am referring to on the slide is the study that showed in Texas 9,000 patients followed over years that if PCSK-9 -- the PCSK-9 gene was disabled the patients had a very lower rate of coronary disease and lower rate of LDLC cholesterol. That observation, a human observation led to a race in developing this.

In 2009 Chris and the team decided to focus on PCSK-9 and because it has a strong translational rationale and it has a strong medical value attached to it, in our opinion. And so when we did, realizing that the mode of action is different in statins that in fact you had an opportunity here with smart development to reach a goal quite fast in terms of reaching proof of concept and eventually Phase III.

Sure enough, Phase II results have been described for the reduction of LDLC and 65% systematically even on top of statins, which shows the complementarity of the pathways and at the same time that we have opportunities to treat patients who can't tolerate statins. And we're starting Phase III in the second quarter of 2012. We have already started the Phase III long-term study in December 2011, so again, addressing unmet needs.

Because we are quite expert in cardiovascular thrombosis, for example, and other like Plavix or other treatment like low molecular weight heparins and other approaches, we really focused on this one, otamixaban.

Why is that? Because when you talk to physicians who treat acute coronary events what they will tell you is that one of their biggest fear is that they will treat the event and they will harm the patient because they have to use heparin or anticoagulants, the action of which is slow in coming which means that, that when they do the intervention the blood can clot and they fail, or slow in going.

In other words the anticoagulant action lasts so long that they have treated the patient and then the next day they have a significant hemorrhagic complication including hemorrhagic stroke. So doctors have been looking for something that would be short in terms of reaching efficacy and short in terms of quitting the anticoagulant effect.

So I am trying to explain it to you why is it that we are interested in this product is because it provides a superior outcome while simplifying treatment. Treatment today is very complex. With this one what we hope is that interventional surgeons and interventional radiologists who do -- a lot of cardiologists, who do a lot of these procedures will realize that with this they can have a one step titration and a one step deactivation of the thrombotic event. So those are, in my view, the advantages of otamixaban. And we'll see we have a Phase III that will finish at the end of the year and we'll see that's true.

Again, building on the rare disease franchise, continuing to say we don't want to be dispersed. We want to be focused on things we are good at and build on our strength. This eliglustat is, in my view, not only a novel therapy for Gaucher's disease but it's probably a revolutionary therapy because it addresses the disease in a different way.

With Cerezyme what we try to do is replace the defective enzyme. With this medication what we try to do is a small molecule goes to the brain and goes through different parts of the body, bones for example. But what we're trying to do is different than Cerezyme.

What we're trying to do is actually inhibit the enzyme that produces the harmful ceramide which is the one that accumulates and make these patients have a large liver and the dysfunction is associated with Gaucher's disease.

That's why our colleagues at Genzyme really jumped on this opportunity and frankly it's a potent and novel substrate inhibitor that has the convenience of oral therapy and can eliminate the challenges of infusing patients that is complementary in many ways because it will help us in truly managing this disease more comprehensively.

And the clinical profile is expected to be similar to Cerezyme because it's really in the pathway. But we believe that over time with the Phase II data that we have, and we have completely recruited Phase III, that what we hope is that this will be a game changer for these patients.

You could have a patient here, for example, 18 years of age. You can see the size of the patient. Three years on eliglustat, and you can see the impact physiologically on this young patient. It is in my view probably the most significant change in the management of this disease that will occur.

So to finish, I don't want to miss my colleague Olivier Charmeil's accomplishments here, and again we're working as a global organization, and we're sharing our resources to make sure that the high value projects are supported and executed with operational efficiency.

While dengue vaccine, in my view, is actually in truth over the past ten years has not been a novel vaccine in the field. Everything has been sort of modification of what we know. This is the first true novel vaccine designed for dengue.

And dengue is, in my view, a growing global threat because the mosquito that carries dengue lives in cities. Urbanization is fast occurring. Global warming is affecting a larger swath of the world. It's truly at this point a public health priority in Asia and Latin America, 220 million infections. So we think that this, in my view, provides a solution to a rising problem at the right time.

There's a global Phase III program currently ongoing with 43,000 individuals, and this is something that I think has to be understood about global R&D. Global R&D at Sanofi is capable of launching a global clinical development program in all of the areas of interest to the Company. And this is a good example of that.

