Sanofi SA (SNY) 2012 Q4 法說會逐字稿

Okay, well, I guess we're ready to go. Good afternoon to those here in La Boetie, our headquarters. Just a little anecdote, I'm actually very proud to contribute to the cost savings plan of the company because this year we are organizing our full-year results indeed in our own offices; that will lead to about EUR130,000 of savings on the IR budget. So jokes aside, welcome to our full-year results.

As always I must draw your attention to the forward-looking statements. So our presentation today will contain forward-looking statements which involve known and unknown risks and uncertainties. I suggest that you look in our Form 20-F to have more details on these.

So with that, today the presentation will be divided in four segments. First, we'll have Christopher Viehbacher our CEO who will share with you the key highlights for 2012. We will then have our CFO Jerome Contamine who will provide you with details on the financial results. Then we move on to a section where we'll review the performance of our growth platforms, this will be led by Hanspeter Spek, President of Global Operations. Also with Olivier Charmeil who is our Senior VP for Vaccines. And Chris will be, in his role as Chairman of Genzyme also coming back to talk about the Genzyme operational performance. Then we'll move to an update on R&D with Dr. Elias Zerhouni who is President of Global R&D at Sanofi. And finally Chris will come back on stage to wrap up this presentation with his views on 2013, as well as the mid-term outlook.

We'll then go into a Q&A session which will last for about 40 minutes and I will, for those of us -- of use for anyone following us on webcast I will take questions also from the webcast as well as from people here in the room today attending live.

With that I will turn the call over to Chris.

Good afternoon, good morning, everybody. Thank you for the savings, Sebastien. I could probably add that actually as part of our overall cost reduction measures reorganization of Paris-based office space will have eliminated 100,000 square meters of office space with an annual saving of EUR50m, so you can see that we continue to be cost conscious and focused on growing the business.

As I present to you today I'm thinking about the very first time that I did this in the name of Sanofi which was in February of 2009. Back in 2009 we were looking forward to the patent cliff and actually on that day, that was the very first time we as a company admitted there was a patent cliff, and announced really a strategy about how we intended to deal with the patent cliff.

This morning I was on TV and the journalist was very (technical difficulty) saying, you've never deviated a single line from that strategy, and I think that's true. It hasn't always been easy, not everybody's believed it but I would say today that we have successfully navigated through the patent cliff because if you look at all of the products that we lost, we have had, certainly the most concentrated and deepest patent cliff of anybody in the industry, and I'll show you some numbers on that.

The objective as we laid out four years ago, now it wasn't just to replace the sales of those products we were going to lose, it was to put the company on a completely different path. It was meant to provide long-term sustainable growth of the business and you can't do that if you're really only ever going to be focused on R&D and patents. So what we were looking to do was to create these growth platforms that had different barriers to competitive entry, whether it be capital investment, brands, knowhow. But the idea was that really unless you got that long-term predictability of earnings you were never going to get to a higher multiple. This industry has now for at least a decade underperformed the broader market in terms of multiples. In the last two or three years, the last two in particular, Sanofi has closed the gap to its peers on multiple but I would say that on an average multiple of around 11, 12 times, this industry is still at a discount compared to the sector.

And largely that's (technical difficulty) R&D and the lack of long-term predictability. So what we were really looking to do with these long-life assets like Vaccines and like Consumer Healthcare and Animal Health and emerging markets was to provide a platform of predictable long term (technical difficulty).

Now it never was meant to eliminate innovation as a core of our business, but if you are doing research and development in the context of a company that can grow long term without patents then imagine the leverage effect you could get if one of these products actually makes it out of R&D and imagine actually the predictability of a business that knows that it can grow, even if in a particular year a particular product doesn't make it.

And imagine the discipline that you can have in R&D if you're no longer depending on meeting your 2014 number because a certain product has to launch. Because I can tell you in my career, the thing that really drove me nuts the most was that we took compromises, we made compromises along the development path because we needed to hit certain expected net present value calculations on our portfolio, that we needed to have a certain number of projects in every stage of development, and I think that has led to poor quality pipelines.

So the objective we have and Elias will talk more about it, is to really be a growing company on a long-term basis and known for the science.

Now we're not entirely there yet but I think we've been able to make a significant amount of progress and I would submit that today the company is stronger than it was four years ago, largely because back then we had a significant amount of our sales and an even bigger percentage of our profits that were threatened by generic entry and today we have probably one of the lowest exposures to generic entry of anybody in our industry.

Now we all know that Plavix had a big impact on our business in May 2012 and it's going to take a year from May 2012 for all that to wash out. Eighteen months ago we told you that the impact of losing Plavix and Avapro in the US was about EUR2b on an after-tax basis and on a 12 month basis. That would be split roughly between 2012 and 2013. In actual fact, because of exchange rates and a few other things, it's about EUR2.1b and so the effect in 2012 was EUR1.3b and it will be EUR800m next year, so it's about EUR100m more than what we had expected. So as a result we're going to be affected by comparisons to last year when we still had Plavix until the middle of the year, but once we're back into like-for-like comparators we expect to be able to show growth in our business on both top and bottom lines.

And, of course, everything that we are looking at in the business completely confirms what we thought 18 months ago, all of the businesses are performing as we had thought and so we are completely confident in being able to meet our 2012 to 2015 objectives for sustainable growth.

Now what we've done, I think you've known, we've moved from the blockbuster phase, we've just finished four years of extensive transformation. There's a lot has gone on in the company that you'll never see and is completely invisible, but it certainly has included investing in the growth platforms and diversification, cost management.

And I think as we stand here today I would say we start a new chapter. Really the major impact on results is finally getting rid of the generic drag on the business and just letting the growth platforms continue to perform as they have over the last three years.

The other aspect that is quite exciting this year, and most of you don't know Sanofi as a pipeline company, but if I've had any surprise over the last 12 months it's really that the pipeline has kind of crept up on us. We have not had the attrition we were expecting, we've had interesting assets like the IL-4 suddenly come through and come through faster. I think the partnership with Regeneron, for instance, drives us at a pace that's probably faster than your typical big pharma pace, and as a result I think we're actually looking at an extremely robust late-stage pipeline. You've seen the number of approvals we've had, even in the past week, and of course all of those need to be properly funded.

So I think in addition to the growth platforms you're going to see us increasingly become a story of launching new products and having a sustainable pipeline.

Now in all of this, of course, we've been able to grow our sales. We started, 2008 was the first year I presented, we had EUR27.5b in sales, I'll show you in a minute that had we done nothing we would have certainly lost EUR5b because of generic entry. We're showing close to EUR35b in sales and so there's been a significant increase in sales and, of course, we all know that at least part of that is through acquisition. But I will tell you that it's at least a 50/50 split between what was acquired in growth and what we've been able to do organically through our growth platforms.

If you look at what has really left us over time it's a pretty impressive list of products, from Allegra all the way through Eloxatin, and you can really see this concentration. Sanofi really before 2010 had never really been faced with any significant patent expiry and after 2012, as I'll show you later, really isn't faced with any, at least any small molecule patent expiry until the end of the decade. But in those critical three years of 2010, '11 and '12 you saw an awful lot of business at risk.

So when I look on the right side of that graph of course, you see this, the nine products that were really facing patent expiry and generic entry had sales of EUR7.6b roughly in 2008. EUR5b has walked out the door and so that perimeter is now EUR2.2b. Of course we all know that that never really goes to zero but there will be some marginal impact in 2013 of some of that business.

In the meantime, the growth platforms that we just talked about have grown from EUR11.8b to EUR23.5b. They were 42% of sales and they're roughly around 70% of our sales today. By 2015, as we already said 18 months ago, they'll be roughly 80% of our sales. In other words, the emerging new Sanofi is really the growth platforms and, as you'll see also later on, we were able to grow those growth platforms close to 10%, 9.9% to be exact

Individually, emerging markets grew at 8.3%. We didn't achieve our double-digit target in 2012. I don't think that's for any fundamental market reason, this is principally as a result of, for example, Eastern Europe, which is growing slower. We describe emerging markets essentially those countries that spend less than 5% of GDP on healthcare because we know that that's an underinvestment in healthcare. However Eastern Europe continues to be principally affected by macroeconomic trends in Western Europe, and Hanspeter will go into more detail; you'll see that the key regions of Asia, of Latin America and Middle East/Africa continued to grow at double-digits. My personal view is, and I have not changed one iota on this, I still believe that emerging markets is the single biggest growth lever that this industry has.

Diabetes continues to perform extraordinarily well at 16.7%, Vaccines at 5.7%. Consumer Healthcare 9.9%, we were nowhere as a consumer health company four years ago and today I have to say I'm extremely proud of our teams in being able to say that we're the third OTC company now worldwide after J&J and Bayer.

Animal Health, an extremely important business, I think we continue to drive value since the acquisition of Merck's half of the business. If you think about Frontline, four years ago the patent expired, it is still a $1b-plus brand and there's a very exciting pipeline. We never talk about the pipeline because in this business you test the products in animals and therefore it's pretty fast for the competitors to chase you. So we tend to tell you about what's in the pipeline about five minutes before we launch it, as I say, largely for competitive reasons, but I think you'll see that growth accelerate in the future.

New Genzyme, and I'll go into some detail later, really a success story in the past year.

Innovative Products at EUR611m grew at 10% but we all know that that part really has been historically a weakness of the company, and I think you're going to see that strengthen over the next couple of years.

We were busy on external growth. It was one of our key pillars in the strategy, EUR23.7b in acquisitions. We acquired 32 companies but, of course the most notable was Genzyme. 91 in-licensing agreements and we entered into three joint ventures.

Genzyme really had a remarkable year and this was a very, very delicate exercise. The biggest issue we had was how are you going to integrate an iconic biotech company, we're talking about one of the four original biotech companies ever created in the world, suddenly being merged with a big pharma. People who work in biotech generally work there because they don't want to work for big pharma. Now we're going to take a French/American cultural exchange, we had a hostile bid to acquire the company.

So the stars were really aligned against us in being able to integrate it and I think one of the first tests was the ability of the Sanofi team to work with the Genzyme team and we've been working day and night for two years to really get that production back on track. I think the fact that they were able to work together, get Framingham approved by both the EMA and FDA within four days of each other in January is an extremely important event.

We also then saw that Shire did not get Replagal approved in the United States and that really allowed Genzyme to take advantage of the renewed manufacturing capacity and the open market in the United States, and now also to reconquer market share in Europe, and so we close to doubled the business in Fabrazyme. All of the other businesses performing well.

The other, of course, is that we decided to make New Genzyme, remember we took the oncology, the biosurgery, the renal business, put that into Sanofi where we had the marketing muscle to do more with those businesses. New Genzyme is rare disease and Multiple Sclerosis and I'll show you a little later on, but they've already launched Aubagio with success. We have Kynamro approved and, of course, Lemtrada has been filed in the EU and in the US.

So this is just what I've said before, this is largely what we've said, we've had, because of some tweaks to exchange rates and some other things it's a slightly different mix from the EUR1.3b and EUR700m, it's EUR1.3b and EUR800m, but largely this is a predictable event, we've seen it coming and I think we've managed through it.

Of course we shouldn't forget that we live in an extremely difficult environment. On the US side, of course, we had healthcare reform from President Obama and these are mostly taxes that have impacted us. Those are expected to reach almost $500m in 2013 for us.

