Download IR Thematic Seminar in LatAm - São Paulo - November 29th

IR Thematic Seminar in LatAm
São Paulo - November 29th - 30th, 2012
Forward Looking Statements
This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995,
as amended. Forward-looking statements are statements that are not historical facts. These statements include
projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and
expectations with respect to future financial results, events, operations, services, product development and potential, and
statements regarding future performance. Forward-looking statements are generally identified by the words "expects",
"anticipates", "believes", "intends", "estimates", "plans" and similar expressions. Although Sanofi's management believes
that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forwardlooking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and
generally beyond the control of Sanofi, that could cause actual results and developments to differ materially from those
expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties
include among other things, the uncertainties inherent in research and development, future clinical data and analysis,
including post marketing, decisions by regulatory authorities, such as the FDA or the EMA, regarding whether and when to
approve any drug, device or biological application that may be filed for any such product candidates as well as their
decisions regarding labeling and other matters that could affect the availability or commercial potential of such product
candidates, the absence of guarantee that the product candidates if approved will be commercially successful, the future
approval and commercial success of therapeutic alternatives, the Group's ability to benefit from external growth
opportunities, trends in exchange rates and prevailing interest rates, the impact of cost containment policies and
subsequent changes thereto, the average number of shares outstanding as well as those discussed or identified in the
public filings with the SEC and the AMF made by Sanofi, including those listed under "Risk Factors" and "Cautionary
Statement Regarding Forward-Looking Statements" in Sanofi's annual report on Form 20-F for the year ended December
31, 2011. Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any
forward-looking information or statements.
2
Agenda
November 29, 2012
LatAm Highlights
● Hanspeter Spek, President, Global Operations
Brazil Overview
● Heraldo Marchezini, SVP, Latin America and General Manager, Brazil
Genzyme
● Rogerio Vivaldi, MD, SVP, Head of Rare Diseases - Genzyme
Consumer Healthcare
● Heraldo Marchezini, SVP, Latin America and General Manager, Brazil
Q&A
Break
3
Agenda
November 29, 2012
Diabetes
● Fernando Sampaio, General Manager, Sanofi Pharma, Brazil
Generics
● Heraldo Marchezini, SVP, Latin America and General Manager, Brazil
Animal Health
● José Barella, SVP, Animal Health - Merial
Vaccines
● Patrice Lebrun, VP, Latin America - Sanofi Pasteur
Q&A
4
Agenda
November 30, 2012
The Interfarma Perspective on Brazil
(1)
● Antônio Britto, Executive President of Interfarma
LatAm Industrial Affairs
● François Blanot, VP Industrial Affairs, Latam
Q&A
Suzano Plant Visit
The Brazilian Pharmaceutical Market
● Herbert Gonçalves, Partner at Primeira Consulta
Q&A
(1) Interfarma: Brazil Research-based Pharmaceutical Manufacturers Association
5
LatAm Highlights
Hanspeter Spek
President, Global Operations
6
A Strong and Experienced Group of Managers Presenting
at the IR Thematic Seminar on LatAm
Heraldo Marchezini
SVP, Latin America and
General Manager, Brazil
Fernando Sampaio
General Manager,
Sanofi Pharma, Brazil
François Blanot
VP Industrial Affairs
Latin America
José Barella
SVP, Animal Health
Merial
Rogerio Vivaldi, MD
SVP, Head of Rare Diseases
Genzyme
Patrice Lebrun
VP, Latin America
Sanofi Pasteur
7
Agenda
Latin America - A Fast Growing Region
Sanofi - The Market Leader in LatAm
8
Latin America Is a Region of Diversity
Market Characteristics
(1)
● A large population
● ~600m people or 8% of the world‘s
population
● Diverse political systems and
unequal distribution of wealth
● LatAm per capita income only 30%
of the U.S.
● Regional development gaps
Mexico
GDP: $ 1,163bn
Population: 115m
CAMAC(2)
GDP: $305bn
Population: 70m
Colombia
GDP: $365bn
Population: 47m
Venezuela
GDP $338bn
Population: 30m
Ecuador
GDP: $71bn
Population: 15m
Brazil
GDP $ 2,425bn
Population: 197m
Peru
GDP: $200bn
Population: 30m
Paraguay
GDP: $26bn
Population: 7m
Bolivia
GDP: $27bn
Population: 11m
Uruguay
GDP: $50bn
Population: 3m
Chile
GDP: $268bn
Population: 17m
Argentina
GDP $475bn
Population: 41m
● >30 distinct Emerging Markets
● Disparities in affordability
● Public funding vs out-of-pocket
expenditures for Healthcare
(1) IMF World Economic Outlook Database, October 2012
(2) CAMAC: Central America & Caribbean Countries
9
The Economic Outlook for LatAm Remains Positive
● Economic indicators show resilience
LatAm GDP Growth(1)
● Fairly stable GDP growth projected
GDP in %
Inflation rate in %
● Recent slowdown in larger economies
(Argentina, Brazil) balanced by faster
growth in smaller economies
(Colombia, Peru, etc...)
● Appreciation of most currencies
(except Brazilian Real in 2012)
● Unemployment rate at historic low
level: 6.8% for LatAm in 2011(2)
● Mix of external economic factors
● Weaker prospects in advanced
economies (Eurozone, U.S.)
● Commodities and food prices boom
● Capital inflow surge
Actuals
(1) IMF World Economic Outlook 2012
(2) International Labour Organization 2012
Projections
10
The Unequal Evolution of Healthcare Expenditures
Reflects a Diverse Socio-Economic Environment
● LatAm healthcare expenditures
growing faster than GDP
Evolution of Health Expenditures(1)
(% of GDP per country)
● 8% of GDP in 2010(1)
● Continued strong growth expected
in healthcare expenditures as a
percent of GDP in key markets
● Brazil, Mexico, Colombia
● Disparities in the development
of healthcare infrastructure across
LatAm countries
● Tailored approach to local markets
required
(1) World Bank
Brazil
Argentina
Ecuador
Mexico
Colombia
Venezuela
11
LatAm Markets Are Largely Out-Of-Pocket but Public
Funding Is a Growing Percent of Healthcare Expenditures
Split of Pharmaceutical
(1)
Expenditures (%)
● Large portion of out-of-pocket
healthcare expenditures typical of
Emerging Markets
● High percent of out-of-pocket spend
on Pharmaceuticals (>80% in Brazil)
● Significant public sector funding
through healthcare programs
in key countries
● Government purchases by "Sistema
único de saúde" (SUS) in Brazil
● "Seguro popular" in Mexico
● Private health insurance gaining
traction among the middle-class
(1) IMS World Review Q1 2012 and Sanofi internal analysis
12
A Growing and Aging Population with Increased
Purchasing Power of a Larger Middle Class
(1)
Total Population & People ≥60 in LatAm
(in millions)
(2)
Middle Class Population in LatAm
(in millions)
(1) Latin America and Caribbean Demographic Center (CELADE) – Population Division of ECLAC and United Nations, 2011
(2) Wolfensohn Center for Development at Brookings Institution, 2010
13
Healthcare Expenditures in LatAm Are Projected
to Continue to Expand
% Population ≥ 60 years old relative to
Healthcare expenditures per capita(1)
● LatAm healthcare expenditure per
capita still low at U.S. $671 vs.
global average of ~U.S. $1,000(1)
● Market attractiveness to support
growth in the medium term
● Economic expansion of the region
● Aging population
● Chronic diseases on the rise
● Growing upper and middle-class
Healthcare expenditures per capita (U.S.$)
● Growth of average healthcare
expenditure per capita in LatAm
>10% in 2010
8000
7000
6000
5000
4000
3000
2000
1000
0
5%
10%
15%
20%
25%
% Population over 60 years
30%
(1) World Bank
14
LatAm Pharmaceutical Markets Are Expected to Reach
Over $100bn by 2016
Rank in 2000(1)
Rank in 2016e(2)
1
U.S.
1
U.S.
2
Japan
2
China
3
Germany
3
Japan
4
France
4
Brazil
5
UK
5
Germany
6
Italy
6
France
7
China
7
Russia
8
Brazil
8
Italy
9
Canada
9
India
10
Spain
10
Canada
11
Mexico
11
UK
12
Argentina
12
Spain
13
South Korea
13
South Korea
14
India
14
Australia
15
Australia
15
Mexico
16
Turkey
16
Argentina
17
Netherlands
17
Turkey
18
Poland
18
Venezuela
LatAm Pharmaceutical Market
(3)
as % of Emerging Markets
(1) IMS World Review 2000 (US$)
(2) IMS Market Prognosis 2011-2016 (US$)
(3) World excluding USA, Canada, Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg, Portugal, Holland,
Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark), Japan, Australia /New Zealand
15
Top 3 Countries Make Up ~70% of Pharmaceuticals
in LatAm
2011
2016e
$15.0bn
$10.9bn
$5.4bn
$4.1bn
$47.4bn
$29.0bn
$8.5bn
$5.7bn
$6.6bn
$12.2bn
$11.7bn
$13.6bn
Market size $68bn
Expected market size $102bn
(1) IMS Market Prognosis 2011-2016 (US$)
16
Agenda
Latin America - A Fast Growing Region
Sanofi - The Market Leader in LatAm
17
LatAm Is a Significant Contributor
to Sanofi’s Leadership in Emerging Markets
LatAm Sales
Emerging Markets Sales
(1)
>€3,300m
€2,963m
€3,111m
2012e: ~€11bn
9M 2012
€1,913m
LatAm
~30%
Other
Emerging
Markets
70%
2009
2010
2011
2012e
(1) World excluding USA, Canada, Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta,
Belgium, Luxembourg, Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland,
Denmark), Japan, Australia /New Zealand
18
Sanofi Is the Market Leader in LatAm
● Sanofi: an undisputed market
leader in LatAm for several years
● Overall market share of 7.5%
in Pharmaceuticals(2)
● Strong presence in most LatAm
countries
● Leader in Brazil, the largest market
● Significant changes in the LatAm
market
● Most multinational companies
losing market share
● Increasingly fierce domestic
competition
MAT Q2 2012(1)
2008(1)
1.
7.3%
1.