Now, clearly dengue is a major threat. The vaccine itself is scientifically extremely innovative because it uses a chimera where we use a yellow fever virus and we build all the antigens of the dengue viruses, which are four of them, and so that we can produce the tetravalent vaccine that this dengue vaccine is. And I really have great confidence that this will be a successful launch.

So 18 potential new launches, you have the list. I am only giving you what is in the current late stage portfolio. I understand that, and I'm told that there is a lot of discounting of whatever R&D chiefs say in terms of their early portfolio, and I agree. We should, given the track record of the past 20 years, but I think we have here tangible, measurable outcomes of R&D you can check us on.

And frankly, when you look at the catalysts in 2012 -- you have the list -- we are committed to these. But importantly I think you should not ignore, and you have that in the Appendix, our earlier stage portfolio and our preclinical portfolio, which also I think promises to be quite significant.

So with that, I'll turn it back over to Chris.

All right. Thank you, Elias. So let's have a look at now where we're going in 2012. So now, as we thought about guidance, we said all right, what do we want to signal that's new? What do you we want to tell you in the guidance that's a change from what we've already told you?

The answer is nothing. The 6th of September a lot of us were up here. We gave you a vision of where we saw the Company going into 2015. What's happened in the meantime? Well, we had a very solid fourth quarter.

All the growth platforms performing exactly in line. In fact, for any doubting Thomases on emerging markets, I think we put those to rest. And anything if there is any new news is the fact that we've de-risked the Genzyme recovery through the approval of the Framingham facility.

So let's have a look specifically at 2012. This is just the things that are going to happen. Again, I wouldn't expect for anybody who has been following us to have any surprises in any of this. Clearly what are the headwinds? Well, March, Avapro is going to go, May Plavix is going to go, August Eloxatin is going to go, and the full year effect of Taxotere.

We've seen that Momenta has lost the injunction on a second generic, and we would expect that in the market. We've already put our own generic out there. The Copaxone agreement terminates in Q1 of 2012.

On the other side, we've clearly got very strongly performing in our growth platforms. They've been performing for three years, and I think they're going to continue to perform. We will get an additional quarter of Genzyme, so we will consolidate four quarters instead three quarters in 2011. And I think we've developed a good reputation on being disciplined on costs.

So what does that mean? Well, I think we were also trying to be very transparent. What is the actual impact on Plavix? Well, on September the 6th it was EUR1.4 billion. What it's today? It's still EUR1.4 billion.

So if we take into account very robust performances in the growth platform, cost control and the impact of Plavix, Avapro and other generic competition, we would expect EPS for 2012 to be in line with consensus, which is around 12% to 15% lower than 2011.

Now, exchange rates always play a role in all the consensus, and we've try decode all of that, but our belief is that this is in line with consensus. And again, this is exactly in line with our vision of the business that we had on September 6th. Nothing has changed as far as we're concerned. We still are extremely confident that as we come out of 2012 we've got a growing business, and why is that?

Well, it's because nothing happens to the business. The only thing that happens is the stuff that's dragging us down goes away, but the growth platforms just continue to march along. And when you remove the part that's negative then you just have a higher and higher percentage of what is growth platform.

So as we stand here today, we believe that we can do 5% annual compound growth rate on sales between 2012 and 2015. You go back 30 years, you will find that diversified companies pretty much consistently have a higher P/E than those who aren't.

And we believe that we got a nicely balanced business. We have got scale in some pretty important franchises, leaders in vaccines, leaders in diabetes, leaders in rare diseases, leaders in animal health, and now one of the top five companies in consumer health.

What happens on patent expiries afterwards? Sanofi goes through one of the most concentrated patent cliffs, but it comes through the patent cliff. By the time we get through the patent cliff 6% of our sales are related to small molecules in generic-endemic countries, i.e., US, Europe, and Japan, probably the lowest of any company in our industry.

Large emerging market presence. Are those countries here and there are going to have hiccups? Yes. Are we going to be able to do double digit every single quarter? I don't know. We can't manage those businesses as tightly as we have been able to do in US and Europe.

But I do fundamentally believe in the emergence of middle classes, the growth of those economies, and I think that it is the biggest lever of growth for the entire pharmaceutical. And I don't think anybody has got a better position to seize than Sanofi.

Research and Development, you heard that having cleaned out the portfolio three years ago, actually that stuff is still here, and it's now being filed and it's coming to market. And I think Elias has given a good indication of some of the interesting things we have in the pipeline.

There's still work to do. That's why we are doing a massive shift in research. But I actually think that in research and development we were behind three years ago. We're at least as good as anybody I think in the industry today. And I think on research we're prepared to be more radical than most.

