EuroBusinessMedia (EBM): Sanofi, a global and diversified healthcare leader, reports earnings for the first quarter of 2012. Jerome Contamine welcome.
Jérôme Contamine: Thank you for having me.
EBM: You are the CFO of Sanofi. What are your comments on the Group's performance in Q1? Are you satisfied with the way the year has started for Sanofi?
Jérôme Contamine: Well, clearly I think the first quarter has been a good start for the Group for this year. Our sales reached €8.511 billion. This includes the consolidation of Genzyme sales and this is an increase of 7% versus last year. Our business EPS grows as well by 7.2% at €1.85 and this growth is driven by Genzyme definitely, but also the growth platforms as well as good cost control. Overall, our growth platforms which now include what we call ‘New Genzyme’ i.e. the rare disease sales from Genzyme, now represent 63% of our overall sales. Also importantly over the quarter, we started to ship Fabrazyme® products from our new Framingham facility, which got approved by EMA (European Medicines Agency) and FDA last January. While clearly, over the year, we will face the loss of exclusivity of Plavix®, which will hit our P&L in May, but the good news is that the underlying growth and the underlying performance of our business is definitely consistent with our medium-term growth outlook.
EBM: Can you give your comments on the status of Genzyme performance? Are the latest manufacturing milestones already translating into increased sales of Rare Diseases products
this quarter and is the Multiple Sclerosis pipeline with products such as Lemtrada™ and Aubagio™ progressing as anticipated?
Jérôme Contamine: Yes we are now grouping into what we call ‘New Genzyme’ both the Rare Disease franchise on sales and the new Multiple Sclerosis products. So I would say that Genzyme is really on track and the recovery is on track. The sales for just Rare Diseases have been €400 million, which is an increase by 13.7% versus last year. As from March we started to ship Fabrazyme® products from the new Framingham facility. The US patients have returned back to full dosing, and full supply of Fabrazyme® will really be reached over Q2. When it comes to Cerezyme®, things are improving, and when it comes to Myozyme® or Lumizyme® - depending on where you sell it - which is the drug for Pompe disease, this one is continuing to post strong double-digit growth. On the Multiple Sclerosis side, over the quarter Genzyme has filed the Aubagio™ dossier for the EU and is just now preparing and completing the dossier to file Lemtrada™ following the impressive phase III results which were released recently.
EBM: Diabetes sales reached a new record in Q1 2012. What are the key growth drivers of Lantus® going forward? When do you expect Lyxumia® to reach the market?
Jérôme Contamine: You’re right that diabetes posted again double-digit growth over the quarter, 14% versus last year. Clearly this is driven by Lantus® sales. Lantus® has grown 17% versus Q1 2011. In the US, growth has been more than 16% and importantly, Lantus® SoloSTAR® now represents more than 50 - precisely 51% - of overall Lantus® sales in the US. The growth in emerging markets is quite impressive; more than 32%, driven by China up 64%, as well as Brazil, Russia or Mexico. When it comes to Lyxumia®, as you know we filed Lyxumia® last year with the European Authorities and the dossier is presently being reviewed, and when it comes to the US we plan to file in Q4 2012.
EBM: Some of your flagship brands such as Plavix® and Lovenox® continue to show resilience in key geographies outside of the US Can you explain why this is the case?
Jérôme Contamine: When you think about these flagship brands, there is always a tendency to firstly look at the US and the end of patent exclusivity. But as a matter of fact, these brands continue to grow in other areas in the world. When it comes to Plavix®, just over Q1, we have grown by more than 5% in emerging markets, driven by China which has grown 23%, and in Japan we continue to grow double-digit, precisely 11.9%, and we expect to propose two new indications during the second half of the year. Lovenox® is also performing extremely well outside the US, both in Europe and in the rest of the world. All in all, Lovenox® outside the US sales for the first quarter have been €404 million, which is in overall growth of 11.9%
EBM: What is your update on your R&D pipeline and future growth catalysts coming down the pipeline?
Jérôme Contamine: Since our last R&D update on the 8th of February, two important elements came up which reinforce the outlook of our R&D pipeline. The first one is the presentation of the phase II results of our anti-PCSK9 compound which looked quite impressive, and also the presentation recently to the American Association of Neurology of data on the phase III trials for Lemtrada™. Over the quarter as well, Genzyme has filed mipomersen for homozygous hypercholestoremia in the US, Zaltrap™ has been filed as well in the US and Aubagio™ has been filed in the EU. So at the end of April, our R&D portfolio under development comprises 61 new molecular entities, out of which 18 are either in Phase III or just being submitted with the possibility to be approved and launched before the end of 2015.
EBM: Sanofi acquired Genzyme a year ago. Where do you now stand in terms of net debt?
Jérôme Contamine: As a matter of fact, we are reimbursing pretty fast the debt we raised to acquire Genzyme. Just over the quarter, the net debt was reduced from €10.8 billion to €8.6 billion. This is clearly the result of the strong free cash flows that we generated over the quarter, which raised €2.8 billion and which allowed us to both invest in our capital expenditures, but also to continue some opportunistic share buy-backs, which represented €400 million over the quarter. So now, if I take into account the dividend, which is going to be paid in May, we are heading into the target we have for the year, which is to have net debt in the range of €10 billion at the end of the year.
EBM: Does the Group's performance in Q1 allow you to reach the high end of your guidance range for 2012? Can you remind us of the impact of the loss of exclusivity from Plavix® and Avapro® in the US in 2012?
Jérôme Contamine: As we disclosed at the beginning of the year and already last year, the impact of the loss of exclusivity of Plavix® and Avapro® in the US on our P&L in 2012 will represent around €1.4 billion. So clearly, the results for the first quarter, the solid results, make us comfortable that we are going to reach the overall guidance we gave for the full year. However, it is clear that we have to take into consideration the impact of this lost exclusivity, in particular on Plavix® which will occur on the 17th of May. So I can just confirm today the guidance we gave at the beginning of the year, that taking this into account as well as the contribution of the growth platforms, of Genzyme and the continuous cost control, the business EPS should decline by 12 to 15% versus last year, barring unforeseen events.
EBM: Thank you very much.
Jérôme Contamine: Thank you.