7.5%
2. PFIZER
6.9%
2. NOVARTIS
5.6%
3. NOVARTIS
6.6%
3. PFIZER
5.2%
4. MERCK
5.3%
4. EMS
4.2%
5. BAYER
4.3%
5. GSK
4.0%
6. GSK
4.1%
6. MERCK
3.9%
7. ROCHE
3.9%
7. BAYER
3.7%
8. ABBOTT
3.1%
8. ROCHE
3.3%
9. J&J
3.0%
9. ABBOTT
3.2%
10. ASTRAZENECA 2.8%
(1) IMS MIDAS MAT Q2 2012
10. HYPERMARCAS 3.0%
19
Sanofi Is a Well Diversified Player in LatAm
with Multiple Sources of Sustainable Growth
LatAm Sales Split by Business (2012e)
Vaccines
12%
Animal Health
8%
Other
Pharmaceuticals 41%
5% New Genzyme
12%
Generics
8%
14%
Diabetes
CHC
20
Brazil and Mexico Represent >2/3 of Sales and Headcount
for Sanofi in LatAm
Headcount Split
Geographic Sales Split
> €3,300m
> 10,000 people
33%
Other LatAm
29%
21%
Mexico
20%
46%
Brazil
51%
2012e
2012e
21
Sanofi’s Leadership in LatAm Is Illustrated by
its Broad Industrial Footprint and Significant Headcount
● A network of 10 plants dedicated to
the LatAm market
LatAm Headcount per Function
● ~3,900 people in Manufacturing
2012e
● Branded pharmaceuticals, Generics,
CHC, Vaccines, Animal Health
● 95% of Pharma volumes sold in
LatAm produced locally
●
R&D
6%
18%
Manufacturing
Sales Force
A strong sales force
Others
39%
● ~3,900 commercial people
● A solid operating margin
● In line with business operating
margin for the whole Emerging
Markets perimeter(1)
38%
(1) Sanofi’s Business Operating Margin excluding central administrative and R&D costs was around 40% in 2011 in Emerging Markets
22
LatAm Represents a Strategic Opportunity
for Sustainable Growth
Historical
presence
● Leverage unique accumulated local experience
and diversified product portfolio
Market reach
● Expand product portfolio to address growing middle-class
Manufacturing
capacity
● Leverage network of industrial sites to serve increasing volume
and ability to produce at local costs
Quality of
management
● Attract, train and retain local management talent
Local
innovation
● Use local R&D capabilities to participate in global clinical trials
and to respond to LCM needs in LatAm
Bolt-on
acquisitions
● Continue to enlarge our portfolio by successfully
identifying and integrating M&A targets
23
Brazil Overview
Heraldo Marchezini
Senior Vice President, Latin America
and General Manager, Brazil
24
Agenda
Brazil - A Country on the Rise
The Pharmaceutical Market in Brazil
Sanofi’s Leadership in Brazil
25
Brazil - A Country on the Rise
Brazil Nominal GDP(3,4)
● Significant growth potential
(BRL in trillion)
● 6th largest economy worldwide(1)
● 5th largest population (~200m)(2)
4.5
● Public debt under control
● Public debt / GDP ratio: 35% in
September 2012(3)
● Policy tightening to contain inflation
● Stable inflation targeted below 6%(3)
2.7
● Economic growth expected to
rebound in 2013(4)
● 2011 GDP: +2.7%
● 2012e GDP: +1.5%
● 2013e GDP: +4.0%
(1)
(2)
(3)
(4)
2007
IMF 2012, World Bank
IBGE – Instituto Brasileiro de Geografia e Estatistica (2010 Population census)
Brazilian Central Bank
IMF, World Economic Outlook database, October 2012
2008
2009
2010
2011
2012e
26
Brazil Benefited Significantly from a Period of Stability
and Rising Living Standards from 2000 to 2011
● Increase in employment levels and
salaries boosted consumption
Population Shares of Income Categories
in Brazil ($ per day)(3)
● Emergence of a large middle class
● Consumer credit expansion
created opportunities for the
middle class
● Large foreign investment inflows
● Cumulative value of €288bn(1)
from 2000-2011
● Lowest unemployment rate in
Brazil’s history reached in 2011
●
4.7% vs. 11.7% in 2003(2)
(1) Brazilian Central Bank
(2) IBGE (Average unemployment rate of major metropolitan regions)
(3) Socio-Economic Database for Latin America and the Caribbean (CEDLAS and The World Bank)
27
Agenda
Brazil - A Country on the Rise
The Pharmaceutical Market in Brazil
Sanofi’s Leadership in Brazil
28
Brazil Is Expected to Become >$47bn Pharmaceutical
Market by 2016
● Brazil expected to become the 4th
largest Pharma market by 2016
Pharmaceutical Market by Segments(1)
$47.4bn
● Private demand accounts for the
vast majority of the market
>+10%
CAGR
● Retail sector represented >70%
of total market in 2011(1)
● Public market growth accelerated
by “Plano Brasil Maior”
● Generics segment expected to
outpace market growth
$29.0bn
● Expansion of public sector coverage
● “Farmacia popular” program to
expand access to medicines for
chronic diseases
(1) IMS Market Prognosis 2012 and internal estimates
29
Changing Dynamics in a Competitive Marketplace
Regulatory Environment
● Evolving regulatory framework
● Unified Healthcare System (SUS)(1)
established in 1988
● Pipeline Patent Law of 1996
● ANS(2) created in 1998
● Generics Law introduced in 1999
● Guidelines for Biosimilars in 2011
● Stricter regulatory procedures
implemented by ANVISA(3)
● Bioequivalence tests for all branded
Generics/Similares required by
2014
● Tight price control through CMED(4)
● Annual price adjustments based
on multiple criteria
(1)
(2)
(3)
(4)
(5)
SUS- Sistema Único de Saúde
ANS - Agência Nacional de Saúde Suplementar
ANVISA - Agência Nacional de Vigilância Sanitária
CMED - Câmara de Regulação do Mercado de Medicamentos
IMS Health 2012
Competitive Environment
● Government policies implemented
to boost national industry
● Growing share of domestic players
46% in 2012, up from 37% in 2007(5)
● “Profarma” - Government incentives
for local manufacturers
● Public-Private Partnerships (‘PPP’)
for improved technology transfers
● Fast growing number of generics
● Use driven by government policies
● More Multinationals with “local” base
● Consolidation in the distribution
channels
● Drugstore chains with regional
expansion strategies
30
Drugstore Chains are Increasingly Important Players
in the Retail Market
● Drugstore chains capture share
in a growing retail market
Sales Split by of Point of Sales Type(1)
4-6%
● Investments in regional expansion
● Modern retail concepts with
state-of-the-art infrastructure
35-39%
● Launch of private labels
● In-store shopping experience
increasingly important to consumers
● Large product assortments
appealing to the new Middle-class
57-61%
● Combination of Health, 'Well-being'
and Beauty product offerings
● Strong presence in retail channels
key to market share expansion
(1) IMS Latin America 2012 (IMS Distribution Study, Company Annual Reports, Midea, IMS analysis)
31
Agenda
Brazil - A Country on the Rise
The Pharmaceutical Market in Brazil
Sanofi’s Leadership in Brazil
32
Sanofi’s Largest Operation in Emerging Markets
Sales in Brazil(1)
● Commercial presence since 1955
(in €m)
● Headquartered in São Paulo
●
Also LatAm regional HQ
th
● Sanofi’s 5 largest country by sales
●
Sales of €1,522m in 2011 (+17%)
●
4.6% of Group sales in 2011
●
>5,200 employees
Brasilia
(1)
Sao Paulo
● Manufacturing capabilities at 4 sites
€1,458m
A/H1N1
€1,254m
● Market leadership gained through
acquisition of Medley in 2009
● Five of Brazil’s top 20 pharma
products are from Sanofi(2)
(1) 2011 sales growth at CER excluding A/H1N1 sales of €204m in 2010
(2) IMS MIDAS August 2012
€1,522m
€767m
33
Our Continued Success is Based on 3 Pillars
Sustainable growth driven by strengths in the local market
1
2
A Diversified Portfolio
Enhanced by the
Acquisition of Medley
3
A Preferred Partner
Status at Pharmacies
A Committed
Organization
34
Sanofi: Well Diversified with Leading Presence
in Key Pharma Market Segments in Brazil
Share of Market Segments in Brazil(1,2,3)
Generics (in %)
Total Pharmaceutical Market (in %)
CHC (in %)
Retail
Retail + Non Retail
Retail
Hypermarcas
12.0%
9.8%
EMS
8.9%
Others
Others
28.7%
Novartis
7.8%
Eurofarma
7.4%
#1 in Pharmaceuticals
11.9%
Others
EMS
7.3%
EMS
24.1%
#1 in Generics
#2 in CHC
● Strong local brands including OTX and Mature or Off-Patent Rx Drugs
● >50 brands actively promoted
● Unique combination of medical detailing expertise and media/POS know-how
● More than 150 products and >500 presentations manufactured
● Broad offerings adapted to local needs
● 92% of sales are from non-patented drugs
● New line extensions fueling growth
(1) IMS MAT September 2012
(2) In value
(3) Only Pharma (Sanofi and Genzyme) - Excluding Vaccines and Merial
35
Strong Outlook for Future Growth of Pharmaceuticals
in Brazil
A tailored approach in each market segment
Drive performance
in Ethical Rx
● Strengthen diabetes
leadership in private and
public markets, based on
success of Lantus®
● Successfully launch new
products
● Continue innovation
through life cycle
management
Consolidate leadership
in Generics
● Benefit from increasing
demand for affordable
drugs by the emerging
middle class
● Seize opportunities with
launches of high-demand
off-patent products
● Secure industrial capacity
Expand presence
in CHC
● Leverage broad CHC
portfolio through extended
distribution channels
● Execute new launches
in a brand-driven consumer
market
● Penetrate into high growth
CHC segments
to accommodate growth
36
Genzyme
Rogerio Vivaldi, MD
Senior Vice President, Head of Rare Diseases
37
Agenda
Genzyme’s History in LatAm
Genzyme - A Leader in Treating Rare Diseases in LatAm
Building a Presence in Multiple Sclerosis in LatAm
38
Genzyme - A Commitment to Changing the Lives
of Patients with Rare Diseases
- A Transformative Therapy
Brazil
Mexico
39
Applying Genzyme’s Deep Commitment
to Rare Diseases in LatAm
Global Rare Diseases Sales(1)
Expanding Rare Disease Treatment
€470m
● Latin America followed Europe and
became a major geographic region
of expansion for Genzyme
● Brazil office established in 1997
● Sales in LatAm of €160m in last
four quarters
● Growth of +20% reported in Q3 2012
versus Q2 2012
2011
2012
(1) Key Rare Diseases brands include Cerezyme®, Myozyme®, Fabrazyme®, Thyrogen®, and Aldurazyme®
40
Genzyme Benefits from a Strong History in LatAm
● Headquarters in Rio de Janeiro,
Brazil (1997)
Mexico city
● Presence expanded over time