Operating margin will be affected, and we gave guidance on that. Nothing has changed on either by the way. We're still at the 31% to 32%. But the EUR2 billion that we will pull out of the business on top of the growing business mathematically leads you to higher margins as we go forward.

We'll have leveraged P&L, so that means, we would expect earnings per share, compound annual growth rate to be in excess of sales. And as we said, all along we believe in shareholder returns and so increase our dividend payout ratio to 50%.

Thank you very much for listening and let's turn this over to some Q&A and love to hear from you.

Thank you. It's Luisa Hector at Credit Suisse. I've got three questions, please. Firstly, on the guidance, Chris, you showed the slide with the tailwinds and headwinds, but you've got the guidance range. Is there anything specific driving that range? I guess Lovenox and Genzyme are probably the two bigger swing factors ?

Yes, I mean, you've got obviously the EUR1.4 billion that's Plavix and Aprovel. We only had Taxotere for three quarters last year. You're going to have a fourth in this year. We've got Eloxatin. We are very thrilled to get Eloxatin back last year, but Eloxatin will go away again in August.

We don't expect anything new on European pricing. Last year, European pricing cost is about EUR300 million. I don't see things getting better in the Europe. We have no particular evidence that anything's getting worse either so we would kind of expect difficult times in Europe to continue.

I think we will make an extremely strong progress with Genzyme. I'm more confident ever than in the recovery of Genzyme. And I think the ability for us to really work with Genzyme. It's not just the recovery. I think there's excitement in Genzyme when you look at the new products coming on. And we're clearly seeing the ability, with Hanspeter's organization of what we can do behind biosurgery and behind the renal and oncology business.

So there's nothing in particular, it's just this is 2012, and we've always known this is the cliff year. And so that's where we are. And as I say, I think our view of the world is pretty much in sync with where our investors are.

Okay. And then, Jerome, just coming back to the cost savings, so you've got about EUR1.7 billion left to deliver. And I think you were saying basically for 2012, it would really be the residual Genzyme cost savings coming through. So can you put any more color on the timing of the rest of the savings and why they are more delayed?

Well, there is no delay. We have this EUR2 billion objective for 2015, so if you split it over four years it's EUR500 million per year. The way you need to look at it is the following, I mean, A, you have Genzyme, so we have generated EUR330 million in 2011. There is have EUR700 million full year impact 2013.

Clearly, the savings in 2012 will be somewhere in between because all this change in organization that we are implementing such as, an example, I mean funding out a new ERP, you take country by country for the 80 countries where Genzyme is located, and then I mean you get over time of those years. So I can take examples like that.

So clearly that is another contribution from Genzyme this year. I mean in industrial, I mean you saw a slide I presented. We have implemented all our industrial Lean approach, having the total cost of ownership approach to see how we can generate maximum value of the production. I mean we're also having the commercial people speaking more with the field people to reduce the number of SKUs to standardize the blisters which we are producing all over the world and the rest.

But actually all this take a bit of time to be implemented, but on the other hand, we are going to benefit this year from the savings which result from the decisions we took in 2009 and 2010, for instance, the restructure of our chemical network in France and Europe. So there is always a delay between the time you harvest the saving and the time you start to decide to implement that. Of course, if you decide to reduce field force in the US it is probably much quicker R&D.

I mean, on the R, we still this reorganization taking place. By midyear and even maybe before all people working in Bridgewater will have either moved to Cambridge or left the Company. But I mean still you have to move all the infrastructure, the IS, I mean the information system as well. So these are how things work.

So at the end of the day, from what I tried to describe to you, out of the average 500 we should see more of these taking place this year. In another term there will be some frontloading of the EUR2 billion, which will be already in 2012 and 2013.

So in other words, if you take EUR2 billion between now and 2015, you could say it's EUR500 million a year. That ain't going to happen. I mean the only thing that takes longer is industrial affairs. The rest of it all is going to come much closer in the period. So most of the savings actually are upfront.

And I think if you look at our last EUR2 billion, originally in 2009 we said we'd take EUR2 billion out before 2013. In actual fact we took the EUR2 billion out in the 2011. So I think we've got a pretty good track record of when we sit down to do it in taking cost out.

We're always cautious in how we express that because we got a big cost base in Europe and there are always negotiations and consultations that have to be done, and we never want to get out ahead of those. But I think if you look at what we've done on cost that's what we're going to do in the front. So most of those cost savings will come in in the next couple of years and not in 2012.