On the EU side things are no easier, we all know about the austerity measures in Europe. These are measures to either increase generic utilization, decrease prices or increase the difficulty of getting new medicines approved. I would say Europe is probably the most difficult region in the world for the pharmaceutical industry today and is likely to remain so for a couple of years. That's about EUR300m for us in the 2010/2013 period, on an annual basis I would add. And, of course, because we are a traditionally-rooted European company we have a fairly large tail product business that gets affected by these measures.

Now this is the EPS picture, 12.8%, but if you went back to the EUR5.59 in 2008 and you calculated the generic impact you would have seen that we would have lost 50% of our EPS had we not employed the strategy that we did. 12.8% down is clearly nothing to write home about but it's certainly a lot better than it could have been and I think a credible performance given what we faced in terms of patent expiries.

Now as we look forward I think this comes back to this notion again, I think a huge amount of progress has been made on the R&D front. Nine regulatory approvals in the last year and certainly we've seen a couple that are already off to a good launch start. We've got six new drugs and vaccines which have been submitted, so we're going to have other decisions and Elias will tell you what's in Phase III. But all of these are progressing well and, as I say, we've had certainly less attrition.

In terms of progression to Phase III we've got the PCSK9 inhibitor and Elias will talk about the big ODYSSEY study. We've got our new insulin glargine formulation, we've got the JAK2 inhibitor. We've got the Fluzone Quadrivalent ID, the Synvisc-One for hip. As you've seen, the LixiLan device, because of a recent technical glitch is not probably going to go into Phase III this year.

For Phase III results, reading out, this year we'll have the Lemtrada and this was back in 2012, we had Lemtrada, we had Lyxumia, we had eliglustat and we've just announced that the ENCORE study which was the second Phase III met its primary endpoint in efficacy.

And one of the most important events I think was the ORIGIN study and the epidemiology study. We not only put to rest any concerns around safety, but now as we look at competitive entries I would submit to you that there isn't a product that has a more robust safety profile and efficacy profile out there in the marketplace.

So what are we going to see in 2013? Well, we've already ticked the box for ENCORE, we've got the JAK2 inhibitor and you can see these products, I won't go into them in detail because Elias will cover the pipeline a little bit later, but you can see that actually there's an awful lot going. What is also good for me is I've been a skeptic on R&D for many years now but I will say that when I look at a pipeline and I say, do we know mechanisms of action, do we have a robust proof of concept, do we have a high percentage which are biologics, and I can answer to all three of those questions a yes, that gives me a whole lot more confidence about this pipeline's ability to make it through to the marketplace.

Now the dividend has been an important part of the value story of our stock, particularly as we've been going through the transforming. We wanted to make sure that investors continue to believe in our company and so the best way that we could communicate our own confidence in the business was a steadily progressing dividend and we've seen since 2008 we've increased steadily the payout and steadily increased the dividend, regardless of actually the development of EPS, to EUR2.77. That's a compound annual growth rate of close to 6% and we still are intending to achieve a payout ratio in 2014 with the payout of the dividend in respect of this year.

One of the untold stories of the company over the last four years, it's not only just a question of transforming the business, of dealing with the patent cliff. We obviously had our key shareholder, for very legitimate strategic reasons exiting the company. And they certainly did it in a sensitive way trading every day, but nonetheless we had 1% of the capital coming into the market every quarter. And, depending on the market cap, that's anywhere from EUR500m to EUR800m every quarter and that has meant that we've had to go around and find new shareholders. And the shareholding of the company has dramatically changed over the last four years and that's why it has been extremely important for investors to believe in the long-term story of the company, but also in the dividend, because I think we've actually been able to manage this part of the cliff equally well. I just want to confirm that, of course, TOTAL is no longer a shareholder of the business today.

So to wrap up my part, if I look at four years, sales up to EUR34.9b from EUR27.6b. Key genericized product sales were 28.4% of sales four years ago, they're now 3%, probably again one of the lowest rates in the industry. The growth platforms, which were fledgling businesses back in 2008, now 70.4% of our business. Emerging markets business from EUR6.5b to EUR11.1b. Biologics, we'd clearly been behind in biologics and I'm very happy to see that 48%, close to half of our pipeline, is in biologics and you may remember me setting that as a target three or four years ago. Earnings per share, clearly not up as much as in sales but still up from EUR5.59 to EUR6.20 in 2012 and, of course, the dividend up to EUR2.77.

So with that I will turn it over to our Chief Financial Officer, Jerome Contamine. Jerome.

So thank you, Chris. Good afternoon or good morning, everybody. So we go quickly through a bit more detail on the financials. So I'll start with sales, you are used to this graph and I would say that probably we will continue to see this graph for another two quarters, as long as we get out of the full impact of the patent cliff, so once we know. Q1, Q2 will still show a difference in 2013 as compared to 2012.

So the lesson of this graph is pretty much all the same, it's, well, on hand we've lost over the years EUR1.3b of sales from this definite list of key genericized products. On top of that we terminated, or it was agreed that we had to terminate our agreement with Teva on Copaxone and we have sold out our Dermik business in the US.

At the same time, the growth platforms have contributed for EUR1.6b of extra sales, on top of which we can consolidate in 2012 another quarter of Genzyme which we didn't consolidate obviously in 2011. Which leads us to basically a slightly increasing sales, all in all, on a constant exchange rate basis. And clearly in 2012 in comparison to 2011, but we know that is always fluctuating, we had a very positive tailwind impact of ForEx exchange rates, in particular because the euro was pretty weak in 2012 versus most of the other currencies, leading to this overall increase of 4.7%.

Well, maybe a few more words on the currency impact. This graph is firstly here to tell you, to give you more details. I think that we presented this graph in the previous quarters. Also to show there is volatility in this impact. So in fact the bulk of the tailwind impact was visible in Q2 and Q3. In Q4 the comparison was not that different, in fact we had an exchange rate of the US dollar against the euro of $1.35 versus $1.30 in Q4, when the gap was $1.39 versus a bit less than $1.30 for the overall year.

It's not only the US dollar, we know that we are also exposed to quite a number of other currencies, which in a way mitigates also our risk. We are present in Japan, we are present in Brazil and Brazil went the other way around, the Brazilian real went down last year. So this will go as it is, it's clear that since the beginning of the year we should not see such a positive impact on the like-for-like basis even if, of course, we don't know yet what will be the final average rate of the US dollar in particular.

I remind you, and this has not really changed, that a variation of $0.01 of the exchange rate of the US dollar versus the euro leads to 0.3% variation on the business net income.

As expected, Q4 has shown a low profit and a declining profit versus the same quarter of the previous year. And I can tell you today that it has been the tough quarter, so in other terms, we don't expect to have Q1 2013 be as low as Q4 2012 on the constant exchange rate basis. So clearly Q4 is a trough quarter, even if clearly Q1 and Q2 because suffering from a difficult comparator will still be much lower than Q1 or Q2 2012. So still two quarters to go through the cliff, not that we are going to lose more sales but because for comparative reasons the base will be higher.

So as expected, we have delivered EUR8.20 per share, earnings per share for the whole year and I think you'd notice that we've been very much in line with what the consensus expected.

So if I look at the overall P&L for the full year, well, it's clear that you see the impact of the patent expiries, and in particular the impact of the patent expiry of Plavix. You see that and I will come back on the next slide on the other revenue which is basically the royalties but also on the contribution of the share of profit from associates for the part we used to consolidate, or we can let's say formally still consolidating from our joint venture with BMS in the US. So this clearly is the big change.

At the same time we have managed our cost base in such a way that we have reached a business operating margin of 32.5% which is somewhat higher, slightly higher than what we expected one year ago when I gave the guidance that we should be between 31% and 32%.

Okay, so now I go a bit more in details line by line, so it start with this Other Revenue line and you see here, I tried to make as much detail as possible, you see the contribution quarter after quarter of the declining contribution of the royalties coming from BMS both on the other revenue line, this is the higher part of the slide, on the income from associates which is the lower part of the same slide. So as you can see, if I take the higher part, grey part is basically disappearing. We still benefitted from EUR532m of revenues this year which we won't get next year in 2013; these are, of course before tax. And the remaining is EUR478m which unfortunately we'll still suffer from the end of a royalty paid on Ambrel which we are just now losing. So on a like-for-like basis the Ambrel impact or loss of royalties from Ambrel which represent EUR100m as compared to 2012. So in other terms, we should end up with something which will fluctuate between EUR300m and EUR350m of other revenues in 2013.

Second is the income from associates, well, this was a big line in the Sanofi P&L which was a bit unique for us. Well, you see that that's completely disappeared now and we are now basically coming down to zero.

Cost of sales to sales ratio. Well, as planned we've seen an increase of this ratio still in 2012, this is a result of the evolution of the mix of businesses. When it comes to Q4 the significant performance of our Vaccine business where, as you know, the growth margin is lower than the average growth margin of the Group and is even more when we are selling more flu, which has an average growth margin which is somewhat lower than the average growth margin of the vaccine activity. This being put aside and there is no exceptional in the Q4 and we are in line with the guidance I gave at the beginning of the year which was to be between 31.5% and 32%.

The important news is that what we expect from 2013 is that the business mix impact won't be that significant and that, on the other hand, we expect the productivity measures that we are progressively implementing into our industrial network on many aspects would lead to some improvement of the cost of sales to sales ratio. Not a huge improvement, this will be progressive, but we expect that it will be a (inaudible) point 2012 to 2013. Of course still we have some exchange rate impact because we are producing more in the Eurozone, so with this exception which could lead to some marginal fluctuation on a constant exchange rate basis, we expect in 2013 an improvement of the cost of sales to sales ratio.

R&D, continuing to be tightly managed, trying to bring down the internal costs in order to give more headroom to invest externally, both in partnerships but also in late stage clinical trials which we did in 2012 obviously, and in particular during Q4 where we embarked into the full recruitment of the number of Phase III studies which are ongoing under the ODYSSEY program in particular for PCSK9 but also for IL-6. Which explains largely why there is a hiccup of the overall R&D expense for the fourth quarter.

So all in all, R&D expense for the full year has been within the guidance we gave to be somewhere below EUR5b. It's, on a constant exchange rate basis, down by 3.6% if you compare including Genzyme for the full year 2011 and this despite the fact that we have started these large Phase III trials. For 2013 we expect to maintain our overall R&D expense within the EUR5b envelope.

SG&A, here again, tight control on cost in mature areas, tight control on G&A which has been declining, if you are able to read the footnote you will see that our G&A expense on a ratio basis has declined by 3.1%, on a ratio basis a decline as well. So we have reduced G&A and this is really the result of Genzyme synergies, on building our shared service platforms to be more efficient in our management of our IS as well as Finance or HR platforms all over the Group.

At the same time we have been investing behind growth platforms and also we have been investing in particular in Q4 to build our MS sales and marketing team, which explains why we've seen some increase of our SG&A expense for the fourth quarter.

So this being said, we will continue to generate cost reduction while continuing to invest next year, which I think is what is described in the next slide.

So as you remember, in September 2011, we announced that we wanted to embark into a new cost saving program, with the objective to save EUR2b by 2015. This included the synergies attributed to the integration of Genzyme which were evaluated at the time around $700m, i.e. around EUR500m.