across LatAm:
● Buenos Aires, Argentina (1997)
San Jose
Caracas
Panama city
Bogotá
● São Paulo, Brazil (2000)
● Bogotá, Colombia (2002)
Lima
● Mexico City (2003)
● Santiago, Chile (2004)
Rio de Janeiro
São Paulo
● San Jose, Costa Rica (2005)
● Caracas, Venezuela (2007)
● Panama City, Panama (2010)
Santiago
Montevideo
Buenos Aires
● Montevideo, Uruguay (2010)
● Lima, Peru (2011)
41
Genzyme Pioneered and Overcame Challenges in LatAm
Challenges
Genzyme Expertise
Socialized Medicine
Navigating bureaucratic systems
Centralized Tender Bids
Past success with tender offers
Complex Reimbursement Process
Experienced professionals
No Orphan Drug Legislation
Participating in Brazil’s Fast Track process
Patient Advocacy Groups
Vital role understood
Limited Patient Data
Comprehensive patient registries
42
Today, Genzyme Is Well-Established in LatAm
1
Leader in LatAm treating patients with Enzyme Replacement Therapy (ERT)
● Focused efforts on diagnostic capacity
● Early investment in the region
● >1,700 patients treated with Genzyme’s products(1)
2
First fully established biotech company in LatAm
● >300 employees and support staff in 15 countries
● Benefit of aligning with Sanofi’s large infrastructure
3
Strong partnerships with key stakeholders
● Governments, Patient Groups, Academia and Research
(1) Including Gaucher patients enrolled in clinical trials for the investigational agent eliglustat tartrate
43
Agenda
Genzyme’s History in LatAm
Genzyme - A Leader in Treating Rare Diseases in LatAm
Building a Presence in Multiple Sclerosis in LatAm
44
Genzyme’s Rare Disease Business in LatAm
Has a Promising Growth Outlook
● LatAm sales represented 10% of
Genzyme total sales in 9M 2012
LatAm Rare Diseases Sales(1)
€48m
● Genzyme comprised 5% of Sanofi
LatAm business in 9M 2012
● Solid recovery in Brazil attributable to
improved supply situation
● Brazil accounted for 46% of
Genzyme sales in LatAm in Q3 2012
● Significant room for expansion
exists in other LatAm countries
2011
2012
(1) Key Rare Diseases brands include Cerezyme®, Myozyme®, Fabrazyme®, Thyrogen® and Aldurazyme®
45
Genzyme’s Growth Expected to Come from Newly
Identified Patients and Full Supply Situation
Patients on Treatment in LatAm
(1)
~1,700
Eliglustat tartrate
2011
2012
(1) Including Gaucher patients enrolled in clinical trials for the investigational agent eliglustat tartrate
46
Brazil Has the Second Largest Gaucher Patient Population
in the World(1)
● First Gaucher patient treated with
Cerezyme® in 1992
● Cerezyme® is an established
market leader
● Treating >500 Gaucher patients out
of an estimated total population of
660 patients treated in Brazil(1)
Brazil: Gaucher-Treated Patient Share(1)
3%
~1%
10%
10%
● ~86% patient share(2)
76%
● Proven commitment to Gaucher
community with ongoing
development of eliglustat
86% of all Gaucher-treated patients(2)
(1) Estimates based on public information and internal data
(2) Including Gaucher patients enrolled in clinical trials for the investigational agent eliglustat tartrate
47
Eliglustat Expected to Expand Genzyme’s Gaucher
Franchise
● >100 patients enrolled in LatAm in
eliglustat Phase 3 trials
Eliglustat Clincal Program
Patients Enrolled(1)
● Largest clinical trial in the Rare
Disease field ever conducted
~400
● Sites in Argentina, Brazil and
Mexico
● Estimated product launch 2014
~400
~160
~170
~40
(1)
(1) Includes Phase II participants
48
Agenda
Genzyme’s History in LatAm
Genzyme - A Leader in Treating Rare Diseases in LatAm
Building a Presence in Multiple Sclerosis in LatAm
49
The Multiple Sclerosis Market in LatAm Is Poised
for Significant Change
● Market estimated to be ~€375m
in 2011(1)
®
● ~23,000 patients on DMTs(2)
● 80% of treated patients in Brazil,
Mexico and Argentina
● Standard injectable therapies
available
● Beta-interferons, glatiramer acetate
and natalizumab
Under regulatory review in Brazil, Mexico and
Argentina
● Regulatory approvals expected in 2013
(3)
● Reimbursement programs exist
● Public and private payors
● Pricing for branded DMTs in range
of EU and U.S.
(1)
(2)
(3)
Regulatory submissions in Brazil, Mexico and
Argentina expected in Q1 2013
●Regulatory approvals expected in 2014
Based on IMS data and Genzyme estimates
Disease Modifying Therapy
Lemtrada™ is the proprietary name submitted to health authorities for the company’s investigational multiple sclerosis agent
alemtuzumab being co-developed with Bayer Health Care
50
Genzyme Contributing to Sanofi’s Growth in LatAm
1
Well Established Rare Disease presence in LatAm
● Largest pool of patients treated(1)
● Successful government tenders
● Experienced with payors
2
Existing scope for expansion
● Identify new patients
● Increase publications, education and training on rare diseases
● Create next generation products
3
Future roll-out of Multiple Sclerosis franchise in LatAm
● High unmet need
● Sizeable market
● Leverage success of rare disease experience in the region
(1) Based on public information and internal data
51
Paulinho, Brazil
52
Consumer Healthcare
Heraldo Marchezini
Senior Vice President, Latin America
and General Manager, Brazil
53
Agenda
Consumer Healthcare Market in LatAm
Sanofi’s Successful Brand Strategies in LatAm
54
LatAm is One of the Fastest Growing
Regional Consumer Healthcare Markets Worldwide(1)
Total CHC Market in LatAm in 2012
~€8.7bn, +14%(1)
in €bn
+15%
+41%
-0.2%
9%
(1)
(2)
(3)
+20%
Nicholas Hall OTC Year Book, DB6 2012
IMS MIDAS MAT August 2012
IMS OTC Market MAT August 2012
+8%
55
The CHC Market Remains Very Fragmented in LatAm
● Strong presence of multinational
companies
Top 10 CHC Companies in LatAm
by Market Share(1)
● Six MNCs within Top 10
● Sanofi: #1 player in CHC in LatAm
● Domestic players in leading
positions at a national level
● Hypermarcas #1 in Brazil(1)
Hypermarcas
Others
Bayer
● Genomma Lab #1 in Mexico(1)
● Grupo Pharma #1 in Venezuela(1)
GSK
● Growing competition from private
label brands
EMS
J&J
Boehringer
Nestle
Genomma Pfizer
(1)
IMS MIDAS MAT August 2012
56
The CHC Market in LatAm Has Grown Double-Digits
for Many Years
● Experiencing solid double-digit
growth for more than 10 years
(€m)
● 2012 CHC growth slightly slower
than for total market
● Recent re-acceleration, driven by
Brazil and Venezuela
● CHC growth reflects country specific
out-of-pocket spend levels
45.0
+17%
+17%
28.7
+14%
+10%
● Brazil (+15%), Venezuela (+41%),
Argentina (+20%)
● Mexico, Uruguay, Ecuador (<10%)
● Opportunities in new segments
driven by lifestyle changes
+11%
+17%
+20%
+14%
● New focus on nutrition, “well-being”
(1)
IMS Retail MAT June 2012 - Growth is at constant x-rate
57
Agenda
Consumer Healthcare Market in LatAm
Sanofi’s Successful Brand Strategies in LatAm
58
Sanofi is #1 in CHC in LatAm
CHC Quarterly Sales
● CHC is a key contributor to Sanofi’s
growth in LatAm
(€m)
€130m
● Sales of €470m in last 4 quarters
● Brazil is the 4th largest contributor
to Sanofi CHC sales
● Focus on leadership in key categories
● Pain, Gastrointestinals,
VMS(2)/Nutraceuticals, Intimate Hygiene
● Strength built on heritage products
and brand recognition
● Dorflex® in Pain
● Lactacyd® in Feminine Hygiene
● Launch of new products in growth
categories
● DePura® and Gelicart® /Trivance®
in VMS/Nutraceuticals
(1)
(2)
IMS OTC Market MAT August 2012
Vitamins, Minerals & Supplements
2009
2010
2011
2012
59
Strategic Investment Focused on Regional Brands and
Local Heroes
Pain
Gastrointestinal
Cough &
Cold
VMS/Nutraceuticals,
‘Well-Being’
Feminine
Hygiene
Others
Regional
Brands
Skin care
Eyes care
Others
SINUBERASE
Local
Heroes
Calmidol
PAX
Enterolyte
BioGrip
Local
Brands
Adermicina
60
- The Champion in Brazil Keeps Growing
● Top selling brand(1) in the pharma
market in Brazil since 2006
● #1 out of >11,500 registered brands
● Key contributor to Sanofi’s revenue
base in Brazil
● >€100m sales expected in 2012
● Competitive presence at the Point
of Sale key for continued growth
sales (in €m)
● Potential to leverage brand by using
U.S. Chattem portfolio
(1) IMS MIDAS, August 2012
61
&
A Successful CHC Growth Story in LatAm
● “Intimate Hygiene” : a new category
with low household penetration
● Sustainable growth
and
One Brand Equity
● High consumer loyalty to
established products with high
brand recognition
● Low price sensitivity
● Brand not subject to patent cliff or
impact from generics
● Long duration asset
● #1 category brand in ten LatAm
countries(1)
● Growth of >40% expected in 2012
● Geographic expansion
● DTC and brand LCM
LatAm
(1)
(2)
IMS MIDAS, August 2012
Direct-to-consumer
Brazil
62
- Innovation and Growth in the Category
via Geographical Expansion in LatAm
in €m
Q4 2012
Launch in
Brazil
Launch in
Argentina
Launch
in Mexico
Life-cycle
Launch
in
management,
Launch in
Peru, Ecuador, Introduction of
Venezuela,
Uruguay,
capsules
Colombia,
Paraguay
Central America
● Strong relationship and brand equity with physicians and patients
● Physician and DTC educational program
● Expansion through regionalization strategy
● Currently launched in >10 countries
● Balanced high double-digit growth across all countries
● Growth of >50% in Latin America expected in 2012
63
DePura® - A New CHC Brand Launched by Sanofi
in the Brazilian Vitamins Market
● Regulatory status of a food
supplement and promoted as
an ethical medicine
● Developed locally by Sanofi Brazil
● Manufactured in Suzano facility
● Launched in Brazil in 2011 and
reached market leadership in July
2012(1)
● DePura® kids launched in March
● Launch in LatAm planned for 2013
● ~100m consumers aged 50+ are
targets for vitamin D supplementation
(1) IMS PMB July 2012
64
Strategic Focus Has Driven Performance of Sanofi’s CHC
Growth Platform in LatAm
Strategic Priorities
in the CHC market
in LatAm
Revenue Base in Latin America
Expected to Double Over 3 Years
>2x
Boost sales of
existing brands
Drive regional expansion
€418m