Thank you. Could I also just ask on the Lantus new formulation, so is that -- the studies that you've started that's with once daily dosing so just sort of pitching this as a true, true once daily? And then, could you comment on the timing of the data and whether this would be filed as a novel drug or as a supplemental to Lantus please?

So on the current Phase III trial, we're really focusing on high dose patients with the goal of glycemic control and hypoglycemia. So that's exactly the point. I mean, in other words can we do it in that mode and reduce the number of injections that you have to do?

But also more importantly is really understand whether we can get better glycemic control over -- and with less hypoglycemia. And the formulation is really a patented formulation. So it has actually some specific component, I mean composition of matter issues to it in terms of the physics and the biophysics and so it is patented per se.

Jean Jacques Le Fur, Oddo Securities.

Jean Jacques Le Fur.

The first one is could we have a little bit more color on the impact of austerity measures/healthcare reform which impacted through 2011, and what could it be for 2012? And my second question is about iniparib. You found a new mechanism of action. So could we have a little bit more color on this new mechanism of action? And what could be now the new indications for this product and the timing for Phase III filing and launching? Thank you.

So Hanspeter you want to take the austerity measure?

If I take the austerities, I think it was mentioned before we estimated at approximately EUR300 million in Europe and I think we have said another EUR100 million in the United States coming out of previous measures in 2010 possibly even in 2009 out of this so-called Obama plan, so round about EUR400 million.

And in anticipation we anticipate nothing more dramatic which has to be handled with care as the overall macro economic situation became a little bit unpredictable and a small pressure is on the macro system as modeled beyond the micro system of healthcare. But in our estimates we have anticipated approximately the same impact 2012 as in 2011.

As far as iniparib is concerned as you can see from the data -- I mean the information that you have, we're definitely considering the trials that were ongoing. So we're going to have a redial on that.

In the meantime though we did elucidate the mode of action and iniparib is acting in a way that we understand better which will lead us to redesign some of our approaches to it. Fundamentally it is acting like a prodrug and really is metabolized within cancer cells which really has unique advantages in our view and explains also some of the results that we've had. And so we are trying to really exploit this knowledge right now.

So two phases, one, we continue what we had in the trials because we now we have some confidence that we understand what's happening. Second, redesigning some of the -- or designing de novo a new approach to it dose-wise as well as delivery-wise.

We're not saying much because we have actually new intellectual property pending on this actually.

Okay, Vincent Meunier from Exane BNP Paribas. A few questions if I may? The first one is a follow-up question on the new Glargine formulation, is it required to perform cardiovascular studies with that new compound? And will you test the usual Glargine molecule as the comparator?

Also, what's your commercial strategy against Novo Nordisk Degludec which is potentially launched or at least approved by the end of July this year? And last question on Lemtrada, what could be the pricing for this drug assuming its yearly infusion?

I think we are going to have to take one question at a time. I don't have that. So go back to the first one on the Glargine if you don't mind? And I'll take that.

Yes, sir.

You mean U300? Yes.

For the Glargine the question is do you have to perform cardiovascular studies and will you compare it to the usual Glargine molecule?

So we don't expect to do that I mean it's Lantus in its own -- as a molecular matter. It's different in its PK/PD so we have to document that. We have to find out what happens in terms of the typical endpoint glycemic control and hyperglycemic events. Second question was?

Was on Degludec?

That you see, first, we will not define our commercial strategy before they are through Phase III and have a labeling. And even if we would, we would not communicate today about it. Overall, we are not too excited about the compound, to be frank with you. I think I have said before we have been through a similar phase with Detemir. You know this means that Detemir has not been such successful.

We have seen of course the recent clinical data where we see according to what Novo Nordisk said no difference at all between Lantus and this product in the -- I'm having a memory loss -- in the group of diabetes 1 patients. What we see in the diabetes 2 population is very marginal. Already from a clinical point of view I think they have 0.05 hypos per patient year so whatever you show statistically maybe interesting but it has not a lot of clinical relevance.

But as I also said earlier we have to see how this product comes to the market at which price and so on and so forth. And then we have a number of options to react or just to let it go by as we did with Detamir. The last one was on the potential pricing of Lemtrada.

So just maybe I will add, I mean the only thing I would say on Degludec from what we're hearing is that basically if Detemir was too short you know, Degludec is too long. And so we can deal with that commercially.