So at the end of 2012 we have achieved 60% of this cost saving plan, i.e. around EUR1.2b and the Genzyme synergies have basically been reached, I mean not exactly 100%, we will reach a bit more than 100% in fact during this first half of 2013. One-third of these gross cost savings have been reinvested into growth platforms.

Now when it comes to 2013 we will continue to generate savings more than EUR500m, I would say at this stage at least EUR500m, but it's fair to say that because of the new launches we are working on and we had, as you know, we had just three approvals last week, we are going to invest more on new launches leading to reinvesting a significant part, let's say, of the EUR500m of savings which we plan to reach in 2013. So we are entering into a period where because we need to support our growth platforms and also support the launches, we are reinvesting a significant part of the savings we generate. It remains that we will continue to generate savings in 2014 and '15, both on OpEx but also on the cost of sales, through all the programs which I mentioned already, which is leading to improving productivity of our industrial network.

Okay, I will go quickly but still below the operating income line, so to start with the rest of the P&L down to the business net income. So maybe here I'd like to make two comments. The first one is on financial expenses, I'd like just to remind you that in 2011 we just accounted for the net debt as from Q2 when we acquired Genzyme which was just three-quarters of that, when we had four quarters during 2012. On top of that for the fourth quarter we took a provision on one non-consolidated asset we had for a minor amount. So this leads to a stabilization, let's say, of financial expenses for the year of 2012 assuming the same level of debt.

In terms of tax we end with a lower tax rate than what we expected. We gave at Q3 the guidance that we should be at 26%, actually we end at 25.5% and there are two reasons for that. The first is that the development of the Group leads to increased revenues on profit which has inherited in countries which have a lower tax rate than the tax rate which we incur both in France as well as in the US. So the fact that we are developing more in lower tax rate countries is helping a bit more than expected our tax rate. And on top of that we have the full effect of the agreement we had with the Japanese tax authorities which is, again, leaving a certain level of profitability in Japan and bringing back the rest in lower tax countries.

So for 2013, of course, probably it's a question you may have, we expect to have the tax rate to be between 26.5% and 27%. So an increase and obviously this results from the fact that we have less revenue from royalties which are taxed at a low tax rate, but still a limited increase.

One word on the new accounting rule when it comes to pensions, this is an IFRS rule which has a negative impact from the P&L standpoint but not from an equity standpoint. So basically we cannot count anymore in our P&L the expected profitability of the assets which we manage, but just we account the revenue on these contracts which we are using to discount the liabilities. So the impact for 2012 and I think this has been posted on our website and you had some indication already in December has been EUR78m on the BNI, in fact it has not been, it would have been, as it's not counted in the 2012 BNI because this now will be applied as from 2013, representing EUR0.06 per share.

In 2013 it's a bit difficult to assess exactly how it will represent; it should not be very far, probably slightly higher, maybe up at EUR0.08 to EUR0.09, everything being equal.

From the business net income to the IFRS net income, well, I don't think there are many comments here. The first one is that we continue to have an amortization of intangible assets which is pretty stable at EUR3.3b. The large part is coming from the Aventis acquisition on the assets or the intangible which was allocated -- or the goodwill which was allocated to assets at the time. Another part is coming from the more recent acquisitions with Genzyme or Merial and you have the detail in the press release.

We have very limited impairment on intangible assets, it's mainly Ombrabulin and the termination of the compound which we were developing coming from Exelixis.

The fair value remeasurement of contingent consideration liabilities is the reevaluation of the CVR based on the actual market price of the CVR. And you see the impact on the restructuring cost line of the reserves we took for the French plan during Q4 which, here again you can read in details.

So all that leads to an overall net attributable income to Sanofi shareholders of EUR4.967b, which is a decline of 12.8% which is pretty close to the evolution of the business earnings per share.

Cash flow, we continue to generate strong cash flow despite of the loss of the revenue on the cash flow generated by Plavix since May. We generated EUR7.3b of free cash flow after paying for working capital variation on capital expenditures. We have reduced and put under control our capital expenditure program, also some big investments are somewhat coming to an end, or close to the end, such as, for instance a biologics facility in France. And I think we have put in place a tighter control on our working capital requirement so that in fact we managed to reduce the level of receivables while controlling the evolution of our inventory just by increasing inventory at Genzyme which clearly was required.

Cash returned to shareholders in total represented EUR4.3b, this includes the dividend for EUR3.5b but also share repurchases which represented EUR800m.

So all in all, the net debt has decreased, decreased significantly by EUR3.1b showing the capacity of the Group to generate cash flow giving us the flexibility to increase firstly the dividend when the profit is somewhat declining, so this was clearly anticipated and probably we'll discuss later on this question of allocation of capital.

Okay, with that I will hand over now to Hanspeter.

Thank you, Jerome. Good afternoon, good morning. I'm here to give you some more insight into the performance of 2012. As you have heard, 2012 has been mainly marked by the strong, by the good performance, but the performance as expected of our growth platforms which represents now more than 70% of our sales. You see that those growth platforms were standing in the first quarter of 2011 for EUR4.6b and in the last quarter for EUR6b. They are composed of a still small but growing share of I would say innovative products evidently New Genzyme, Animal Health, CHC, Vaccines, Diabetes and the Emerging Markets.

What has changed also and what is a premiere in our reporting, for the first time the Emerging Markets became the most important part or important piece of our business. As you see from the chart we have achieved EUR11.1b, with a growth you have heard before already from Chris, 8.3%. And this represents 31.9% of our total business, which means the emerging markets have overtaken the United States and by far also Western Europe.

Remarkable also that the share of Europe continues to decrease, for reasons you understand. You see that we have a decrease of 9.3% in Western European sales, and the sales in the United States have been stable in 2012 and, by the way, we expect a growth as of 2013 in the United States.

How did this all happen in the emerging markets? You see that we always had a strong position. I have mentioned many times before that to some extent this is even an historical effect due to the early entry of companies like Hoechst and Roussel in those parts of the world.

We had 2005 approximately EUR5b sales but, nevertheless, you see very impressively over the last seven years those sales have increased to more than EUR11b. And the growth in recent years has accelerated, mainly by increased efforts in those markets, by reallocation, which means we have reduced our efforts in Europe and also to quite some extent in the United States, and have reallocated those resources to the emerging markets.

One highlight, we have today more pharmaceutical sales representatives in China than in the United States, where in 2005 we had about 10,000 and today it's approximately half of it.

Now also Chris had mentioned this, why only 8.3% of growth in front of our commitment to 10%, you see from the chart on the right side that this is largely due to the definition of emerging markets, because for historical reasons and in order to remain comparable, we continue to integrate the Eastern European countries, which in their overall macroeconomic development, but also in their healthcare development, get more and more close to the Western European markets.

But you see then that outside we have a growth in Africa and Middle East of 10% in both markets together. We achieved EUR1b of sales also for the first time each. You see that in Asia, including of course China, we have another 10% growth, obtaining sales of EUR2.8b, and in Latin America growth of 11.3%, equal to EUR3.4b.

Now the Diabetes platform also has seen a record year in 2012. You see then once again for the last three years how those sales really continuously develop from quarter to quarter, and from year to year. And yes, evidently Lantus is a flagship product inside, obtaining sales of nearly EUR5b in 2012, and this with a growth rate of 16.7%.

And on the right side of the chart you see that we have obtained 22% of growth with Lantus in the USA, 25% in emerging markets, where sales approached the EUR1b mark. Western Europe at least 5% growth in an otherwise overall flat market environment. And in the Rest of the World part 20.6%.

It's not only at all Lantus, it's also Apidra, which came back to a very strong growth, and we had an excellent fourth quarter in 2012. You may remember that Apidra was suffering from a stock-out situation due to production problems in 2012, and it's a product that is really very nicely back on track in 2012.

You have also heard about Lyxumia. Lyxumia is for us a major launch. I say it's a major launch because we intend of course to launch the product in Europe, in Japan and in the United States, with two different speeds. You may remember that the FDA has asked us to submit cardiovascular data, safety data. The respective study called ELIXA is underway and is performing exactly according to schedule. Consequently, we intend to file the product during the first quarter 2013.

In Europe, very recently within the last week, so to say, we have obtained the European approval and we start launching the product as of the second quarter 2013, in the usual launch pattern. We launch first, we have early access which historically and classically will be Germany and the United Kingdom and, towards the end of the year, all other major countries, including France.

We have also heard that we had as Chris called it, glitch, a technical glitch with the device for a combined application of Lantus and Lyxumia. This of course is unfortunate. Nevertheless, it's part of our business that technical problems occur. I believe that it is less severe because we have to establish anyway the product first in a single dose. Nevertheless, the product will be dosed in combination from the very, very first day because, as you see from the chart, the whole development program was built in the direction of combining Lyxumia with oral anti-diabetics and for us, more importantly with Insulin.

We know that approximately 25% to 30% of all Lantus patients also get GLP-1, so it was a major aim of our development program to show that a combined dose of both molecules achieves additional effects and, according to the clinical program, we could prove this. And consequently we also have obtained an adequate indication, so we will explore it for the next years, the product solely but, of course in a joint recommended dose, together with our insulin products, Lantus and to some extent also Apidra.

Another recent introduction is Zaltrap, a product which we have launched since autumn in 2012 in the United States. Zaltrap is indicated in the second- and third-line treatment of colon cancer. This is for Sanofi, to some extent, yes, I may call it an historical indication. You may remember that we have been the first offering any treatment of this disease with Eloxatin. To some extent we now come back also with a totally different way of treatment. We have also quite recently, within the last couple of days, obtained European approval and the rollout starts as of today in the major European countries.

Now this product I carry here in my pocket, because I think it's really always worth to show it to you. I understand that some of you have received a training sample from our Investor Relations. It is a product which is really [unique], because it speaks. It really instructs the patient how to use this product in a very dramatic situation -- indication which is anaphylactic shock.

It is a significant market, as you see from the chart. It is a market in the United States of -- yes, it makes around about $1b and there is a single competitor on the market, which is EpiPen from Mylan, so we have a really (technical difficulty) easily attackable target. And this has, of course, caused some reaction also from this target, as you see -- see two inventors made it to the front page, the inventors of the product, which we have licensed in Auvi-Q. We have made it to the front page of the New York Times, underlining the product is really a breakthrough in terms of safety and convenience. We are very optimistic for this product, which is a true innovation, as outlined here, from the New York Times.

Merial. Merial is in a phase of stabilization. We have obtained nearly EUR2.2b sales in 2012, which is a growth rate of a little bit more than 3%. We prepare a basic renovation of the portfolio of Merial, which consists, as you see from the chart, mainly of pharmaceuticals for companion animals, amongst Frontline. Frontline is selling about EUR775m in 2012.

We have developed over the last five to 10 years major new products in this field, the field of flea and tick, which presents significant advantages in terms of convenience, efficacy, and safe dosing. And we will be launching those products as of the end of 2013. So 2013 will, once again, see a performance approximately in line, perhaps a little bit accelerated, as compared to 2012. And then in 2014 we expect a significant increase of sales growth due to the various new products which we intend to launch as of the end of 2013.

Consumer Healthcare, another very positive result in 2012. We have obtained more than EUR3b of sales. The portfolio is growing by 9.9%, which is a good growth, I believe. The overall OTC market is growing in 2012 about 4%, 4.5%, and you see that we have obtained the third rank.