€242m
Launch innovations
and new variants
2009
2010
2011
2012e
65
Sanofi is #1 in Consumer Healthcare in LatAm(1)
1● Broad portfolio of well-established brands with
name recognition at the country level (“local heroes”)
2● Execution of regionalization strategies replicates business model
in multiple markets (“regional brands”)
● Strong Brand Equity
● Professional Endorsement by Physicians
● Execution at the Point of Sale
3● Steady flow of new products in high growth CHC categories
(1) IMS MIDAS, August 2012
66
Diabetes
Fernando Sampaio
General Manager, Sanofi Pharma, Brazil
67
Agenda
The Diabetes Market in Latin America and Brazil
Sanofi - A Leader in Diabetes
Broadening Access with A Patient Centric Approach
68
Diabetes is a Large Growth Opportunity in LatAm
Adults with diabetes in Latin America(1)
36m
Patients undiagnosed in Latin America(2)
~45%
Percent of patients not achieving glycemic control
target values in Latin America(3)
>70%
Expected CAGR growth of diabetes market between
2011 and 2015(4)
Expected size of Latin America diabetes market in 2015(4)
(1) IDF. Diabetes Atlas 5th Edition, 2011
(2) Pramparo P et al. Prevention and Control (2006) 2, 149–157
(3) Lopez Stewart G et al. Pan Am J Public Health 22(1), 2007
(4) Internal Data (IMS projection)
25%
€2.55bn
69
Diabetes Prevalence is Rapidly Growing in LatAm
● Expected growth of diabetes
prevalence in LatAm is significantly
higher than the U.S. or Europe
Diabetes Prevalence(1)
● Patients are predominately treated
with first generation therapies
+58%
+22%
(1) IDF. Diabetes Atlas 5th Edition, 2011
+36%
56m
● Lifestyle of middle class changing
(i.e. increasingly sedentary, diets
including fast food) leading to
higher diabetes prevalence
● Health Authorities focus on chronic
diseases, prevention programs and
treatment
64m
51m
36m
53m
38m
70
20 Million Diabetic Patients Expected in Brazil by 2030
● Aging population with increased
incidence of lifestyle related
diseases
Brazil: Number of Diabetic Patients(1)
19.6m
● Market is largely out-of-pocket and
for high-end treatments
● Increased purchasing power of
growing middle and low income
classes
12.5m
● Treatment of chronic diseases is a
priority of the Health Authorities
● Glibenclamide and NPH are provided
free of charge through “Farmácia
Popular”
2011
(1) IDF Diabetes Atlas 5th Edition , 2011 – Country Estimates Table
2030e
71
Other LatAm Markets Also Hold Sizable Potential
Mexico
Colombia
● 10.3m type 2 diabetes patients(1), one of
the highest prevalence rates in LatAm
● Healthcare reform covers ~90% of the
population
● Low rate of insulinization (<10%), low
average daily dose and 95% of patients
not at treatment goal(2)
● Analogue insulins now reimbursed on
basic formulary, increasing insulin usage
● Innovative approach: Sanofi integrated
solutions program proposed to the gov’t
● Sanofi is increasing investment by ~50%
with a focus on patient education
Venezuela
Argentina
● Government increasing coverage
reaching ~50% of the diabetic population
● Government programs offering last
generation diabetes therapies & devices
● Diagnosis and treatment is increasing
due to social programs
● All patients are reimbursed for insulin
treatment from HMOs based on protocols
and local legislation for diabetes
● Sanofi is increasing educational
programs for GPs and at hospitals
(1)
(2)
IDF Diabetes Atlas 5th edition, 2011
ENSANUT 2006. salud pública de méxico. 2010 (52) suppl 1:S19-S26
72
Basal Insulins Are the Largest and Fastest Growing
Insulin Segment in LatAm
Insulin Market Share by Type (Value)
Latin America(1)
Brazil(2)
Market Share (%)
Market Share (%)
Growth vs. prior year (%)
Growth vs. prior year (%)
14%
15%
+16%
+23%
5%
-4%
14%
+23%
80%
72%
+16%
+27%
€459m market
size(1)
Basal
Premix
€222m market size(2)
Short-acting
(1)
(2)
MAT IMS MIDAS June 2012; Retail + Non-Retail
MAT IMS August 2012; Retail + Non-Retail
73
Agenda
The Diabetes Market in Latin America and Brazil
Sanofi - A Leader in Diabetes
Broadening Access with A Patient Centric Approach
74
Sanofi: A Track Record of Strong Growth in Diabetes
in LatAm
Diabetes LatAm Sales (€m)
● LatAm Diabetes sales in 2012
expected to approach €300m and
grow more than 20% at CER
186 (+26%)
228 (+35%)
2010
2011
● Fastest growing markets(1)
● Mexico (+33% at CER)
● Colombia (+67% at CER)
● Venezuela (+73% at CER)
● LatAm Lantus® sales in 2011 were
€176m, up 35% at CER
● Lantus® is #1 product for Sanofi
in LatAm
(1) Based on 9M 2012 results
2012
75
Lantus® is the Cornerstone of our Diabetes Franchise and
our LatAm Presence is Well-Diversified
Sales Split by Product(1)
Sales Split by Country(1)
% of Sales
% of Sales
Venezuela
Others(2)
Brazil
13%
Argentina
23%
11%
Colombia
77%
(1)
(2)
10%
11%
Lantus®
Based on 9M 2012 reported sales
Amaryl®, Apidra®, Insuman®
29%
Others
26%
Mexico
76
Sanofi: The Leader in Diabetes in LatAm
● Sanofi has a leading share of the
diabetes market in LatAm
● Broad leadership across LatAm
markets(1):
(1)
LatAm Diabetes Sales: Market Share
21.1%
● #1 in Mexico (27% share)
● #1 in Venezuela (22% share)
(1)
(2)
Year-to-date IMS MIDAS Data, Quarterly (as of June); Retail + Non Retail
Source: Diabetes Image and Company Performance (180 physicians)
9.1%
8.6%
8.5%
Lilly
● #1 ranking among endocrinologists and
diabetologists in Brazil(2)
Novo
● Sanofi diabetes has solid company
image:
Sanofi
● Provide integrated patient solutions
treating multiple patient
comorbidities
Merck
● #2 in Brazil (20% share)
Merck KGaA
15.3%
77
Sanofi Has the Highest Insulin Market Share in LatAm
and Brazil
Insulin Market Share by Company (Value)
Latin America(1)
Brazil(2)
Market Share (%)
Market Share (%)
Growth vs. prior year (%)
Growth vs. prior year (%)
19%
19%
+28%
2%
nm
42%
+34%
+44%
40%
+25%
35%
39%
+14%
-3%
3%
+30%
Sanofi
Novo
Lilly
Others
(1)
(2)
MAT IMS MIDAS June 2012; Retail + Non-Retail
MAT IMS August 2012; Retail + Non-Retail
78
Sanofi: A Strong Heritage of Diabetes Solutions in Brazil
1972
1996
2000
2004
2010
®
Daonil
glibenclamida
● Launched
Daonil®, the
leading
sulphonylurea
until 1999
● Launched
Amaryl®, leader
in the OAD
market from
1999 to 2002
● Launched
Completed 46 ● Launched
●
® and
Insuman
in licensing
Lantus®, a novel
pushed
the
basal insulin &
agreementsccc
market towards
became the
devices
leading insulin
● Unique patient
support
programs: 24/7
call center,
educators, etc.
79
Agenda
The Diabetes Market in Latin America and Brazil
Sanofi - A Leader in Diabetes
Broadening Access with A Patient Centric Approach
80
Patients’ Purchasing Power Limits Private Market Growth
Income per Household Brazil
(households in millions)
Monthly
Income
2004
2009
Change
● Outpatient drugs are out-ofpocket expenses in Brazil
High
> €2.2 k
3.3
4.2
+1.0
● Patients generally allocate 3% to
10% of their income to
pharmaceutical spend(1)
Middle
€0.4 - 2.2 k
22.3 29.3
+7.0
● <10% of the population can afford
the average cost of Lantus®
therapy(1)
Mid-Low
€0.2 - 0.4 k
13.8 14.0
+0.2
● Economic growth is increasing the
affordability of medications but
access challenges remain
11.1 9.3
-1.8
Low
< €0.2k
Source: IBGE (PNAD 2009/2004), Analysis Primeira Consulta
Euro = 2,3 Reais; 2004 income adjusted by inflation to 2009 figures
(1) Internal research
81
Lantus® is Not Sufficiently Accessible in Brazil
Brazil: Lantus® Share By Income Class(1,2)
● Insulin analogues are priced at a
premium
19%
● Lantus® market share is
concentrated in income class “A”
● Main objective is to expand access
to the middle class
Target Groups
● Target groups “B”, “C” and “D”
represent nearly half of insulin
patient population
3%
1%
< 1,0KE
(1)
(2)
4%
1%
D
1,0 - 2,0K
C
2,0 - 3,0K
B
3,0 - 4,5K
> 4,5KA
Source: Vidalink analysis / Primeira Consulta; patient share by volume
A = >4,500 BRL per month; B = 3,000 to 4,500 BRL per month; C = 2,000 to 3,000 BRL per month; D = 1,000 to 2,000 BRL per month;
E = < 1,000 BRL per month
82
“Alcance” Project Expands Lantus® Access in Brazil
and Supports Volume Expansion
● Selectively targets patients that
cannot afford Lantus® therapy
● Individual screening process adjusts
benefit to each patient’s need and
income
● Reduces the overall treatment cost
for diabetes patients
● Leverages multiple partners and
Sanofi’s broad portfolio
● Offers patients a comprehensive
solution treating diabetes and other
co-morbidities
83
Sales in Brazil Accelerated following Implementation
of Alcance
Lantus® Sales Growth: Private Sector (€m)
33%
27%
Alcance
Implemented
24%
22%
13%
0
2007
2008
2009
2010
2011
A key growth driver for Lantus® in Brazil
84
Delivering More Value to Patients in Brazil
Insupen needle aims to improve patient
satisfaction; Sanofi has a broad distribution
system and strong customer service
®
Brazil has key competitive advantages to
leverage the opportunity, including Alcance
and superior share of voice with physicians
Sanofi will bring the most integrated and
complete offering for diabetes treatment in
Brazil including disease management
Diabetic foot ulcer is a common
complication of diabetes; Hidrastar is a
moisturizing cream for daily use
A new “pen” device developed exclusively
for the emerging markets
2012
On the market
2013
Anticipated launch
2013
Anticipated launch
2013
Anticipated launch
2014
Anticipated launch
85
An Integrated Solution Provider for Diabetic Patients
Value
Market
Volume
Market
(1)
(2)
Core Brands
Devices/Services
●
●
●
●
●
●
●
●
●
●
Lantus®
Amaryl®
Apidra®
Lyxumia®(2)
BGM(1)
SoloSTAR
Moisturizer(1)
Call Center
Educators
Other Services
Patient
Value
Tailored Offering
●
●
●
●
Alcance
All-Star pen(1)
Insuman®(1)
Generics
Product is not yet commercially available in Brazil
In-licensed from Zealand Pharma A/S. Lyxumia® is the proprietary name submitted to health authorities for
investigational GLP-1 RA lixisenatide. Lixisenatide is not currently approved or licensed anywhere in the world.