Lemtrada pricing I think we're not going to comment on it at this stage but given the results we would certainly -- no, I'm just not going to comment actually.

Chris, I will jump in with couple of questions from our webcast. We have got one for Jerome from Stanislas Rihouey at BNP Paribas. He is asking what are the expectations in terms of payout increase for the dividend in 2012 already? And he wonders whether we'll actually increase the dividend in 2012 despite an EPS decline this year.

And we've got another one maybe I guess for our Head of Vaccines here, Olivier Charmeil. There is a question on whether the strong Q4 performance of vaccine in the emerging market is related to any specific tender process or other growth drivers?

Dividend firstly, the dividend is a yearly decision of the Board of Directors to propose to at the general meeting to approve a dividend. So it's not time to ask any ask any board member to pronounce and set on what could be the dividend to be paid in 2013 on 2012 results precisely.

Now, if you look at the graph I mean clearly we are big, single. But the fact that we have decided to increase the dividend up to 65, which is a 6% increase, when our profit is decreasing, the signal that we are aiming clearly to have a regular increase of our dividend over years in order to reach the 50% payout in 2013 paid on the result in 2013, and clearly the results in 2013 should be higher than the results in 2012. Now how are we going exactly to join these two figures and this is what will have to be decided next year.

The other thing that I can say is that I think that we said already that by all means we are not considering or we will not consider reducing the dividend even if our profit will decline in 2012. So this is also clearly excluded. So between flat to slight increase going through the 50% payout in 2014, I will see where we will be next year.

Thanks, Jerome. And then so the question was from Michael Leuchten at Barclays on vaccines, Olivier.

So we had a strong quarter in the emerging market with a growth of 16% when compared to a full year growth of 10%. We are really leveraging our presence in the emerging market. Our growth is very much driven by our Pentaxim sales, our pediatric combination with strong sales in Mexico and in other parts of Latin America.

We have also got the IPV in Brazil. Brazil had made the decision to put on its immunization schedule IPV and this is a major achievement. And we had first shipment at the end of December but this is of course sustainable sales.

And the last element is the OPV sales to UNICEF that it could play from one quarter to the other. It's nothing very significant here. We continue to see a strong momentum for OPV. And since the beginning of the year of 2012, and we see in the level of requirements coming from UNICEF that the OPV sales continue to show us some strong momentum.

I think it's also equally valid to say that India has now gone two years without any polio outbreak. And there is certainly a movement now I think that we'll see acceleration from OPV to IPV, and Sanofi Pasteur is exceptionally well-positioned to take advantage of that opportunity.

So we will take some more questions from the room. Yes, go ahead.

Hello, Philippe Lanone from Natixis, just one quick question on Lyxumia because you know slide you only presented it as on top of Lantus basically. Well, there has been a lot of change in the GLP-1 environment with the negative results of the 'once a weeks'. And so what you see as a future for a monotherapy Lyxumia apart from the fixed combination?

Oh, I hope I didn't convey that. There is definitely because of the postprandial effect and the ease of use it has a single free standing use per se. And I hope I didn't mis-convey the fact that it can only be used on top of Lantus.

But because of that it has a unique profile to be in fact combined with basal insulins, not just Lantus, because of this postprandial control profile which is quite unique across GLP-1s, and the fact that you can titrate it in one step. You don't have to wait for six weeks to get there.

I hope I am answering it has both uses, GLP-1 alone and GLP-1 on top of insulin. And remember all GLP-1s have the advantage of weight loss versus weight gain so that you stabilize the patient on the better rate. And you, through the studies we have done, I mean you can see there is a better achievement of A1c levels with a combination. But it is not just a combo product. It has a free-standing merit.

Mark, go ahead.

Thank you. I am Mark Beards from Goldman Sachs. A couple of questions on the pipeline, if I may? Firstly, we didn't see PCSK-9 on your new launches 2015 slide. Is that because it's a long-term opportunity and still will take several years for developments, or is a just missing from that?

And secondly, Lantus lixisenatide and new Lantus, obviously you've got a combination in development from Lantus lixisenatide. You are also developing a new Lantus. How should we think about those two programs and will they converge at some point?

So PCSK-9 go to page 55. It's right there, on the bottom of the 2015 column.

Okay. Thank you.

Okay. And on the Lantus U100, U300 and you said PCSK-9 I didn't quite get the question.

No, the question was you have developed a new Lantus. You also are developing a Lantus lixisenatide combination. Will those two programs converge? Do you have any updates on them?