I believe when we really started to concentrate on Consumer Healthcare, we have (technical difficulty) the seventh or the eighth ranking company, so we do well. We do well also by acquisition, but we can say that the major acquisition we have made in Consumer Healthcare which, of course, is Chattem, continues to do very good, not only with Allegra, but we also made interesting acquisitions.

You may have seen that we acquired from J&J Rolaids, and we plan to re-launch the product which had been absent of the American market for production problems on the side of J&J. We intend to launch the product by the end of 2013, which will further accelerate (technical difficult) in the United States.

Now I pass it over to Olivier, who will continue with very positive figures out of 2012 for our Vaccine Division. Olivier.

Thank you, Hanspeter. Good afternoon, good morning. I'm afraid I have nothing in my pockets, but I'm happy to report that Sanofi Pasteur ended 2012 on a very high note. We had a very strong fourth quarter with our sales up 20.5%, with a strong growth (technical difficulty) coming from the emerging markets, where we show a very strong performance with sales up almost 24%. For the full year for Sanofi Pasteur our sales have reached EUR3.9b, up 5.7%.

We continue to drive our profitability up due to vigorous management of our OpEx and targeted investments. Beyond our growth drivers our profitability has gained 1 point, 1 percentage point, from 28.4% to 29.5%, getting closer to the profitability of the rest of the Business.

After a couple of years of very sluggish sales in Europe, with our joint venture with Merck, we are happy to report that we have regained some momentum. We had a very strong fourth quarter, with a growth of 9%. And for the full year we show a growth of 6.8%.

For 2013 we get prepared for the launch of our hexavalent vaccine, which is expected in 2013 at the end of the first half. And it will be an important growth driver for 2013.

Sanofi Pasteur had another very good flu campaign in 2012. The history of flu, which is very different each and every year, we are the undisputed leadership on the flu market, both on the mature markets, but also in the emerging markets. In the US, as you know, disease activity has been a little bit late, in a sense that it came at the end of Q4 and beginning of this year. And we have continued to ship even although for small quantities in January.

Overall, in terms of numbers of those, see the flu campaign 2012/2013 is very similar to the flu campaign of 2011/2012.

We continue and we are very happy to report that our differentiation strategy works in terms of average selling price. Our average selling price have increased in an environment that is extremely competitive on the regular doses and, of course, with our differentiation strategy, we are happy to show that on our Fluzone High-Dose that is for the elderly, and also our [Fluzone ID], we are able to get value upgrade.

Okay looking to the future, we will be launching mid this year our Fluzone Quadrivalent which will be important for our differentiation strategy. Fluzone Quadrivalent is under review of the FDA and action date is June 10.

Looking to the emerging countries, we are happy to report that despite our very high market share in Latin America, for example, where we have a market share of above 75%, and also a very strong market share in other parts of the emerging countries, we are happy to report that we continue to grow 5.1% and we see significant progress in terms of flu immunization in countries like Brazil and Mexico.

Looking to our growth. So Sanofi Pasteur has delivered growth in mature and emerging markets, despite supply constraints. In the mature markets we are very proud about our performance of Menactra. We continue to hold a significant market share; we are close to 80% and our sales -- our growth by [ACIP] recommendation, for booster dose for adolescents between 16 and 18 years of age.

With regard to Japan, Japan was a country where we had almost no sales back two years ago. And I'm very happy to report that we had the most successful launch of a pediatric vaccine with Imovax on the Japanese market. It's not a one-off, now IPV is a routine -- is part of routine immunization, and we will continue to grow our business, especially with the new combinations that we will be launching.

I'm happy to say also that despite the supply limitations that we faced in 2012, we are getting back on track and we will get back on track on Pentacel end of Q1, beginning of Q2. And on TheraCys, where we had to renovate the facility, we are expecting to get back to production in September this year, and to be back on the market at the end of the year.

We are very happy with the momentum of our service provider platform, VaxServe, that allows us to leverage our portfolio, and to be very close to our customers both retail and of course primary care -- primary care network.

Looking to the performance of our emerging markets, 9.1% our franchise -- pediatric franchises, very much driving this good performance. We are very happy with our performance in China, with the launch of Pentaxim.

Again, it's the best launch ever in the class two market, the private market. And we continue to benefit from the launch of Pentaxim as well in Mexico. And we launched a couple of months ago the IPV on the public market in Brazil, and things are moving very, very smoothly.

Also good performance of Menactra, not only in the US but also in the emerging markets. And we continue our rollout today and the product is licensed in 37 countries. And we continue and we will -- the product will be approved in a couple of years in almost 100 countries. So very strong growth of Menactra, driven this year by Chile, but also Saudi Arabia.

2013 will be an important year for our combination vaccine, Hexaxim that will be launched in some international markets. We got the license in two countries of Latin America at the end of 2012, and this will represent a significant opportunity for 2013 and 2014 onwards.

So overall for Sanofi Pasteur, a strong fourth quarter, very solid underlying performance and despite the supply limitation we faced, and of course a significant growth driven by the emerging markets.

So I'm now going to hand over to Chris, in his capacity of Chairman of Genzyme.

All right. A number of these points I've mentioned earlier, so I'll go quickly but, as you can see, a very strong performance of all of the products within the rare disease portfolio. Clearly the United States, with no competitor for Fabrazyme, was a significant opportunity for the Company, taking advantage of now the increased competition.

I think it's very good though to see a strong performance of Cerezyme, where the competitive situation is different. And this is where I think you start to see the importance of the Genzyme business model, the real proximity to the patient.

Now we've had good news on both Phase III studies on Eliglustat, and I think Eliglustat becomes another element to add to really allow Genzyme to regain leadership in the Gaucher market, and of course Myozyme growing also at double digit.

In addition to the financial success, what I can tell you that within the -- around the corridors of Genzyme, being able to fully supply the market has had huge morale boost. And I think it's been a factor that has allowed us to really successfully have Genzyme come into the Sanofi family.

Now the other was a trickier proposition. We put Multiple Sclerosis into Genzyme. No real experience in Multiple Sclerosis, we actually had to build a team from scratch, which we have done, actually a very significant investment.

And it's fair to say that Aubagio did not have a significant awareness level coming into this. However, I think when we started seeing the first data we were encouraged by the launch. Personally I like to see a little bit more than a couple of weeks to data to get excited. But you know here we have four months of data, and what you can see is clearly that the Aubagio launch is tracking at least as well, if not slightly better than the Gilenya launch.

80% of MS specialists have -- now have prescribed Aubagio. One in five patients were treatment naive, and then obviously the rest were switches, mostly from Copaxone and Avonex. During some of the initial market research one of the key reasons is actually tolerability of treatment.

So I think this augers well because it also says that we have a team that should be in a good position to launch Lemtrada. It is obviously a huge opportunity that we have to be able to put two significant new medicines into an important area like MS. This is a market of some $14b worldwide.

So with that, now to talk about the future and research and development, Dr. Elias Zerhouni.

Well, thank you, Chris. I think, as you've heard through the presentation, 2012 has been an extraordinarily busy year for R&D. It's probably one of the busiest years the Company has known. I think it's the result of a very driven strategy, starting in 2009, when we focused on first reinforcing the late-stage portfolio; second, transforming R&D, and third, reinventing the model for R&D over time.

I think what you've seen in the past year is nine approvals, six registrations. And what I would like to talk to you about is what is it that we are currently executing on, and what is it that we intend to do over time?

First and foremost, we thought it was very important to have a focused portfolio and, therefore, we pruned the portfolio. Currently we have about 64 new molecular entities in development, but the key to the progress was to focus on areas where -- in areas where we knew we had already great investments in platforms that were destined to grow, like Vaccines, like Diabetes.

In addition, we thought it was very important to build new therapeutic areas, in areas of strength that we had, for example, immunology and inflammation, with Multiple Sclerosis, with anti IL-6, IL-4, monoclonal antibodies.

We knew clearly that we had to maintain our competitive position in oncology, so what you will see today is a portfolio that essentially aligns to the seven strategic areas that we decided to focus on over the period 2012/2015, and trying to execute along those specific lines.

So, in Multiple Sclerosis you heard about Aubagio; I'm going to tell you about Lemtrada. In Diabetes you heard about Lyxumia; I'm going to tell you about the new Glargine.

In oncology we have a JAK2 inhibitor that I will tell you about, Eliglustat in rare diseases. Cardio-Metabolic is an area of legacy for the Company and we are trying to reinforce that franchise with PCSK9, the monoclonal antibody and Otamixaban.

And then Immunology is an emerging area, where we think we have actually strength, because of our experience in vaccines, our experience in protein engineering, and our rising experience in antibodies, through our partnerships with Regeneron and others. And so Immunology -- immunomodulation is emerging as a strong theme of our portfolio and, obviously, Vaccines.

I would also note that our of that portfolio, nine of the molecules that are coming are biologics, three are small molecules, again illustrating the very specific strategic intent of equilibrating the R&D portfolio to have a diversity that allows us sustainability over time.

So with that let me go to Lemtrada. I think it's probably one of the new medications that is going to truly change, in my opinion, the management of Multiple Sclerosis patients. As you know, there are effective drugs out there, and the demand of the patient now is towards quality of life and improvement in the tolerability of the treatment that they receive).

You heard about Aubagio and its launch and Lemtrada we filed in Europe, and we filed in the US. (Technical difficulty) accepted by the FDA. And if you look at Lemtrada, the reason we think it's [an] important (technical difficulty) component of the armamentarium in Multiple Sclerosis, is that it does reduce significantly relapse rates against comparators, not against just placebo. And it also significantly slows the accumulation of disability over six months.

It's a completely different mode of administration, with injections at one year apart. So it's almost like a vaccine in many ways. The patients do not have to come back every week or every two weeks to get injected and, therefore, it's a really manageable drug from the standpoint of the physicians.

It's manageable also in terms of its safety profile. Some infusion reactions, a little higher infections. But autoimmune events are the ones that have been mentioned, but all of them can be detected and managed conventionally.

And the -- so we have great hopes here. We will hear about the regulatory decisions in the course of 2013.

Again, I think that R&D has to also support existing platforms. In diabetes, what we are trying to do with R&D strategy is to support an integrated solution set for the patients with diabetes, from oral to GLP-1, to insulins of all different kinds, so that we can in fact provide this comprehensive solution.

In terms of Lantus and Glargine, we discovered that a new formulation of Lantus, called U300, actually didn't -- wasn't just more concentrated, but it provided us with a PK/PD profile that was much flatter than the original Lantus. So we decided to launch a development in a new Glargine formulation, with two Phase III trials, first in patients who are high insulin dose users. And this trial's result is expected in the second quarter. Also patients who have Type 2 diabetes, plus oral therapies, and we started the second set of four Phase III trials in the second half of 2012, insulin naive, Basal and also Japan. We started the studies there, because we do believe that that offering is going to be necessary.

As Hanspeter mentioned, 30% of the patients are not at goal in Basal therapies; we need to really improve the ability for the treatment protocols that we offer, to reach a greater level of compliance with HbA1c levels that are expected to reduce the number of complications later in life.