Patient
Access
86
Key Pillars to Fuel our Diabetes Growth in LatAm
87
Generics
Heraldo Marchezini
Senior Vice President, Latin America
and General Manager, Brazil
88
Agenda
Generics - A Fast Growing Market Segment
Medley - A Major Player in the Generics Market
Medley’s Strategy for Continued Strong Profitable Growth
89
Generics Are a Fast Growing Segment in the LatAm
Pharmaceutical Market
● Drivers of generics market growth:
LatAm Pharmaceutical Sales
● Lack / loss of exclusivity of patented
originator drugs
(1)
(in €bn)
● Government expenditures providing
access to medicine and coverage to
a broader population
● Aging population and increased
prevalence of chronic diseases
● “Branded Generics” represent
majority of generic market in value
● Further acceleration of generics
market expected
● Strong national manufacturers
(1) IMS Midas MAT Q2 2012 (Retail only, Pharmacy Purchase Price (PPP) not included)
90
Continued Leadership in the Generics Market is Key to
our Growth Strategy in LatAm
Sales in €bn in 2012(1)
Expected growth 2012-17(2) (CAGR)
Total Market
Generics
+13%
+16%
+5%
+8%
+25%
+31%
+19%
+20%
+8%
+11%
+3%
+4%
(3)
LatAm generics market expected to reach ~€35bn in 2017
(1)
(2)
(3)
IMS MIDAS MAT Q2.2012 (Retail only, PPP not included)
IMS Prognosis and internal estimates
International Nonproprietary Names
91
The Brazilian Generics Market Offers
Two Distinct Business Models
1
Pure Generics
INN
Rx Originator
Price
Investment,
Promotion
•
•
High Reference Price
Low discounts
•
•
Field force
Concept selling
(1) Point of Sale
2
•
“Similares”
Branded Generics
•
Mandatory % below
branded reference price
High discounts
•
•
Equivalent to Generics
Low discounts
•
•
•
Sales Channels
Investment at POS(1)
Added Value
•
•
•
Field force
Branding, Sampling
Pharmacy presence
92
Agenda
Generics - A Fast Growing Market Segment
Medley - A Major Player in the Generics Market
Medley’s Strategy for Continued Strong Profitable Growth
93
- A Powerhouse for Affordable Medicines
(1)
● Total sales of €370m in 2011
● ~1,800 employees
● Headquartered at Campinas site
in São Paulo, Brazil
● Strong operations and market reach
● ~550 sales representatives
● Worldclass industrial facilites
● ~1,000 employees in Industrial
Affairs
● Customer service to 25,000
pharmacies and 80,000 physicians
● Generics INN, Branded Generics
(1) Generics sales in LatAm were in total €441m in 2011 (of which Medley was €370m)
94
A Highly Competitive Portfolio Aligned
with Market Demand in Brazil
Medley‘s portfolio includes 65 out of 77
high-volume generics molecules(1)
Total Generics
market
65
molecules
77
molecules
108
molecules
Total Generics
market
77 molecules
account for
~80% of
Generic
market
volume
~80%
volume
313
molecules
~20%
volume
(1) IMS MAT September 2012
(2) IMS September 2012 in local currency – generic market
Medley leads the market owning 7 out of
the top 10 generics molecules in value(2)
Rank Molecule
Total
Market
Market Leader
BRL
(in m)
Market
Share
1
Losartan
71.7
19.6%
2
Sildenafil
36.6
26.3%
3
Pantoprazole
33.0
51.3%
4
Omeprazole
29.6
40.9%
5
Enalapril
29.2
28.0%
6
Simvastatin
27.3
35.2%
7
Amoxicillin
21.2
27.5%
8
Clopidogrel
21.1
30.7%
9
Metamizole Sod.
19.4
46.9%
10
Atenolol
18.1
35.7%
95
High Exposure to the São Paulo State Market Provides
Opportunity for Geographic Diversification
Market Share per Region(1)
(in volume)
Volume Split by Region in Brazil(1)
24%
25%
20%
São
Paulo
State
22%
São Paulo
State,
41%
(1) IMS YTD August 2012 (units)
96
A Compelling Presence at the Point-of-Sale
● Exploit selling space to raise awareness
for preferred brand
● Wealthier middle class asking
for increased number of product
presentations
● Favorable purchasing conditions
at modern pharmacy chains
● Secure profitability through
returns from trade marketing
investments
97
Agenda
Generics - A Fast Growing Market Segment
Medley - A Major Player in the Generics Market
Medley’s Strategy for Continued Strong Profitable Growth
98
- Consolidate Leadership Position
in the Generics Market in LatAm
3 Strategic Levers for Future Growth in Brazil and LatAm
1
Maintain leadership
in volume market
• Address growing demand
from population segments
• Middle class, Aging population
 Focus on high
consumption
molecules
2
Broaden position in
Branded Generics
• Expand in Branded
Extend geographic
reach
3
• Enlarge business model
Generics
•
 Leverage existing
strong image
across LatAm markets
M&A(1)
 Generate synergies
from Sanofi’s leading
position in LatAm
(1) Genfar - The closing of the transaction is subject to certain conditions precedent and is expected to occur in Q1 2013
99
Esomeprazol - A Major Launch Success in 2012
Share of esomeprazol market in Brazil(1)
in k units
● Esomeprazol: a high volume molecule
● Launch of generic version of Nexium®
by Medley in July 2012
● Medley rapidly expanding its unit share
12%
24%
● Medley achieved 29% market share of
generic esomeprazol in September(1)
29%
(1) IMS PMB September 2012
● Medley’s esomeprazol is the #1 generic
version in Brazil(1)
100
Portfolio Expansion into Key Countries Across LatAm
25
countries with Medley’s products in Latin America
78
therapeutic classes
150
products in its portfolio, in over
500
645
dossiers prepared since LatAm platform was established in 2010
262
dossiers approved
presentations
101
101
- A Brand With a Growing Reach
MEXICO
Branded GX
INN
Q3 2011
ACHIEVEMENTS
HONDURAS
GUATEMALA
Q4 2010
INN
PANAMA
EL SALVADOR
Q3 2011
(where Medley is present):
INN
Q4 2011
INN
Q4 2011
INN
VENEZUELA
Q3 2011
COLOMBIA
Q1 2012
Branded GX
~24
Branded GX
BRAZIL
million patients buy
Medley products
monthly(1)
Branded GX
INN
(1) Based on units sold per month in Latin America YTD October 2012; internal analysis
102
Genfar Acquisition in Colombia to Accelerate Growth
Path towards Leadership in Affordable Medicines
● Sanofi to acquire Genfar S.A.(1) in
Colombia
Generics Segment in Colombia by
(2)
Market Share (value)
● #1 position by sales(2)
Sanofi and Genfar to reach
~30% share of Gx market
● One of the fastest growing companies
● Genfar has a commercial presence
in more than 10 countries in the
Andean countries & Central America
22.6%
22.5%
● >1,200 employees in the region
● Large portfolio of affordable medicines
10.9%
LA SANTE
● Industrial facilities located in Cali
MCKESSON
● 30% of sales outside of Colombia
11.3%
(1) The closing of the transaction is subject to certain conditions precedent and is expected to occur in the first quarter of 2013
(2) IMS MAT June 2012 (Generics and Branded Generics)
LAFRANCOL
● Sales of $133m in 2011
6.7%
103
Genfar – A Complementary Footprint in the Andean and
Central American Region
● A commercial presence covering
a region of 200m people
● Andean and Central America generics
market of $5.2bn growing at +12%(1)
● Solid awareness of Genfar brands
in large markets
● Colombia, Peru, Venezuela
● Leadership positions in Generics in
most markets after acquisition
● A strategic fit with Sanofi's portfolio
● Improves leverage with existing
relationships in the distribution
channels
(1) IMS MAT June 2012
104
Sustaining Leadership in the Generics Market in LatAm
● Generics are expected to remain the fastest growing
segment in Pharmaceuticals in LatAm
● Medley is the leader in affordable medicines
● Broad product portfolio
● High brand recognition
● Local manufacturing capabilities
● Medley is poised for future growth
● Maintain leadership in the volume market
● Enlarge position in Branded Generics
● Extend geographical reach in the region
● Genfar acquisition to further boost leadership position
in affordable medicines across the Andean region
105
Animal Health
José Barella
Senior Vice President, Animal Health
106
Agenda
Merial - A Leading Presence in Latin America
Production Animal Health - Growth Drivers
Companion Animal Health - Growth Drivers
Strategic priorities in Latin America
107
Merial: An Animal Health Leader with a Broad, Diversified
Geographic Footprint
● Merial global sales were €2bn in 2011
●
Globally ranked #1 in the Pets market(1)
and #3 in Production Animals(2)
● 25% of sales in Emerging Markets,
approaching Western Europe in size
(vs. 20% in 2008)
●
Growth driven by Asia and LatAm
●
Room for further expansion
●
Expected to grow twice as fast as
developed markets from 2012-2015(1, 2)
● LatAm accounts for ~50% of Merial
Emerging Markets sales
Merial 2011 Sales Split by Region
Other
Countries
8%
Emerging
Markets 23%
25%
U.S.