At this point I can't comment on the new Lantus converging with lixi. What we're doing right now is lixi plus Lantus because we do define that as a special -- a kind patient. The beginning development for U300, the patients were not a target especially the high insulin use patients. So at this point, I can't comment on whether or not our development is going to go there. Our first Phase III is on the 20% of the patients really at -- are high doses with any basal insulin, by the way, and are not at goal.

Do you have an update on the combination development plan?

So the combination as I said we are launching the Phase III in 2013. The device, you know the FDA requires that you do your Phase IIIs with your final commercial device. So that's what's getting to a start into the end of 2012 beginning 2013.

Okay, thank you.

We'll take a question from Eric Le Berrigaud

Thank you. Eric Le Berrigaud, Bryan Garnier. Three questions, first would be on the emerging markets. For the six products to be filed you're still very much focused on the US and Europe. How far behind other filings in territories like China or Japan for instance?

So actually we look at global development now. So if you look at our PCSK-9 we're already in trials in Japan, for example, Zaltrap, same thing. We're trying to submit to other health authorities. But you're right, and I think the key is in many countries if you don't have a EU or an FDA approval it's hard to go to Phase II.

Like China, for example, will not allow you to do a Phase II trial unless you have or else you have to do the Phase I with compound produced in China. So when you strategize all that you have to understand that it's almost obligatory that you start in US and EU no matter what. So Japan, on the other hand, in Japan we have Lyxumia there. We have PCSK-9.

I can't remember the others but I know that we're putting Japan much earlier in the process, because if you recall Japan used to have the tradition of waiting for all approvals elsewhere before starting. That has changed. They do want to reduce the time of access to new molecules by their patients. So it's not reported here, but I can -- I could convey that information to you, if you wish.

In fact it's quite a mix because there are some countries also in emerging market that once you have approval either in the US or in Europe you will automatically get approval in those countries. So there is actually quite a wide range of variability, but at least as Elias said, for particularly China and Japan there is going to be some delay but probably less than it has been in the past.

Unless it's a disease that is specific to the region, we are still going to do global development with US and Europe being key to the approval for our pathway.

As we're doing with dengue for example. Dengue is Latin America and Asia.

Right, so dengue is different in its pathway of approvals.

So precisely the second question relates to PCSK-9. The target per se looks very much interesting, but what could you say already about safety and in terms of injection site reaction, whether you see anything? And whether your own formulation is already into early stage development?

No, no, the overall formulation is pretty -- we clearly understand that. We wouldn't be going Phase III in three months if we didn't have that. The device is something, the dosing we're pretty clear on what needs to done.

In terms of safety I don't know if you went to AHA, but we did report at the AHA that immunology (inaudible). And we don't see that in the Phase II trials. We had one skin reaction, and unclear whether it's the product or something else. So it looks extremely safe from the current data that we have.

No increase in other parameters that would say oh, there is a counterbalancing effect or lowering for example in HDL or something like this that typically you'd worry about. So right now we are quite comfortable with the safety profile. We'll find out in Phase III.

Okay. Last one in terms of dividend, do you plan as last year to pay too for the possibility for the dividend to be paid in shares?

No.

It was a quick one. Maybe we will take questions here from Alexandra Hauber, second row.

Thank you. I have several questions. Question for Hanspeter first. I think it was said in the press release that this solostar conversion is now up to 50% up from 40%. Is that going fairly smooth and are you confident you can sort of increase that penetration every year by ten percentage points so that by 2014, '15 we should be at this sort of 80%, 90%? And what are you actually doing to make sure that that's happening?

And then second question is just around the topic of pens. Have you finally defined which device you're going to take into the Phase III for the lixisenatide combination? Are you still pursuing the version that both components can be titrated? And then also -- I'll save that one later if you want to take the questions one by one.

I will take conversion. Yes, I think 40% is not a better size. You will remember it was a matter totally dominated by cartridge so that's already the answer to the second part of the question, what do we do? We favor everything commercially from a promotional point of view, which goes into conversion and we de-favor anything which would keep the market on cartridges.

Can we bring the market to 100%? I don't think so, because I think as we grow we are right. Would you like to grow faster? Yes. Yes, perhaps on the other side we have to see that there is still a market of non-pens where we also have to continue to make offers with Lantus that are not in pens. But I think 40% today -- 50% today where we have been I think in 2005 or 2006, 10% or 15%, it's a good rate.