So JAK2, the JAK2 inhibitor is also novel in the sense that it's a very selective JAK2 inhibitor. It has extremely promising Phase II response rates in patients with myelofibrosis. As you see on the right-hand side there's a dose response with over 60% reduction in one of the primary parameter that we see in the spleen volume. And the percent of patients with that sort of reduction is quite large; 35% reduction in 60% of patients is what I meant.

And so we are in Phase III, two doses, 400mg and 500mg. The enrollment is completed and we are expecting the headline results in the second quarter of 2013. And we have two Phase IIs, ongoing and related conditions called polycythemia vera, and also myelofibrosis patients who were previously treated and failed therapy with ruxolitinib.

So it's important to see that the strategy, if you will, is to continue to be strong in what we call liquid cancers -- the leukemias, the hematologic malignancies -- as well as continue to build our portfolio in solid tumors and especially in prostate.

When you look at the Eliglustat, it is an example of Genzyme research at its best. Cerezyme is obviously a very effective therapy. But when you really look at the new way of performing R&D, the approach is to look at a systems biology approach.

And in this particular case, looking not just at the missing enzyme, but looking at the enzyme upstream and downstream of the process, and in this particular case a novel or very potent substrate inhibitor, meaning that it really acts on the enzyme above the defective enzyme, and reduces the amount of ceramide that is produced in Gaucher's Disease.

And that oral therapy eliminates the challenges of infusions. We've had positive results against placebo in the first pivotal Phase III trial engaged, and we have just received the ENCORE Phase III study, which is a comparative study between Eliglustat and Cerezyme, with -- and we met the primary efficacy endpoint. So I cannot tell you more because data is being analyzed and will be published soon at a scientific meeting, with a significant and comparable change in spleen volume in those patients.

In addition, as I said, we are trying to reinforce our presence in the cardiometabolic area, and we try to do this by selecting programs within our research that would fit with our historical legacy in Plavix and other areas of cardiovascular care, Aprovel where we have quite a bit of experience. And this is why we chose PCSK9 as one of the topic of our collaboration with Regeneron on 2009 and accelerated its development. We are now, as you know, in Phase III.

It's a first-in-class, fully-human antibody targeting PCSK9 and a novel mechanism that was discovered through genetics research where in fact we showed that loss of function of this particular enzyme actually created a reduction in the risk of coronary disease, and then a huge reduction in low-density cholesterol, which is the main risk factor.

So you are seeing here, for example, the effect of the dose response, and you can see a flattening of the curve, with minus 40% to minus 70% reduction in the level, sustained over a period of time, with injections every two weeks at different doses.

So when you really look at the impact of this, you have to ask yourself where is this place of such a therapy in the field where statins have been quite effective?

The target populations, when you really think about it, it's about 21m patients globally. What is it composed of? First, the patients who are familially very susceptible to hypercholesterolemia, because of genetic differences. The second are the significant number of patients who cannot tolerate statins, who have complications from statins; muscular or others.

And those two populations make about 3m or 4m patients. The big population that we are targeting in our Phase III trials is the population of secondary prevention; the patient who was treated, who has been followed, and who comes to the hospital with an acute coronary event. That patient is known epidemiologically to be at a very high risk of recurrence of the event, and death.

So these patients in secondary prevention make up almost the bulk of these patients with 12m, 13m patients entering into that category. And then we know that we have patients at high risk because of diabetes, for example, underlying conditions. And those would be the primary prevention target.

When you look at our strategy, ODYSSEY is the name of the large Phase III program we have launched. It will be 22,000 patients and those involved in this particular category, this target category that I've just defined for you. And we are going to go after that in a sequential fashion.

So we have already enrolled our monotherapy trial, for example. We'll read out this during this year. And we are going to expand into our ability to understand the impact of this approach in terms of benefit in the patients with acute coronary syndromes.

So this is an important pillar of our strategy. The second pillar that is real, that is here and now, that you can evaluate, is Otamixaban. Now Otamixaban responds to a need, which has been identified for years. And the need is the following. How do you know how to manage a patient who comes to the hospital, who's been in the ambulance, who's come to the emergency room, who's come to the interventional with an acute coronary event? And how do you manage that patient?

The problem is the ambulance may have injected a drug, a heparin, for example and the bleeding times have changed. And then you come in and you don't know when to stop, when to start.

And so we know that there is a huge demand for a very predictable IV therapy that has a very fast onset of action and a very fast fallout of the action -- decrease of the action.

So that this is the onset/offset strategy that physicians have been asking, and so we believe that Otamixaban, because of the strong Phase II results that showed not only improved control, but a direct reduction in the complications, including death and myocardial infarction, very hard endpoints, we thought it was very important to develop this product, so we accelerated its development.

It's now in Phase III study, with results expected in the second quarter of 2013. Our hope is that this will become a new standard of care from the ambulance to the emergency room, to the intervention suite, to the operating room. And so this is why we pursued and selected this particular molecule for accelerated development.

Another area of franchise that we want to develop is immunomodulation. Again, we are not doing this alone, as we said. We want to enter the field of biotechnology, the new biologics. We have done this with a lot of discipline and I think that's what we are trying to see here, with the entire IL-6 receptor monoclonal antibody.

And the reason again is that we know today that the response to existing therapies cannot be one size fits all. You know it's not going to be homogeneous across all patients. In every intervention, we do realize that there are patients who react better to a certain type of therapy, or who do not respond. In this particular case about one-third of patients do not respond to current therapies.

We also knew that IL-6 had significant advantages, as a sort of core molecule in the inflammatory response. And that's why we decided to continue its development, with two pivotal Phase III trials, the MOBILITY trial, which is fully enrolled, the Target trial, which is recruiting as we speak, and new studies to start in the first half of 2013, with very significant results observed.

And already we can tell that this is a molecule that could position itself earlier in the treatment cycle of these patients, because of the response rates that we are seeing and the type of response and the sustainability of the response.

Another molecule we have great hopes for because of strong, a positive proof of concept data, is the IL-4 receptor alpha monoclonal antibody. From the scientific standpoint this is a very interesting way of approaching multiple targets at once.

If you really look at the molecular structure of the IL-4 Receptor, if you allow me here, the IL-4 Receptor has two components. It's what we call the alpha components and the beta components. The alpha component is actually also common in the IL-13 receptor. So think of two receptors having one half of the part of the receptors being common between the two.

So the idea here was to develop a monoclonal antibody that would be against this common part of IL-13 and IL-4 and, therefore, with one agent we are hitting two targets.

And because we do this we are really able to see effects which will be presented at medical conferences soon, with very significant proof-of-concept data, in asthma and atopic dermatitis, which gives us the courage to go forwards faster. As Chris said, if you know the mode of action, you have the demonstrated measurable effect in human populations, that's when you should invest at risk because you know that you have a de-risked molecule in this particular stage. So the Phase IIb initiation will be -- is expected at midyear.

Clearly Vaccines is a major growth platform. We focus a lot of efforts. We support the vaccine development very aggressively across global R&D. We've found ways to work across the different divisions to enhance our ability to do this.

The best example, obviously, is dengue vaccine, which was truly an innovative vaccine launched because of the major demand, worldwide, due to the growth of dengue around the world and the expansion of the geographic zone of dengue, from the tropical region now to the south and north, even reaching, for example, Florida. We have now cases of dengue in Boston, with patients who've travelled from Florida to Boston. And it does affect 220m people with 2m cases of Hemorrhagic Fevers, and above 20,000 deaths per year. So it's large public health demand.

The dengue vaccine was quite an original vaccine, from the molecular standpoint. It was a chimeric virus, and we are reading the Phase IIb results this year, where we found that it was safe.

One of the big questions we always have in dengue vaccines, is whether or not a vaccine is going to actually provoke a very hemorrhagic second infection because, as you know, in dengue the first infection is usually well tolerated.

It's the second one that really hurts the patient. So when we did this we were happy to see that it was safe and well tolerated. It was effective against three of the four serotypes in Thailand; it's not effective against the second serotype in Thailand.

Our Phase III trials had been started and ongoing. We'll read out in 2014, both in Latin America and Asia, so it will allow us to understand what is the circulation of these serotypes and how exactly to position the vaccine, relative to its markets, and the prevalence of the serotypes is something we need to define.

And this year we are going to enter Phase III, with the C. difficile Toxoid vaccine. In C. difficile it's not the organism that hurts the patient; it's the toxins produced by the organism and, therefore, we are trying to develop a vaccine against the toxins, which we have been able to do with good Phase II results, with very broad protection.

So we are going to start a multinational Phase III trial in the third quarter of 2013, with Olivier Charmeil's team in Sanofi Pasteur. And we are going to target patients at high risk. This infection is growing, not only in the hospital environment, but also in the community environment. And so we do believe that the need is going to grow over time.

So, in summary, I think you know from in the presentation we have 18 projects in the launch phases, hopefully, within the next three years. You have the list here, as I went through those that are still in the works. And Hanspeter covered the ones that are already approved.

We will continue to change R&D and to really reinvent it. We do believe that the models of the past have to be different. The operating model has to be different.

We cannot do this without either a new philosophy, new people and a new strategy. So we've been recruiting extensively great talent to the Company. This year we've recruited eight top scientists to come and really change the way we do science, by bringing translational research very closely to the process at the bench within our company.

And using open innovation, in other words the idea that we can access the best new ideas, because they are not necessarily all within ourselves And make sure that our internal research team, like the team here, can work with the external team in a very, very collaborative fashion.

This is what Gary Nabel, the new Chief Scientific Officer, is going to help us. He's a world-class researcher, led vaccine research for years at the NIH. Andrew Plump, who is our new Research Deputy for Research and Translational Medicine, and many others.

In the past two years 20 of the 27 leaders of R&D at Sanofi (technical difficulty) have been newly appointed. So we are really going through this reinvention of the model and focusing on a very disciplined strategy.

You heard that we have one of the most active portfolios, yet we have established cost discipline; we've stayed within our budgets by extensive reorganizations, by creating synergies, by improving the R&D core structures.

But from the strategy standpoint, we have also changed our medical strategy. We just don't believe me-toos are going to be effective, and so we are focusing on very high-value projects. And focusing on the selection, the quality and the execution of these projects, by guiding a very rigorous prioritization of what we do or what we do not do, which is sometimes more important in driving this model of innovation.

And again, enhance the value of external opportunities; have no pride of ownership. It's okay if it's not invented here; we will go wherever the best invention here and make it work for Sanofi.

Thank you very much. I'll turn it back over to Chris, who is going to conclude.

I'm going to close here, I think you've seen the strategy, essentially, an integrated Healthcare leader. We have increasingly got a pipeline and we're bringing those products to market. We will continue to have an acquisition strategy, but I can tell you that it's getting tougher and tougher to find good-value items out there and, of course, we need to continue to adapt to our future.

So (technical difficulty) guidance ((technical difficulty)) what's in the background of the guidance. Well, you already know that we have EUR800m of overhang from Plavix coming into this year. But essentially when I look at the business it is going to continue to perform as it has been. Growth platforms will continue to be strong and I don't see any change, any disruption in the business. We are -- have an awful lot of launches this year. We've suddenly seen things like the IL-6, the IL-4 or the C. difficile vaccine come into our program. That's all very exciting for the future and we clearly want to support that, so we are going to reinvest EUR500m of our savings this year into the future of the Company.