40% 42%
27%
27%
Western
Europe
(1) Source: Vetnosis Companion Animal 2012 Study
(2) Source: Excludes Medical Feed Additives; Vetnosis 2012 Avian Study, Vetnosis 2012 Pig Study, Vetnosis 2012 Cattle Study,
Vetnosis 2012 Sheep study
108
Merial: A Leading Presence in LatAm
● LatAm sales in 2012 expected to
approach €270m, up double-digits at
CER
Merial: LatAm Quarterly Sales (€m)(1)
228 (+8%)
246 (+11%)
● Paulinia, Brazil manufacturing site is
one of the largest AH facilities in the
southern hemisphere
● Leading positions in key LatAm
markets:
● #1 ranking in Argentina(2)
● #3 ranking in Brazil(3)
● #4 ranking in Mexico(4)
● Brazil, Mexico and Argentina
accounted for ~75% of YTD 2012
LatAm sales
2010
(1)
(2)
(3)
(4)
Growth at constant exchange rates
Source: CARPROVE
Source: IMS-SINDAN
Source: KLEFFMANN Goup
2011
2012
109
Merial: Double-Digit Growth in Both Production and
Companion Animal Health Businesses
Merial Sales in Latin America (€m)
Production Animal Health Sales
Companion Animal Health Sales
CAGR +10%
CAGR +14%
185
2008
2009
2010
2011
2012e
2008
2009
2010
61
2011
2012e
110
Merial LatAm Well Positioned with a Wide Range of
Leading Premium Brands
#1 Pets brand in LatAm(1)
Parasiticide controlling fleas and ticks for pets
Recombinant DNA vaccine – advanced protection
#1 internal / external parasiticide control in LatAm for cattle and swine(1)
Pour-on broad spectrum parasiticide for cattle
Leading innovative recombinant vaccine for poultry
Leading Foot and Mouth disease supplier in LatAm
(1) Compiling data from IMS-SINDAN, CARPROVE and KLEFFMANN
111
Agenda
Merial - A Leading Presence in Latin America
Production Animal Health - Growth Drivers
Companion Animal Health - Growth Drivers
Strategic priorities in Latin America
112
Latin America Is a Top Producer of Meat Globally
LatAm: Feeding the World
26% of world
bovine
production
21% of world
poultry
production
6% of world
pork
production
16% of world
meat
production
#1
#2
#5
#2
in the world
in the world
in the world
in the world
Source: Vetnosis STORM 2012
113
Brazil Ranks #3 in Meat Production Globally(1)
Beef Meat(1)
Chicken Meat(1)
Pork Meat(1)
(mn tons)
(mn tons)
(mn tons)
14.2
9.9
9.0
2011
11.7
2020e
Brazil accounts for 14%
of world bovine meat
production(1)
2011
3.8
3.2
2020e
2011
2020e
Brazil accounts for 11% of
world poultry production(1)
Brazil accounts for 3% of
world pork production(1)
●Ranks #3 globally
●Ranks #4 globally
●Ranks #2 globally
(1) Vetnosis
114
Increase in Production and Yield Improvement Drive
Growth of the Production Animal Health Market
LatAm: Meat Production(1)
LatAm: Production Animal Health(1)
(ktons)
(m€)
CAGR +2%
CAGR +7%
39,623
1,211
2010
2015e
(1) Vetnosis STORM 2012
2020e
2010
2015e
2020e
115
Increased Spending Per Head Is The Major Driver of
Growth in Production Animal Health in LatAm
Spending Per Head
Large Animals (Swine & Ruminant)(1)
Avian(1)
(€ per Medicalized Treatable Unit)
(€ per 100 x Medicalized Treatable Unit)
3.92
6.25
2.35
3.63
2011
2020e
2011
2020e
(1) Vetnosis STORM 2012
116
Agenda
Merial - A Leading Presence in Latin America
Production Animal Health - Growth Drivers
Companion Animal Health - Growth Drivers
Strategic priorities in Latin America
117
The Pet Moves “From the Backyard to the Bed” with
Growing GDP per Capita
Food Consumption/Pet 2009 (kg)
100
Emerging Markets
GERMANY
Mature Markets
80
FRANCE
UK
60
USA
40
BRAZIL
ARGENTINA
JAPAN
COLOMBIA
20
MEXICO
0
0
10,000
20,000
30,000
40,000
50,000
GDP/Capita 2009 (US$)
Source: Euromonitor 2009
118
Substantial Opportunity for Growth as LatAm Markets
Spend More on Pets
Animal Health Expenditures per Pet ($)
Latin America
Developed Markets
34.8
29.6
25.6
20.0
5.2
2.1
6.4
2.2
Source: Euromonitor 2009, Vetnosis STORM 2010
119
A Fast Growing Companion Animal Health Market
● LatAm Companion Animal Health
market is expected to more than
double over a 10 year period(1)
● Improvement in the general
welfare in LatAm
● Increased spending per pet:
“Pet as a family member”
● Brazil represents ~30% of the
LatAm companion Animal Health
market(1)
LatAm:
Companion Animal Health Market(1)
(€m)
CAGR +8%
429
2010
(1) Vetnosis STORM 2012
2015e
2020e
120
Agenda
Merial - A Leading Presence in Latin America
Production Animal Health - Growth Drivers
Companion Animal Health - Growth Drivers
Strategic priorities in Latin America
121
Sustaining Growth, Entering New Markets and
Leveraging our Leading Portfolio
LatAm Production AH
● Sustain Avian leadership
●
Leverage leading vaccines
business
●
Provide services in a partnership
approach with producers
● Expand ruminants business
●
Develop new local brands
●
Enter fast growing categories
●
Expand into new geographies
● Develop swine via customized
vaccine platform from recent
Newport acquisition
LatAm Companion AH
● Steady growth of purchasing power
in LatAm to benefit Frontline
● Introduce new parasiticides and
vaccines
●
Increase strength of local portfolio
and defend against generics
● Leverage government partnerships
to improve rabies business
● Introduce new therapeutics
122
New Initiatives to Capture Growth in Latin America
Creation of a local R&D
Center to meet local needs
Establish LatAm
headquarters in Campinas,
Brazil
Fully capture potential of
Brazil’s Northern &
Midwestern regions
Genfar acquisition(1) and
Colombia as a new
subsidiary
(1) The closing of the transaction is subject to certain conditions precedent and is expected to occur in the first quarter of 2013
123
Latin America Animal Health – Well Positioned
for Continued Strong Growth
● Double-digit LatAm growth for Merial expected over the next few years
● Increasing world protein consumption to fuel Production AH growth
● Increasing welfare of population to drive Companion AH growth
● Geographical expansion through increased investments
● Increase presence in less penetrated regions of major countries
● Create new affiliates in smaller LatAm countries
● Newly established local R&D center will develop local brands
● Leveraging premium brands
● Opportunistic business development transactions
124
Vaccines
Patrice Lebrun
Vice President, Latin America
Sanofi Pasteur
125
Agenda
Vaccines - A Sizeable and Attractive Market
Sanofi Pasteur - A Well Entrenched Player
Dengue - A Significant Opportunity
126
The Vaccines Market in LatAm is Sizeable
Market
Characteristics(1)
● ~€1.4bn sales in 2011
LatAm Market(1)
(1
2011 Market
Size: €280m
(2)
Total Population: 596m
● +19% CAGR over 2008-2011
(2)
Birth Cohort: 10.7m
● Brazil and Mexico: ~60% of market
● Public market: 75% of sales
● Governments increasingly attracted
by innovative products
● Private market for “non-covered”
vaccines
2011 Market
Size: €520m
2011 Market
Size: €590m
● Growing trend towards local
production
Projected LatAm market growth
over 2012-17(1): +13% CAGR
(1) Sanofi Pasteur internal estimates for market size and growth
(2) PAHO Health Situation in the Americas – Basic Indicators 2012
127
Mexico and Brazil Constitute the Bulk of Market
Immunization Schedule(2)
● Mexico and Brazil
● 55% of LatAm population
● 4.8m birth cohort
● Vaccines sales >€800m(1)
● Public immunization programs drive
market growth
● Public and industrial partnerships key
for market access
● Opportunities with private market
● Room for adoption of new and
innovative vaccines and services
● Markets becoming increasingly
competitive
BCG
Hep B
Brazil
0
0
OPV
6, 15m
IPV
DTP
DTP-Hib-HepB
DTaP-Hib-IPV
Pneumo_conj
Rotavirus
MR
MMR
MenC_conj
Pneumo 23
Td
TdaP
Yellow Fever
2, 4m
15m, 4y
2, 4, 6m
Influenza
HPV
(1) Sanofi Pasteur internal estimate
(2) As of October 2012
2, 4, 6, 12m
2, 4m
12m, 4y
3, 5, 15m
> 60y, @risk
9m, ev 10y
6-24m, > 60y, preg,
HCW, @risk
Mexico
0
0, 2, 6m
3 campaigns per year
for 2m – 5y
4y
2, 4, 6, 18m
2, 4, 12m
2, 4m
> 13y
12m, 6y
> 65y
>20y, preg
> 12y, preg
6-59m, > 60y,
@risk 11-60y
> 9y
128
Agenda
Vaccines - A Sizeable and Attractive Market
Sanofi Pasteur - A Well Entrenched Player
Dengue - A Significant Opportunity
129
Sanofi Pasteur is a Leading Player in LatAm
● €374m sales in LatAm in 2011
2011 Sales Split by Country
2008-2011 CAGR(2)
● +14% CAGR over 2008-2011
● 2nd player with 29% market share(1)
● 34% of vaccine sales in Emerging
Markets
CAGR
+9%
Others
● Brazil and Mexico: 2/3 of sales
CAGR
+26%
CAGR
+11%
● Undisputed position in flu
immunization
● Strong positions in pediatric and
endemic vaccines
● Industrial presence and strong local
partnerships
Brazil
Mexico
2011 Sales Split by Product
% of Sales
Others
9%
Travel &
Endemic
Flu
18%
53%
20%
PPH
(1) Sanofi Pasteur internal estimate
(2) Including pandemic A(H1N1) Flu vaccines sales
PPH – Pertussis, Polio, Hib
130
Local Industrial Capabilities Provide
a Strategic Advantage to Sanofi Pasteur
Ocoyoacac, Mexico
● Flu vaccines
● Up to 25m dose capacity
● €100m investment
● 1st lots being shipped for the 2012-13 season
● Partnership with Mexican federal vaccine
manufacturer Birmex
Pilar, Argentina
● Hepatitis B antigen for pediatric hexavalent
vaccines Hexaxim™ in LatAm and other
international markets
● 50m dose capacity
● €60m investment
Birmex – Biologics and Reagents Laboratories of Mexico
131
Brazil Illustrates Strong Track Record of Partnerships
with Sanofi Pasteur
Partnership with Butantan