I think it's fair to say that we have really increased our efforts in this in the last two years and that includes pricing and other commercial terms in addition to promotion.

Absolutely, we are continuing with the development of devices that could give you fixed flex so that you can titrate the insulin where we think it's important for patients. I don't think you have the ability -- I mean, the fixed flex for us works well, because lixisenatide has a fixed dose. It's either 10 or 20, so there is not a lot of complexity to that, but we have -- this is what we pursue. I mean, we have a devices for sort of back up and aiming for starting Phase III with a commercial device in 2013.

But it's still not finalized since it's only in the year where are you initiating, or have you nailed it now?

Pretty much. I mean, all you have to do all the PK/PD trials obviously for that before you start your Phase III. So we're ongoing through that and we have primary devices back like every development plan.

So in other words, to be clear, the device is fixed. There is a backup device, so we are not tinkering with the device at this stage.

Yes, we are just making sure.

We are going through the PK/PD studies in the device to make sure it's valid and we are able to get authorization to go into Phase III with it.

And then, I just would like to ask you for a little bit more color on the Genzyme situation. You said that you are going to initiate to dose the patients on the waiting list. I can't remember whether you said March or second quarter. How long is that waiting list and how long is it going to get until everyone's full dosing?

And on Cerezyme, I know it's going to take you some time to get as much out of the Allston plant as you would like, but can you just update us on what Cerezyme situation is in terms of patient dosing and waitlist? And just in general, how long do you think since you have to balance the supply, patient dosing and inventory, how long will it be until we have completely normal inventory levels again?

If we start with inventory levels, one of the aspects of this type of production is it that yields can vary further significantly. Historically, Genzyme had five, six months of inventory. So if you had some of the fluctuations in batch-to-batch yields, you pick that up. We were running at that less than one month of inventory.

Now, we came out of 2011 with actually higher inventory levels than we expected. And so I think there will be gradual build. But clearly there is a constant patient demand and so until we really get every patient on a full dose that needs the drug, we are not about to start putting in product in the warehouse. So we will continue to operate at least through most of 2012 with minimum levels of inventory.

Now, batch-to-batch variability is interesting. We are just coming through the first time that the Allston facility has been shut down for maintenance in 10 years. And our belief is that potentially this could have a beneficial impact on yields as well. We have no evidence of it yet, but those are the sorts of things that could have a result.

We won't be able to immediately be able to use the Fabrazyme reactors because after Fabrazyme is completed you actually have to go through a validation process to be able to use the other reactors.

The real benefit is expected to come from eliminating some of the other downstream bottlenecks because we've taken Fabrazyme out and really significantly simplified the operations of the Allston facility.

The Allston facility was built 20 years ago, and it was built really for one product. And so when four products came in, we'd almost overloaded that facility. So we're now getting that facility back to really what it was originally intended to do. And we've been also be able to replace a lot of the ageing equipment because this facility has been running flat out for 10 years.

So I think, as I say on Cerezyme, we're going to see a gradual increase in sales over the year, principally because in the fourth quarter we weren't able to fully provide dosing for patients. I think the real change in Gaucher's is going to come through eliglustat.

And eliglustat is clearly a game changer in this, offering an oral drug. Remember patients have been on some of these twice monthly infusions, all their life. I mean Genzyme has followed patients very often from childhood through to adulthood. Now to offer them an oral with the same level of -- at least the same level of efficacy is quite an opportunity.

On Fabrazyme, I think the interesting thing about Fabrazyme is that you've got five times the enzyme that the Shire product has. And we have clearly seen that at least some patients don't do as well when they are not getting the full dose of the product. We've certainly got enough patients who are anxiously awaiting Fabrazyme to come into the marketplace, especially since we're offering five times the dose for the same price as Shire. So I think on that one we're more than competitive.

And we get up to -- we first have an obligation to patients who are on the drug, and as I say, that we believe we get to in the beginning of March. And I can't remember exactly how many patients are on there but we take that on a first come first serve basis to be fair to all patients. And I believe by mid-2012 we get back to full supply even on the waiting list. And we will have started to supply those patients in Europe who are desperately awaiting Fabrazyme.

We'll take a question from Beatrice Muzard on the left hand side front row.

Yes, Beatrice from Natixis. I had a question on your auto vaccine, your joint venture in Europe. You have done extremely well after the acquisition of the full control of Merial, so what is your strategy with your JV vaccine in Europe? Are you satisfied with the current performance? How could you leverage, one, the performance of this subsidiary and B, the asset value?