We don't want to get into underlying growth rates, but essentially if you look at this guidance and said, all right, let's take out Plavix of EUR800m, the underlying business is growing at 5% to 10% on the bottom line. And I think that just demonstrates the confidence we have in the underlying business that's going on. So taking all that into account our 2013 business EPS is expected to be flat to 5% lower at constant exchange rates, always barring major unforeseen adverse events.

So the longer-term guidance, everything we still see is completely aligned with that. We do increase our operating margin in our plans. We've got EPS therefore growing on a leverage basis and we still intend to obviously have our dividend payout ratio achieve the target of 50% in 2013.

With that, I'd like to invite my colleagues up onto the stage here and we'll be happy to take any questions, obviously, through webcast or here in the live audience. So come on up, folks.

We'll probably start taking questions from the room and at some point I will turn over to questions we have received through webcast. Maybe shall we go Philippe Lanone? Yes, if you don't mind stating your name and company, thanks.

Good afternoon, Philippe Lanone from Natixis. Three questions, if I may. First one, could you make a comment on Lovenox in Europe, which is quite a big drug still for you? And we have new proposed guidelines that, while they again restate that there is a lot of hurdle, do not close anymore the door to [substitutable] generic.

Number two question for Jerome, maybe, (technical difficulty) R&D. If we extrapolate the trends in Q4 -- you have a number (technical difficulty) in Phase III now. How confident are you that you can (technical difficulty) within the EUR5b threshold if we extrapolate the Q4 trends that needs a lot of restructuring?

One question, maybe more general, on --

Philippe, maybe that's the last one. We'll try to limit questions to one or two at a time so that we can get as many people.

Fair enough.

You can always come back into the queue.

Well, yes, you are absolutely right, there is a guidelines for biosimilars in Europe all which touches Lovenox. We have been consulted in this process. We are overall, I would not say satisfied, but (technical difficulty) satisfied with the outcome. The outcome is rigid, it's stringent. As far as the definition of those products is concerned, we believe that it will not be easy for everyone to overcome those hurdles. Clinical trials are needed, but they can be waived, but it will not be easy to waive them, so overall we believe those guidelines are okay. And they are okay because they are safe for the patients.

Independently, and I have said so over the years, I don't believe that the European market will be extremely sensitive to generics for Lovenox. The European market for the last 20 years has seen a multitude of low-molecular weight heparins. The market situation is not at all comparable to the US market. And let's now overlook that even in the US markets the penetration of generics has been relatively slow -- very slow in special side of the hospital market, where Lovenox even today controls about 50% in terms of volume.

Philippe, I will give you a financial answer. If you look at the first quarter of 2011, where we had a ratio of 15.2% to sales in terms of R&D expense you would have told me, how on earth can you get to 14%, and we did. So in other terms this will be a combination of further full impact of the optimization which has been put in place in 2012. And of course there are things which are increasing, such as PCSK9, but also if I look at the overall Phase III expenses for dengue as compared to the previous year and some have been already, so the cost will be some mature. So there are things which go up and down. And I'll just confirm what I said, that we will stay within the EUR5b envelope.

Okay. Go ahead, Vincent.

Vincent Meunier from Exane BNP Paribas. I have two questions, please. The first one is your new guidance for the long term and especially on emerging markets in the current context of 8% at constant exchange rate in '12 and also in the current context of, let's say, uncertainties in a lot of countries everywhere. Is it fair to continue to assume a double-digit growth in that part of the world, even if, as you say, this is the single, largest opportunity for the pharma industry? But maybe high single digit is better than double digit.

The second question is on the biosimilars of insulins. You are launching -- so you're talking about two Phase I projects. Can we have more details on that? Are you talking about human or analog Insulins, long acting, short acting, maybe a biosimilar of NovoRapid?

Hanspeter can talk also more about the emerging markets. I think we are barely scratching the surface yet on really achieving penetration into these markets. People get a little concerned about seeing maybe the Chinese economy slowing down, but it actually doesn't have an impact on the creation of middle classes. We grew double digit in our key areas last year. As I say, you can count Eastern Europe in or out. I actually think over time Eastern Europe will come back, because it is clearly under-investing.

These are much more -- there's 80 countries in emerging markets, you've got multiple layers of wholesalers and it's never going to be as smooth as what you all have been used to and seeing in Europe and the US. But from a potential point of view and given our product profile I'm not prepared to cede on our target on that yet.

In terms of the biosimilars we don't really want to say an awful lot because of competitive reasons. They are not biosimilars of our own molecules, obviously, since we've had that question come up, so you can pretty much figure out what they might be.

You want to add anything on emerging markets?

Go ahead, Jo.

Jo Walton from Credit Suisse, a couple of questions, please. 18 months ago or so, when you were talking about your long-term guidance, there was a view that 2012 would be the trough year. It doesn't seem that that's the case now.

Would it be fair to say that Genzyme has perhaps done better in 2012 than you had originally expected, so you haven't got the incremental benefit to come through in '13 to offset what was always clearly going to be the second half of Plavix and Avapro? I wonder if you could just tell us a little bit more about why '13 isn't going to be the start of your growth period, because that's what you were originally hoping for.

Secondly, can you also talk a bit about what you're going to do with the cash going forwards? A lot of companies tell us that they just can't make big acquisitions because they don't have any particular advantage and they're just massive bidding wars and you just can't make the sums add up. But clearly investors are very worried about one or other of the big few companies going for a deal. So I wonder if you can just tell us where you think you can best spend your money going forwards.

And, finally, a very quick R&D related question. Now that we have quadrivalent flu vaccines, do you think that the relevant authorities are going to mandate four different strains to put into those vaccines so that the three of you who have the four strains this year will actually gain market share? Because at least one of the major suppliers hasn't got (technical difficulty) is it going to slow down the manufacturing? I always understand that the issue is that you've got to make all four strains and put them together. So if you're making four strains rather than three perhaps it just slows things down. So perhaps you could tell us what the real advantage of four strains in a vaccine will be.

2012 trough year, 18 months ago, first, a guidance of flat to down minus 5% doesn't actually preclude 2012 from being a trough year. So let's have a look at the end of 2013 as to where we get to.

Second is in my experience the worst thing you have is when you've got a flat anywhere in your guidance, because it only requires a little bit of here and there of things like tax rates, of a slight shift in 2012 to 2013 of Plavix that starts to make some of those things that you said 18 months ago a little less precise. If I look above the operating profit line I don't see anything that's changed. And when you -- just say you take out that EUR800m, if you want to get into the underlying growth story, you can see that business growing at 5% to 10%. So we have continued confidence in the underlying fundamentals of the business.

Now, the tax rate was unexpectedly lower last year and we did have a settlement with BMS on Plavix and that's shifted a little bit, but, as I say, the guidance doesn't exclude 2012 from being a trough year. But fundamentally as I look at the business -- and I'm not really looking at it any differently than I did 18 months ago, with the exception that actually we have a whole lot more in R&D.

18 months ago IL-4 was not on my radar screen. C. difficile was not on our radar screen. The ability to actually move as quickly as we did on PCSK9 into Phase III, remember, we only opted into this with Regeneron in March of 2009 and here we are three years later in a major Phase III program. So -- but actually those are good-news items and a lot more robust than I could have even hoped for.

So what to do with the cash? First is we're generating, just to make round numbers, roughly around EUR10b in cash. You got around EUR3.5b, possibly going up to EUR4b going into the dividend by the time we get to the 50% payout. There's about EUR1.5b goes to capital expenditure to keep the Company operating and keep quality in our factories. I think it's pretty easy to say, well, we'll continue to do EUR1b to EUR2b in bolt-on transactions. And our objective is to have, over time, roughly EUR10b in net debt.

Now we're already below the EUR10b at the end of this year and so we're either going to have to find transactions that can add value -- and I've consistently said my preference is to continue to invest in the business. Equally, I would say that if you look at our track record over the last four years the acquisitions that we have done have generated value.

I would agree with you that it is becoming increasingly difficult. When we did Genzyme it was a unique opportunity, but unfortunately the Biotech Index has risen 82% since we did Genzyme, so there's not too many more Genzymes out there. We do find value in non-BRIC emerging countries. The BRICs have become much more competitive, but we're one of the few companies that's present in non-BRIC. But you can't spend that much money. I can't go spend EUR10b, even if I want to, in non-BRIC.

So I think it's a question that you're going to look at over the course of the year. How you use your capital is a strategic question that you explore with the Board. But we're not about to go do anything that doesn't drive value. Remember, half of our equity compensation is based on our return on investment metric and that pretty much precludes you from doing what some of our colleagues have done in the industry.

So our job is not to accumulate cash. Our job is to invest in the business, but it's our job to invest in the business that benefits Sanofi shareholders, not someone else's shareholders. And I think you can also judge us on the deals that we haven't done even over the last year.

With that I'll turn it to Olivier on the quadrivalent vaccine.

So predicting the right strain is always a very difficult exercise. And it starts in February and we have seen years where at the end of the season the strain that circulated and that changed. So it's a little bit premature to say what ACIP recommendation are going to be. What we could say is that in the last couple of years there has been some mismatch, especially for strain B, so to have two strain B will offer better protection.

In terms of manufacturing, it's not going to have a significant impact. The way we view the impact in terms of manufacturing is more the fact that, of course, it will be -- put pressure on capacity, which means at the end of the day to manufacture four strain, of course, you need to have an install capacity that is a little bit larger than for three strain, which means that we are expecting less price pressure for the whole market in a quadrivalent market than a trivalent market.

Okay, we'll move to the second row, Michael, Richard, one after the other.

It's Michael Leuchten from Barclays. If I could just go back to the emerging markets, the slowdown really seems to be in the rump EM business, which is not your growth platforms. And if I look at a full year that business was broadly flat and then down 3% in Q4. Can you help me understand how much of that is structural as to temporary, i.e., how much of that was just some sort of price pressure in 2012 may annualize in 2013 (technical difficulty) how much of that is really structural?

Well, overall we have seen in the marketplace in the demand and acceleration. And in the fourth quarter, if I take the example of China, IMS, which has to be handled with very much of care because it's only selected for the market, but nevertheless has seen a strong rebound in the last two or three months of the year, so I'm talking about demand.

What we have seen and what has weakened our performance in emerging markets in the last quarter from a structural point of view was OTC Consumer Healthcare. We have faced difficulties in China and in Brazil, in Brazil from Medley and in China mainly for one of the brands which is a multivitamin brand. The reasons for the slowdown in the fourth quarter were quite different from market to market.

You could say in both markets we had channel issues. But then intrinsically of very different origin we have a problem in Brazil which is specific for one chain of pharmacy chain, which is accelerated by a local problem with VAT. There was a significant change in VAT in the State of Sao Paulo which, unfortunately, is a major market for Medley so far, so we have to act to it in a structural way, which means we have to dislocate our resources and get to markets where this VAT problem, which is a problem for the consumer, for the customer, not for us, does not exist.

In China we have a situation where second- and third-tier distributors have severe financial problems. They have lost most of their margin and so the distribution system to some extent collapsed, which we also have to address from a structural point of view, which means we are today in a reselection of our customers. We work with different customers. Respectively we will drastically reduce the number of partners.

All of this should lead to a reacceleration of our performance in CHC during the second half of 2013. Beyond, I see no structural change. I fully underline what Chris said before on emerging markets. This trend will continue. Some of the markets will replace others; if I look to markets like Indonesia or Vietnam, they are just at the beginning of their real growth period.