● Sanofi Pasteur, an historical
partner to Brazil public health
● Meningitis outbreak (1974)
● Yellow fever outbreak (2008)
Step-wise technology transfer process
initiated in 1999-2000
Quality control tests
● Pandemic A/H1N1 flu (2009-2010)
● Case-study with Butantan Institute
● Goal: building capacity for flu
vaccine production and maintaining
reliable and consistent supply
● Partnership with Fiocruz for IPV
introduction in NIP in 2012
● Opportunity to build long-term
technical and scientific cooperation
Filled vaccine
Formulated bulk
Blending,
filling & packaging
Production technology
1st shipment expected in 2013
Butantan Institute – Biomedical research center affiliated with the São Paulo State Secretary of Health
Fiocruz – Oswaldo Cruz Foundation’s vaccines unit is Immunobiological Institute of Technology (Bio-Manguinhos)
IPV – Inactivated Polio Vaccine
NIP – National Immunization Program
Support
&
Assistance
132
Sanofi Pasteur Remains the Undisputed Leader
in the Rapidly Growing LatAm Flu Market
● Seasonal flu sales in 2011: €197m
Seasonal Flu Vaccines Sales
(in €m)
● >70% market share (public+private)(1)
● Market driven by public policies:
● Public market: 70% of
€197m
sales(1)
● Most countries recommend:
children up to 24-36 months and
elderly > 60 yrs - Extension expected
● Mexico influenced by U.S. policy
● Private market offers opportunities
€107m
● IDflu, Private companies, Pharmacies
● Evaluating further opportunities for
local partnerships in 2013
2008
2009
2010
2011
(1) Sanofi Pasteur internal estimates
133
Lead Market Entry of Inactivated Polio Vaccine and
Acellular Pertussis Combo Portfolio in LatAm
● Major role in the switch from OPV
to IPV post-polio eradication
● IPV included in the Brazilian national
immunization program as of 2012
Immunization Rate(1)
(in %)
100%
● Pentaxim®: 5-in-1 pediatric combo
● Already launched in Mexico and
some other countries
● Evaluating local agreements for
broader market access
wcP
OPV
● Future launch: Hexaxim™, first fullyliquid hexavalent pediatric combo
● Includes Hepatitis B antigen
produced in Argentina (Pilar)
acP
IPV
0%
Pertussis
Pentaxim® – Diphtheria, Tetanus, Pertussis, inactivated Polio, and Haemophilus
Hexaxim™ – 5 above antigens plus Hepatitis B
OPV – Oral Polio Vaccine IPV – Inactivated Polio Vaccine
wcP – whole cell Pertussis acP – acellular Pertussis
(1) Sanofi Pasteur estimates applicable for birth cohorts in LatAm – Primary series in 3 doses for each antigen.
Polio
134
Private Vaccine Market in LatAm
Provides New Growth Opportunities
● Solid Private Market evolution
Middle Class Consumer Spending(1)
(in trillion U.S. $)
● CAGR 2008-2011: +11%
$3.1 tr
● Growth fueled by rising middle class
● Looking for higher standards of health
$1.5 tr
● Uncovered teens / adults population
reached via new channels
● Emergence of new stakeholders
2009
● Leveraging vaccines as differentiation
(e.g. SESI in Brazil, Pharmacies - Walmart
in Mexico & Central America, Locatel in
Venezuela, Obras Sociales in Argentina)
2030
Evolution of Offering in Brazil
Services Offer
National SESI
Flu  Campaign Offer
Regional SESI
● Moving from product sales to
vaccination campaign and services
Flu Vaccine
individual companies
Volumes in SESI
SESI – Serviço Social da Indústria (Social Services of the Federation of Industries)
(1) OCDE Americas Market Intelligence 2012
2012
2007
1997
0
0.5md
>1 md
135
Brazil and Mexico Expected to Remain Largest
Opportunities for Sanofi Pasteur in LatAm
Brazil
Mexico
● Continuous process of technology
transfer for Flu while private Flu
market progressively evolves
● Unique Flu industrial plant in LatAm
●
Adacel®
Quadra launched in 2011
● IPV introduction in public market
in 2012
● Market entry of Hexaxim™ expected
and
®
Menactra expected in 2014in 2014
● Strong performance of Pentaxim®
● Avaxim® : new CONAVA Hepatitis A
recommendation in 2010 for at-risk
children - Future extension expected
● Adacel® launched in 2012
● Multiple new launches expected:
●
2013: Tetraxim® and Menactra®
●
2014: Hexaxim™
Key countries for potential Dengue vaccine introduction
CONAVA – National Vaccination Council
136
Agenda
Vaccines - A Sizeable and Attractive Market
Sanofi Pasteur - A Well-Entrenched Player
Dengue - A Significant Opportunity
137
Dramatic Increase in Number of Dengue Cases
with Broad Geographical Expansion
Dengue Incidence, 1980-2010
(1)
(per 100,000 by country)
1980 - 1989
1990 - 1999
< 50
> 100 - 200
Unavailable data
50 - 100
> 200
Without indigenous cases
2000-2009
2010
(1) Source: www.paho.org
138
Dengue Hyperendemic State in LatAm
Creates Public Health Concerns
● Estimated 400m people living in
at-risk or endemic areas
● Incidence typically higher in
adolescents and young adults
● Trend towards infection in younger
ages
● Dengue seasonality depends on
rainy season in each country
Increasing Morbidity and Mortality(1)
Period
80’s
2008-11
Dengue cases
1.0m
4.8m
DHF
13.4K
128.7K
DHF as a % of total cases
1.3%
2.7%
242
2,861
Fatalities
Cost of Dengue Illness(2)
● 4 serotypes circulating with
epidemiology changes over time
Aggregate annual costs in the Americas
● Public health priority for health
authorities and PAHO
Peak at $3.1 billion in 2007
Estimated at $2.1 billion for the period 2000-2007
40% in Brazil alone
PAHO – Pan American Health Organization
DHF – Dengue Hemorrhagic Fever
(1) San Martin JL et al. Am. J. Trop. Med. Hyg., 82(1), 2010, pp.128-135 for the 80’s, and www.paho.gov for 2008-2011
(2) Shepard DS et al. Am. J. Trop. Med. Hyg., 84(2), 2011, 200-207
139
Dengue Vaccine: Seeks to Address a Major Threat
in LatAm
● Phase III trial ongoing in LatAm(1)
Clinical Program in LatAm
(25,000 subjects)
● 21,000 subjects – 23 centers
● Efficacy results expected in 2014
MEXICO
Ph I, II, III (efficacy, co-administration)
● Main channel expected to be the
public segment
● Significant opportunities in private
markets for “non-covered” age groups
● Regular contact with regulatory
agencies
● ANVISA (Brazil), COFEPRIS (Mexico)
and INVIMA (Colombia)
● Strong partnerships engaged with
health authorities and international
organizations (e.g. PAHO)
PUERTO RICO
Ph II, III (efficacy)
HONDURAS
Ph II, III (efficacy)
PANAMA
(co-administration)
COLOMBIA
Ph II, III (efficacy)
BRAZIL
PERU
Ph II, IIII (efficacy)
Ph II (co-administration)
(1) ClinicalTrials.gov Identifier: NCT01374516
ANVISA – National Health Surveillance Agency
COFEPRIS – Federal Commission for the Protection against Sanitary Risk
INVIMA – National Institute for Drug and Food Surveillance MoH – Ministry of Health
140
Multiple Opportunities Exist in LatAm for Future Growth
● Solidify existing businesses
● Introduce new products and indications
● Leverage industrial assets and strong public health relationships
● Partner locally to expand market access
● Secure profitable segments/offer expansion in private market
● Continue market preparation for Dengue
Launching Dengue vaccine will be key
to exceeding market growth in next 5 years
141
Industrial Affairs
François Blanot
Vice President Industrial Affairs,
Latin America
142
Agenda
LatAm Manufacturing Capabilities: a Strategic Advantage
Suzano: A Key Site in LatAm
143
Industrial Affairs Are Committed to Support Sanofi’s
Strategy in LatAm
Sanofi
Three Point
Strategy
Industrial
Affairs
Execution
1
Grow LatAm presence, a key contributor to Emerging Markets
2
Focus on growth platforms
3
Achieve profitable organic growth coupled with bolt-on acquisitions
1
Pro-actively manage industrial network
2
Constantly adapt to business competitive needs
3
Support active acquisition policy and Life Cycle Management
144
Sanofi Benefits from a Strong Industrial Network in LatAm
with 10 Plants Dedicated to the Regional Market
Broad industrial footprint
Ocoyoacac
● Longstanding industrial presence in LatAm
● Pharma products: 637m(1) units manufactured,
3,350 employees(2)
Guarenas
● Successful Generics integration: Medley, Kendrick
● Merial & Sanofi Pasteur:
units and
respectively, 480 employees in total
20m(3)
35m(3)
Cali
doses
Brasilia
Paulinia
Industrial Network
Our strengths
Merial plant
● State of the art in-house manufacturing
● Wide product portfolio and strong Generics expertise
● Product development capabilities with regional to
global potential
● Long-term performance track record of Industrial
Operations
Campinas
Suzano
Sao Paulo
Sanofi-Pasteur plant
Pilar
Sanofi Pharma plant
Mirador
Regional Headquarters
Industrial hub
95% of Pharma volumes sold in LatAm are produced locally
(1)
(2)
(3)
2011 figures, excluding external manufacturing
Figures as of September 2012
2011 figures and estimated 2012 production for Ocoyoacac Vaccines
145
Our Pharma Industrial Network Is Tailored to Regional
Business Needs
Production
split
Markets supplied by the
plants
Site
Headcount
Suzano
980
Brazil (95%)
Campinas
920
Other LatAm countries (5%)
Ocoyoacac
550
Mexico (90%)
Textitlan
225
Other LatAm countries (10%)
Country
Rank (1)
1
Mirador
Argentina (96%)
2/3 Sanofi, 1/3 toll-in
190
2
3
Other LatAm countries (4%)
Venezuela (99%)
Guarenas
4
110
Other LatAm countries (1%)
Colombia (73%)
Cali
230
5
Other LatAm countries (27%)
(1) LatAm Pharmaceutical Markets ranking 2011, in Units, source IMS MIDAS
146
Industrial Capacities Strengthened by Recent Bolt-on