And I had also question on the JAK inhibitor for Elias. What is the value proposition for that one compared to the product of Incyte, for example, thank you?

Go ahead, Hanspeter, you want to take the Merial question?

I am not sure if I had understood correctly. I think the question goes what we would do with the joint venture of this Merial --

(Inaudible - multiple speakers).

Oh, so after having successfully integrated Merial and it should go to the

How could you leverage the joint venture the vaccine joint venture leverage of operating performance and the leverage of the asset valuation?

It should be answered by Olivier Charmeil on the first one.

So we are clearly not happy with the performance of the joint venture. We have changed the management. We have a new management on board since September. We are busy working in two directions. The first one is identifying the growth opportunities and we have clearly -- we are starting to identify here growth opportunity.

I think, just an example, Gardasil sales have been declining significantly since the end of the catch-up period but we see now that the immunization rate when compared to the US are really on the low side. We have faced some issues in terms of supply in the last two or three years and month by month we get back on track and at some point we'll be in the position to launch Zostavax in UK.

So the third, second dimension, is really on making sure that we operate in a more efficient way in the various countries, and we are going to look to various opportunities to combine our force to make sure that we get really the full benefit of the Merck support and of the Sanofi support.

On the JAK-2, I mean fundamentally you know it's an equivalent pathway to the JAK-2 inhibition that Incyte had and the targets are myelofibrosis, polycythemia vera. We're looking at other indications. But basically a JAK-2 inhibitor then the differentiation is going to be on relative efficacy and safety.

So in other words we'll need to do the --

(Inaudible - multiple speakers).

I think the interesting thing for us is having an oncology portfolio that covers all the principal mechanisms of action. And I think when you look at whether it's MEK inhibiters or PI3Ks or JAK-2s, Sanofi now has been able to build a portfolio in development of all those. And I think what is also interesting is that we're exploring ways of combing those which few companies will be able to do because we essentially have the full portfolio of those.

We had a number of questions from the web which were fairly similar of what we heard here in the room. Maybe I'll just pick one last question from Mark Dainty. He basically says that market EPS estimates for 2013 seems to be a bit pessimistic. So he wonders what are the main differences between how you view 2013 and what the market currently is?

Right now we're focused on delivering 2012. I mean in 2009 we gave guidance for 2013. Fundamentally I don't see any major difference in what's happened with the business. In fact, if anything we've had to overcome some things that weren't anticipated. We probably lost -- since we gave 2013 guidance -- we probably lost at least a EUR1 billion before tax because of European price reductions, healthcare reform in the US.

And essentially we've been able to offset that largely because our EUR2 billion cost reduction program has come in two years earlier than expected. So overall, I don't see any difference in the trend of the business. I think we've been able to deliver over the three years since we gave the guidance in a manner that was really aligned with expectations.

Now, the one thing that we're going to be cautious about is it's one thing to give guidance in 2013 when you're sitting there in 2009 because everybody looks out with error bars around it that are little different than when you're in 2012. I mean we're all pretty experienced in this. And so we don't want to get into the game of already here in the beginning of 2012 giving pinpoint guidance for 2013.

But fundamentally, I think compared to what we set out to do in 2009 we've been delivering on that. I think the growth platforms have come in. I have to say in particular I think the Consumer Health has done even better than I would have hoped for.

The emerging markets I think we've really been able to seize upon and we directed an awful lot of our investment there and that's created true competitive advantage. I think we've shown -- a lot of people wondered whether we can take cost out of the business with so much of our cost base in Europe. I think we've demonstrated that we have been able to do that.

And I can tell you there's still plenty of costs to be taken out of the business. We've just introduced a program last September in looking fundamentally at productivity across the Company, and there's plenty of opportunity. I've always said that nobody ever got promoted in the pharmaceutical industry because they were cost killing.

And so these aren't businesses that ever been operated like the car industry, for example. So I don't think we're going to have much trouble getting the next EUR2 billion out of that. And that's really helping us to offset some of the loss, of the leverage factor from our blockbusters.

So again, I think now the business continues to perform at a regular pace. We're marching along towards our longer term objectives. But we are not also ignoring any of the shorter term and interim milestones along the way.

Well, I think that's a very nice a way to wrap up, so I'd like to thank the management team for today's meeting. And conclude the webcast now, and invites participants here to a drink. Thanks a lot.

Thank you.