I think your question was around the growth in the non-growth platforms. So just to complement what Hanspeter said, there was a withdrawal of a product in Mexico, for example, which is a one-off. And in these price reductions in China, the oncology piece, which is not included in the growth markets, there was an impact on Taxotere and Eloxatin. So the Taxotere and Eloxatin clearly carries forward in China, but the withdrawal of the products is essentially a one-off. But I think fundamentally there's no real difference.

Maybe we'll go to Richard on the second row.

Thanks, Richard Vosser from JP Morgan. Two questions, please. Just thinking about the cost savings that won't be realized in '13, so '14 and '15, presumably with the pipeline coming through and new launches those will be reinvested as well. And then just thinking about that underlying growth of 5% to 10%, what do you need from M&A to come through -- pipeline to come through to maintain the growth at that sort of level, or even accelerate it from the bottom line?

And then just one question on diabetes. Just thinking about Lyxumia as it comes to the market, have you managed to gain any insight into the cardiovascular profile of Lyxumia from the data you've submitted from ELIXA to the FDA? Clearly, the confidence interval should be relatively below 1.8. How should we think about that maybe impacting the launch of Lyxumia and the sales of that? Thanks very much.

Jerome, maybe you could take the cost saving question and Elias the Lyxumia question.

Yes. So you're right, Richard, that, as we said, we are going to reinvest a large part of our cost savings in 2013. Well, it doesn't mean that we will do exactly the same in the coming years. There is a sort of bonus effect into '13 if you think about all the launches which -- we all know which are just starting or being prepared for, like Lemtrada. And we have a sort of see-saw effect.

Today we are clearly investing more than we will generate in sales in 2013, which -- by the way, one of the reasons why you need to keep to the range in terms of guidance because you don't know exactly what will be the exact timing and what will be the pickup of, let's say, Lyxumia in Germany or whatever. So there is a certain degree of uncertainty. But as long as you go into the next year, hopefully we'll get more sales while you have no reason to build up another sales team for Aubagio. So the leverage effect will ultimately come from these launches in 2014.

So don't really consider that. Yes, we are going to continue to generate savings in the next year. This will -- next years. This will be firstly on the industrial side because, as we know, each measure you take on the industrial takes a bit of time to be implemented and to be visible into the P&L, also because it goes firstly into the inventory before going into the P&L.

But, second, there is a leverage effect which will come over time just as the result of increasing sales from the new launches. Which means that the success of these launches is by far the most important thing when it comes to the evolution of profitability of -- or, let's say, the differing of attention when it comes to the evolution of our performance in the two years to come.

Yes. And of course sales of new products are notoriously difficult to forecast, I think it's fair to say. In 2013 launch costs exceed the sales of those same products by about a two-to-one ratio.

In terms of the cardiovascular risk for Lyxumia, as you know, in the EU we could file. In the US the FDA requested to have the ELIXA study recruited significantly to be able to file, so we filed in December. And they have to do an independent study which is blinded to us of the risk ratio and then determine acceptance of the file or not, which we're expecting in the first quarter, as Hanspeter described. This is an independent study that has to be done on an interim basis by the third party.

Maybe just -- because you also -- part of your question was what do we need to do in M&A to make the 5%. And the answer is I don't think we have to do anything. If you go back to 2012, we've got a EUR23.5b business called the growth platforms that grew at 10%. If you've got that size business growing at double digits, that's quite a momentum that you've got going.

And really when you look at our sales forecast, actually, nothing really has to happen in terms of sales growth. The main reason that sales go up is not because the growth platforms are growing any faster. It's just that every year we have less dilutive effect of the stuff that's come off patent. So in some ways just waiting actually causes the sales to go up. We don't have to buy anything. We don't have to launch any new products to get there. It's just a mathematical effect of that.

Now, the only wobble factor in there is how much does the -- do austerity programs cost us, but we've already baked into our numbers an assumption that the austerity measures have an ongoing impact on our business.

I think we can take a question from Switzerland, on the third row, with Odile.

Yes, thank you, Odile Rundquist from Helvea. Just coming back to the flu vaccine, we know that since 2009 there has been recommendation for universal coverage. But still your flu vaccine has been down 5% in 2012. We know that there is maybe a delay effect that that could recover in the first quarter, but we have seen that with also competitive companies with flu sales being definitely down. So you guided in 2011 for US flu vaccine to grow by double-digit number going forward. Is this guidance still realizable or maybe a bit too bullish?

And then on eliglustat, it has definitely the advantage of being an oral formulation to overcome the challenge of infusing patients and then that is typically what also arises in the childhood. So did you actually enroll patients or children in this study or do you plan to do so in your two studies? Was it some children?

And finally, I don't know if you can maybe talk about the differentiating factor of your JAK2 inhibitor versus in market, [JAK IV], for example.

Oliver, you want to take vaccine first.

So the last two years, in the last two years we have seen very low disease activity on flu. You have seen that especially in the US but also in Europe in the last couple of months the disease activity has increased significantly. So it's obviously that after two years after the pandemic with relatively low activity, we have not observed a significant increase of the vaccination rate.

We have seen since the beginning of December, this is one of the reasons we have been able to ship until the last couple of days, a significant increase in terms of vaccination.

To get back to more precisely to your question, what we are anticipating, and we continue and there is no reason to change the guidelines, what we are anticipating is, and as we move forward, we will be able to do better than the market with our differentiated forms. We are very happy with our performance with the Fluzone High-Dose for the elderly people that is growing more than 65%. We have invested very significantly on our Flu ID our small needle device which is much more friendly and for the people that tend to get their shot each and every year. And of course we are anticipating to get a price premium when quadrivalent form will be launched.

In the long run we're also anticipating, and this is an important part of our strategy, when we get the efficacy data for the Fluzone High-Dose, this is going to be an important booster to our flu franchise in the US.

Elias, do you want to cover eliglustat and JAK2?

So for eliglustat, obviously when you design a trial, the first trial is designed against placebo. And because of the ethical issue of do you offer the treatment in children with the established treatment versus a placebo, you obviously cannot. So you limit the exposure of children in the first trial.

The second trial, I don't have the exact numbers. As I said, the ACCORD trial just came out. We just have the top-line efficacy endpoints. I don't know the specifics within that trial so I'd be happy to share them with you as I discover them as they are analyzed as we speak.

On the JAK2, the differentiation, as you know it's a more selective JAK2 inhibitor. Our hope is that the very -- the key factor of differentiation is whether or not you reduce fibrosis, because myelofibrosis, basically the outcome is driven by the growth of fibrosis over time. And if you can stop or reduce that you will have a significant change in the outcome, we hope.

Now in terms of the existing competitor, the target is about the same. The selectivity is the only difference at this point. But this is -- the question is fibrosis and we're looking at that in a different way.

Go ahead, Eric.

Eric le Berrigaud, Bryan Garnier. Two set of questions. First, to put 2013 in the context of your mid-term guidance, first in revenue, last year revenue was flat and mid-term guidance is above 5%. Where do you see 2013 in this journey? Is it fair to assume a progressive trend somewhere in between, or is it already achievable to think about 5% and to see how much that leaves for '14 and '15?

Second, on core EPS, same kind of questions. Mid-term is above the 5%. This year is between zero and minus 5%, which suggests double-digit for the next couple of years to reach at least 6%. Is it granted? Or under which conditions do you think double-digit will be achievable in terms of external growth, share buybacks or whatsoever?

And the second question relates to GLP-1. Should weekly GLP-1 become standard in monotherapy, with semaglutide, dulaglutide, albiglutide on top of Bydureon, how do you plan to address this point with the existing agreement with Zealand?

Jerome, do you want to take that one, the mid-term guidance?

Yes. On the mid-term guidance, so I try to do some math with you, Eric. So we start from 2012. In 2012, you're right. We've been basically flat on a constant -- slightly increasing on a constant exchange rate basis. Now if I look at 2013, but we are still going to lose -- well, you can do the calculation by yourself. So while EUR1.2b to EUR1.3b of sales from these key products which have got to a nice size in 2012, and this is mainly on firstly Eloxatin. And of course we'll have to beat that by growth platforms. And by how much? It's a bit early to say.

The only thing I can say is that there are all reasons to consider that this growth platform should grow at the same pace as last year, plus the launches we discussed before. We had basically no new launch contribution last year. We just had EUR7m of sales booked for Aubagio. So if you think about that, you say there is some addition which could come from that.

Now if I go into 2014 and 2015, obviously the negative element coming from the loss of revenues coming from the genericized products will be much, much lower. So still as Chris said earlier, the uncertainty remains around the impact of cost containment measures, as an example, even if we know now, for instance, that in Europe, year on year, whatever happens, it is in the range of EUR3m so far for us.

And then of course, it's a bit hard to predict more in detail, but it just gives you that -- still in 2013, and this will be mainly the first half of 2013, so the change in the curve, really the inflection point will be really in the second half, because the first half we'll still see from the top-line standpoint the impact, the full impact of Eloxatin and a bit of Taxotere as well as CoAprovel in Europe and then you will start to see that fading away quarter after quarter.

On the earning per share, well along with what we said before, we are not counting on acquisitions to meet the guidance. We said already one year ago that we have tried to stress test guidance to a set, a number of events, in particular in terms of pricing and evolution in European countries in particular. So far so good. In other terms we still feel that we can meet this guidance without any acquisitions and no specific share buyback beyond the buying back shares in order to compensate for the dilution arising from exercise of stock options.

Maybe we can take a couple of questions from the web. So I have -- I'm sorry, did I -- was there an additional one? I'm sorry.

Yes. I don't know if you're referring to the commercial agreement or the research agreement. I don't know what part of the agreement you're concerned about for GLP-1.

It looks like you don't have a weekly GLP-1. So how should you address the standard of care moving to weekly GLP-1 if all products in Phase 3/regulatory phase succeed?

Right. So basically I think that there is a panoply of needs that needs to be fulfilled. We do believe that if you have a, as we've obtained with Lyxumia, the indication Lantus plus Lyxumia being approved, and you have to give the Lantus injection on a daily basis. There's no once-a-week insulin. So I think there's still going to continue to be because of the side effect potentials and so on, a significant demand for daily GLP-1, Lantus or --. In terms of the once a week, we're looking at several options there. And I'm not ready to comment.

But I think it's also fair to say let's see if it becomes standard of care. We've seen two already fail and my experience, when you've got two failures in a class, I wouldn't bet on the third one.

So, Chris, maybe a couple of questions from the US. There's one from Steve Scala at Cowen. Basically he's asking what type of potential do we foresee for Aubagio. Where is the business coming from? What are the main products from where we see switches? And basically what kind of percentage of the opportunity has already realized? Obviously it's still very early days.

When I look at this, what's interesting is I spend a fair amount of time with neurologists. This is a conservative prescribing audience. These are the people that went to the Tysabri withdrawal and reintroduction. You're talking about patients diagnosed young in life, in their mid 30s, for example. Many women. People who are going to be on medication for many decades. And therefore there's an awful lot of discussion with the patient that goes on. There are questions around safety. There's questions about efficacy. There's questions about convenience.