Acquisitions and Pro-active Plant Management
2008
Year
2009
2010
2011
2012
2013e
12
+1
+2
Mirador
Industrial
+3
Ocoyoacac
V(2)
Textitlan
Brasilia
Sumaré
Paulinia
-2
Campinas
Textitlan
network in
LatAm
5
Genfar(3)
Paulinia
Campinas
Mirador
Sumaré
Ocoyoacac P
Ocoyoacac P(1)
Ocoyoacac V
Suzano
Suzano
Cali
Guarenas
Existing
network
Acquired
companies
Cali
Built
capacities
Guarenas
Pilar
Pilar
(4)
Share of
production
outsourced
Increased capacity allowed to reduce outsourcing and to manage rapid volume growth
(1)
(2)
(3)
(4)
Ocoyoacac Pharma
Ocoyoacac Vaccines
The closing of the transaction is subject to certain conditions precedent and is expected to occur in the first quarter of 2013
2012e
147
Double-Digit Growth in Pharma Production Supports
Dynamic Local Sales Growth
Pharma Sales Growth in LatAm (€m)
Volume Growth produced in LatAm (Mu)
CAGR
18 %
2,490
CAGR
25 %
2,134
1,516
1,633
Acquisition and successful integration of targets
Key Answers
to Production
Growth needs
2009: Medley, Kendrick
2010: Mirador site
2012: Genfar(1)
Consistent investments to increase capacity and launch new
products
€110m(2) of cumulative Capex 2008-2011
Increased industrial productivity through LEAN manufacturing
implementation
(1)
(2)
The closing of the transaction is subject to certain conditions precedent and is expected to occur in the first quarter of 2013
At CER, 2011 exchange rate
148
Animal Health and Vaccines Industrial Networks Align with
Merial and Sanofi Pasteur Strategies
ANIMAL HEALTH
VACCINES
LatAm industrial strategy
LatAm industrial strategy
● One site providing a competitive export platform
● To supply regional market with vaccines
● Two sites dedicated to regional market and
emerging countries
● To fuel global needs in pharma products
● Take advantage of regional footprint
● To source innovative soft chewable galenic forms
● Foster market access
● Invest in new facilities
● Seize external growth opportunities
● Leverage the Group’s industrial presence
Industrial network in LatAm
Site
Paulinia
HC(1)
300
Volume
In m units
Production
split
Industrial network in LatAm
Markets
supplied
Site
HC(1)
Capacity
(m doses)
Production
split
Markets
supplied
LatAm markets
for vaccines
Ocoyoacac
100
25
Influenza
Mexico
Pilar
80
50
Hepatitis
International
markets
20
Worldwide for
pharma
(1)
Headcount
149
Local Industrial Presence in Main LatAm Markets
Remains Key to our Commercial Success
Foster market access conditions
• National regulations and institutional buyers support local production
• Lower tariffs and import restrictions inside free trade areas
Well adapted
to local
market
features
Mitigate currency risks
Manage portfolio diversity and customer alignment
Adapt quickly to market changes and demands
Expand regional portfolio and implement local LCM
• CHC and nutraceuticals
150
Pharma Industrial Affairs Manages a Diverse Portfolio in
LatAm with Competitive CoGS
Sanofi pharma Industrial Affairs LatAm positioning
Rx
OTC
Type of
Gx
drugs
Public tenders
Barriers to entry
Technology
Portfolio Complexity
Costs
Main Competitors
Big Pharma
Local to Regional players
Commodities companies
500
500
Production
costs of
100
125
products
70
65
15
0
LatAm
volume
distribution
151
Industrial Affairs are Driven by Continuous Search for
Improved Performance
Initiatives enforced
LEAN implementation
●LEAN culture propagated in plants
● LEAN leaders
●LEAN tools implemented with high commitment from
operators
● SMED(1), Visual Management
Key results achieved
● Overall Equipment Efficiency (OEE) on track to
increase 9 pts 2010-2012
●
Optimizing investments through
productivity improvements
●
Managing high capacity loads
●Rethinking of production lines through Value Stream
Mapping
● Plant Cycle Time and Work In Progress reduced
Format and packaging harmonization
● Permanent efforts of standardisation between
operations and Industrial Affairs
Better stock management
● From local suppliers to local markets to minimize
cashflow
Standardization of policies
● Global Industrial KPI Scorecard enforced
(1) SMED: Single Minute Exchange of Die
152
Generics Are Expected to Remain a Key Growth Driver
in LatAm
● Move to Generics executed through
acquisitions
Campinas
● Acquisition of Medley and Kendrick
● Strong brand image of Medley
among patients
● New industrial capabilities
● Synergies delivered, e.g. with
manufacturing repatriation of
Kendrick products from Textitlan
Brasilia
● Further expansion ongoing with
Genfar(1) acquisition
● New Brasilia plant construction to
focus on fast-growing hormonal
segment
● Low competition
● Double-digit growth
(1) The closing of the transaction is subject to certain conditions precedent and is expected to occur in the first quarter of 2013
153
Genfar(1) Acquisition Strengthens Sanofi Leadership in
Affordable Pharmaceuticals
● Creation of a new industrial hub in
Colombia
Genfar
● Sanofi: one existing highly competitive
manufacturing site in Cali
● Diversified production fueling both
local and export markets (Central
America and Venezuela)
● Genfar(1): a large and extensible asset
● 2 sites: Bogota and Villa Rica
● 80,000 m2 with current capacity of
150 Mu
● Extension capabilities above 100 Mu
Affordable
pharmaceuticals
Animal Health
(1) The closing of the transaction is subject to certain conditions precedent and is expected to occur in the first quarter of 2013
154
Innovative Life Cycle Management Team Supports
Sanofi’s Growth Platforms
LCM in Latin America
Recent Launches
● LCM department created in 2009 in LatAm
to:
● Foster innovation in pharma
products
Launched March 12
● Optimise time-to-market
● Mutualize expertise
● 150 people in 4 plants with different focus
Launched June 12
● CHC: Suzano, Ocoyoacac
● Generics: Campinas, Cali
Launched June 12
LCM department as a catalyst for new product development
155
LatAm Manufacturing Capabilities Provide Sanofi with a
Strategic Advantage
Industrial
Network
Supports
Growth
Platforms
1
State of the art facilities aligned with Sanofi manufacturing
standards
2
Local manufacturing to foster market access
3
Double-digit production growth to meet strong demand
4
Continuous productivity efforts to provide affordable medicines
5
Innovative LCM to boost sales growth and build profitable
franchises
156
Agenda
LatAm Manufacturing Capabilities: a Strategic Advantage
Suzano: A Key Site in LatAm
157
Suzano Ranks Among the Largest Plants of the Group
Suzano strengths
● Productivity in line with Sanofi’s best sites
● Outstanding customer-service track record
● Product development capabilities with regional potential
● Strong focus on sustainable performance
● Wide range of galenic forms
A diversified portfolio manufactured at competitive costs
4 types of Galenic forms(1)
(1)
(2)
2011 figures
2011 figures, excluding toll-in
4 market segments(2)
Emphasis on local market(1)
158
Suzano Produces LatAm Star Products in All Market
Segments
Ethical drugs
Customer Health Care and OTC
Tablets
Spray
Tablets
Drops
Affordable medicines
Drops
Creams
Capsules
Liquid Soap
159
Suzano is Designed According to Sanofi Manufacturing
Standards
Quality brings a competitive advantage to Industrial Operations
• Dedicated to patient safety and customer satisfaction
Quality
is a
core value
Quality is a strong driver of performance
• Only one batch rejected out of more than 5,000 tested(1)
• Right First Time at 99%(1)
HSE is a daily concern for each employee
• Zero LTI(3) in Suzano for the past two years
HSE(2)
is a
mindset
Energy efficiency leads to financial savings
• New boilers, LED technology…
Suzano combines competitiveness with the highest standards of Quality and HSE
(1)
(2)
(3)
2012 YTD figures at September end
Health Safety & Environment
LTI: Lost Time Injury
160
Suzano Effectively Contributes to Sanofi Growth Platforms
Development center: strong focus on
Growth Platforms
Example of LCM impulsed by Suzano: Dermacyd (CHC)
(1)
Improvement of
industrial processes,
Formulations,
Packaging
Ethical drugs,
Generics,
Access to Medicine
100(2)
New
formula
Dermacyd
Infantil
New scent
Dermacyd
Breeze
Fueling LatAm star CHC products
New
formula
Dermacyd
Teen
New
format
Dermacyd
Pocket
New
formula
Dermacyd
24H
Launch Lactacyd
Central America
30
2008
(1)
(2)
2009
Hours spent on projects by Suzano development center in 2011
June 2012: base value of 100 -volume-
2010
2011
2012
161
Suzano Combines Operational, Financial and
Environmental Performance
LEAN initiative example
HSE initiatives examples
SMED(1) on Puran packaging line
●
On-demand steam boilers
● Two workshops organised with operators
● Team training on LEAN tools
● Movie analysis
● Creation of a check-list
● Visual Management to monitor
performance
●
New air compressors
●
HVAC(3) rest-mode
●
Chillers efficiency increase
●
Suzano HSE(4) commitment is recognised by
international standards
● Quick and sustainable results
● OEE(2) : +33%
● Change-over time: -47%
●
ISO 14001
●
OHSAS 18001
100(5)
Expected
Cost
Improvements
Production
Cost
per Unit
-29%
(2010-2013e)
70
2010
(1)
(2)
(3)
2011
SMED: Single Minute Exchange of Die
(4)
OEE: Overall Equipment Efficiency
(5)
HVAC: Heating Ventilation & Air Conditioning
2012e
Health Safety & Environment
2010: base value of 100, in local currency
2013e
162