And so for me the number one factor is how quickly do physicians become comfortable with the tolerability profile of Aubagio. We know that Aubagio has at least the same efficacy as best-in-class interferon on Rebif. So there's no reason why anybody's going to go through injections if they can take an oral therapy once you become comfortable with the safety profile.

What is interesting, I think, is the fact that actually this is a metabolite of Leflunomide actually helps us because the risk of suddenly a side effect coming out, as has been seen in others, is dramatically reduced because this is a molecule that has a known history. And I think the fact that one of the main reasons for switching is tolerability is actually an extremely important sign. A lot of the products are coming from the number two -- the two main products that we're drawing from are Copaxone and Avonex. I look at this track in Gilenya that says that actually we're not really taking any product -- we're not taking any patients from Gilenya.

So then the question in my mind is what happens when BG-12 comes along. Well, we'll have to wait and see what the profile is and there's some speculation on that, but my personal view is when I look at the Aubagio launches, I'd be very worried if I were selling interferon today because I think there is a faster acceptance than I might have expected of oral therapy here. And that says to me that people are getting comfortable with this.

So I think what you're going to first of all do is say I think the oral segment becomes an extremely important segment. You've got a $14b market here. You don't need 50% market share to make Aubagio a big product. And I think the fact that it's tracking Gilenya can certainly help on where we think the product could go. It's certainly -- we're extremely satisfied with this. And as I say, the number one factor for me is that I think this product is really -- it's just getting acceptance on the part of the prescribing community in terms of its profile.

There's a quick question for Jerome from Tim Anderson at Sanford Bernstein. Tim is asking how do you see tax evolve with the loss of royalties on Plavix and Avapro, not just for 2013 but beyond that? Tax rate.

Okay. So first I just gave the what we expect for 2013, which is, I can just repeat it, between 26.5% and 27%. Well, going forward, it's clear that we will still see in the short term, because of course in the long term it may change again, but we'll still see basically a disappearance of the royalties taxable at low tax discount based on the French tax law. But on the other hand, the relative evolution of our -- of the location of our sales and then our profit is moving towards regions which have an average tax rate which is lower than both the normal French tax rate but also the US tax rate.

So if I put all that together and look at what we can do to manage that, we are still heading to an increase, but I aim to have this increase to be by certainly below 30% and probably somewhere between 29% and 30%.

Thank you. Are there any other questions in the room? Yes. We can go back to Philippe. And then I have a couple more also from the web.

One question on R&D again on diabetes because some of your competitors, Novo Nordisk is now developing new-generation, at least in Phase 1, there's the once-a-week injectable and oral insulins. When we look at your Phase 1 pipeline, there doesn't seem to be any long-term relation to Lantus today. So what -- do you have something looking for the long-term view on diabetes?

So if I heard your question correctly, you're talking about what is our strategy beyond what we have today, right, and what's coming up and --? So when you really look at our strategy for diabetes, there are two sections. One is obviously controlling hyperglycemia in a better way in a greater percentage of patients is something that you'll have to do, and integrating care around that need is continuing to be our goals. With existing products or enhancement of existing products, like U300, basically for certain patients we really cannot be at goal that easily. So we're going to continue that class of work.

Second, if you talk about the GLP-1 or oral anti-diabetics, we are definitely entering that. You may not see it in the published portfolio but it's clearly something we need to be stronger at. And we are certainly starting that. As you know, we recruited some new heads of research and we're definitely looking into that.

In addition to that, I do believe that there will be a significant demand for peptides with copeptides with additional actions that will be of great benefit eventually. This is the direction that we are also taking internally.

So I think that the expectation is that you're pointing out to is that pretty soon you're going to see some of the emerging portfolio that currently is not published. But we're definitely working into that multi-pronged approach to diabetes that integrates vertically between all of the components we currently have and that has what I call the pre-hyperglycemia, the post-hyperglycemia issue that you deal with, including better cell preservation.

There's another question from Graham Parry at Bank of America-Merrill Lynch. Jerome, about the cost saving plans, you talked about 60% being achieved by the end of 2012, also about the fact that about one-third of that was reinvested in growth platforms. You announced an additional EUR500m for 2013. Graham is asking by 2015, how much of the EUR2b savings plan could fall to the bottom line basically? So what would be the --?

Well, I think there are two questions here. The question is how much, at the end of the day, are we going to save by 2015. And if we just prolong the trend you could say maybe we are going to save a bit more than the EUR2b. Maybe it's a bit early to really be affirmative in that respect.

And the second question is how much we are going to reinvest. So this is why we can be pretty clear when it comes to 2013. And depending upon opportunities in terms of which new launches and so on, it's a bit more uncertain in the coming year. So there will be a net increase of the cost savings beyond 2013, in 2014, 2015. How much exactly, well, it's a bit early to say. What I can say is that, well, the EUR2b is really something we will obviously achieve, and well, I'm not really in the position to give a higher number today, but I think obviously it will be on the high side.

Okay. Jo?

Jo Walton, Credit Suisse. I've got two general and one specific question. The specific question first. Your attitude to getting involved with diabetes testing, you've talked about making as broad as possible offering in diabetes and it was an area that you could go into. I wonder if you could update us on your thoughts there.

And two general questions. You've talked about your R&D pipeline and how you've had more success than you might have expected lower attrition. Do you think that we're going to see that generally across the industry, that the quality of knowledge when you put things into Phase III means that you have a better chance of success at the end? Or is that matched in an opposite direction by the increasing novelty of the pipeline so that investors probably won't see a marked difference? Sitting on this side of the fence, we're only seeing about a 60% success industry-wide in Phase III. And that just still isn't good enough. So I'm interested in your thoughts there.

And the other general question is about launch trajectories, and particularly given the different way that you're promoting drugs now. So you point to having half as many sales reps in the US now that you had a few years ago. Well, lots of the industry is like that. And lots of the industry is like that because they've had almost nothing to launch. So if we're moving back to a period with more launches, are we going to see you're going to need to put more sales reps in the US if you -- and just generally? And do you think we should be expecting generally slower ramp-ups because of all the extra problems that you have of getting access around the world?

Right. First, in terms of the diabetes testing, and Hanspeter can talk maybe a little bit specifically about the business, but in general the idea that we had behind that is not actually just to go and compete against J&J or Roche or whomever, but our view is that there's a growing tendency, not so much in Europe but elsewhere, around integrated care, where people are actually starting to look at having those who supply care be reimbursed on the basis of outcomes and not simply on the basis of volume uptake. So increasingly people just don't want to buy a pill or pay for a doctor visit or pay for a hospital visit, but there's increasingly some element of, well, what did you actually achieve in terms of outcomes. In diabetes, for example, how many people actually got to their A1c goal?

Accountable care. Organizations are driving down that path, but you're also seeing some of these being incorporated into some emerging markets. And the real -- if you're going to get into that, you have to actually understand what's happening to a patient between the touch points in the healthcare system, because the way the healthcare system works today is you go in, you have a prescription, you walk out of that and then you don't see a physician for maybe three to six months. Well, we all know that outcomes are going to be based on a whole lot of other factors, including whether the prescription ever got filled, whether the person is paying attention to nutrition, activity.

And mobile phones are having a dramatic impact, and you're seeing a whole host of characters actually getting into this because this is something that we all have with us. And I'm impressed that not too many people are actually looking at their BlackBerry even as we speak, but generally most people's BlackBerrys or iPhone or whatever device it is you carry is not very far away. And suddenly you have an opportunity to communicate with a patient that we've never had before.

So for us, this diabetes testing was, in a sense, getting us prepared for some of this. And you're certainly seeing a lot of moves to marry digital technology with therapeutics. So we've dipped our toe in the water. We've certainly made mistakes in this area and learned what we don't know about software development. But equally I think what we have learned has provided us with insights as to where this could go.

How fast it goes, we'll have to wait and see. But everywhere I go, there are signs that this is actually accelerating. I used to think this was a 2015 and beyond thing. I actually think this will come a lot faster than that. So, if you like, there's a strategic element to this and not just a business segment. But you might just want to add on the actual tactical piece here.

No, on the diabetes piece I have really nothing to add. We have learned and we continue to learn, and I believe that therefore we are a little bit further advanced as others. But I have not the slightest doubts that this integrated model for diabetes, as for other chronic diseases, is absolutely to come. And the question is only time and who finds the fastest, the right doors to go into it and learns the lessons we had to learn.

I'll give you a little anecdote. We have been totally hit by the fact that the latest iPhone does no more fit into our IBGStar device, which is a way of marketing of the iPhone inventors. So we had to learn this the hard way, and the next time we know it.

I would like to say something on the field force question. It's -- these are true -- these [are true] that the number of field reps has diminished also because of lesser opportunity to launch. But I think the major reason was that the decision model on prescribing has dramatically changed in the traditional markets like the United States and Europe. And coming from this, talking about our own headcount, I believe yes, there may be little increases depending on will PCSK9 be a product for a GP or not.

But overall I'm convinced we will never go back to the 10,000 we had in the US because the decision making on prescriptions has totally changed. It moved upstairs. It went in the treatment guidelines and the list coming from the healthcare providers.

On the other hand, obviously geographical scope, I never believed that we will have 10,000 reps in China either because also their decision making and also the way information is being handled is not the same as it has been in the '80s and '90s in the United States. But the fact is we have today more in Japan -- in China than in the US.

Do you want to talk about the attrition question? Does this get offset by novelty? How do you see that developing?

So, as we mentioned, I think our portfolio is pretty amazing in the sense that attrition has not occurred to a significant degree. But I think if you look at general trends in the industry, I think first of all look at the FDA approvals. Last year, this year, they're up. So clearly the base hasn't changed and therefore there's more approvals. So you can tell that there's something happening.

The second, biologics have an inherently higher rate of success, low rate of attrition. And as you change your portfolio more towards biologics, you have a lower attrition by nature because they have an intrinsically lower rate in small molecules, the reason being that with a biologic you need to understand the biology, you need to understand the target and typically whether an antibody or a replacement enzyme it's very specific. And therefore you don't really have a lot of off-target effects and therefore you have a lower attrition rate, both on efficacy and success rate.

I think the other point is I think that the selection process is changing, and inside of R&D. In other words, in the past there was many shots on goal. Any target that comes up from the literature is a good one to go after. You have the tools. You go after the target. Today it's an inverted process. We are adopting the translational strategy which I have been advocating for a long time, which is the goal nudges from bench to bedside, from bedside to bench. Understand the disease biology in humans before you make a choice to go into a large expensive Phase III.

So I think you're going to see a redistribution of the attrition rates. Hopefully more attrition early, less attrition late.

Okay. So with that, I think, Chris, I will just ask you to just wrap up the call and conclude. Thanks.

Yes. Well, thanks, everybody, for being here. Thank you all for your patience on the webcast. I can tell you personally I'm very happy to have 2012 behind us. This is the first time in 17 years that I can look forward and I don't see a patent cliff anywhere. I think we've also been able to surprisingly build an R&D pipeline of a degree of robustness. So, as we look out to the medium terms in the business, we continue to have the confidence that Sanofi gets back to growth in the second half of the year and beyond.

So thank you very much for your support over the years, particularly during the tricky patches in this business. And we look forward to your support going forward. Thanks very much.

So just for those of you who would like to have a trainer of the Auvi-Qdevice, we'll be distributing some just as you exit here. I know some of you have some already.