Sanofi: Pre-quarterly Results Communication

Pre-quarterly Results Communication

Sanofi (EURONEXT: SAN and NYSE: SNY) has compiled the following items for consideration to assist in the financial modeling of the Group's Q2 2016 results.

As a reminder, following the announcement of exclusive negotiations with Boehringer Ingelheim and as an IFRS presentation requirement for discontinued operations, net income for Sanofi's Animal Health business (Merial) is reported on a separate line in the Consolidated Income Statement. Sanofi will continue to manage and report the performance of the Animal Health business, which will remain an operating segment consistent with IFRS 8, in the Business Net Income Statement until the closing of the transaction. On June 27, 2016, the signing of contracts to secure the transaction was announced.

Q2 2015 Sales and Business EPS

Sanofi's Aggregate sales⁽¹⁾ (with VaxServe sales of non-Group products (€110 million) reclassified to the line Other revenues were €9,268million in Q2 2015. Sanofi's business EPS was €1.41 in Q2 2015.

Venezuela

In Q2 2015, Sanofi benefited from significant increased product demand in Venezuela, due to buying patterns associated with local market conditions. As a consequence, Q2 2015 sales in Venezuela were €199 million (of which €104 million was in established products, €43 million in CHC, €23 million in diabetes, €12 million in Generics and €10 million in rare diseases).

In Q2 2016, given the depreciation of the Venezuelan Bolivar, Sanofi will use the DICOM rate of 620VEF per USD versus the CENCOEX rate of 6.3VEF per USD that was applied in Q2 2015. As a reminder, Q1 2016 reported sales in Venezuela were €3 million using the DICOM rate compared to €200 million in Q1 2015. The adverse impact of Venezuela on Q1 2016 Business EPS versus Q1 2015 was €0.09 and included a foreign exchange loss of €102 million (which impacted Q1 2016 Business EPS by -€0.06), which eliminated the remaining balance sheet exposure to Venezuela.

Business Items

AuviQ^®/Allerject^®
On October 28, 2015, Sanofi announced a voluntary recall for AuviQ^® and Allerject^® in the U.S. and Canada. Sales of the product were €35 million in Q2 2015.

Japan
As previously communicated, multiple generic versions of Plavix^® entered the market in Japan since the end of June 2015 and significantly impacted Plavix^® sales. In Q1 2016, sales of Plavix^® in Japan were down 56.1% at constant exchange rates to €92 million. In Q2 2015, sales of Plavix^® in Japan were €208 million.

Diabetes
As previously communicated on February 9, 2016, the relative weight of Lantus^® in U.S. government channels (with lower net pricing versus other channels) was higher in H2 2015 than in H1 2015. As a consequence of this evolution, sales of Lantus^® in the U.S. in H1 2016 will compare to a relative higher sales base in H1 2015. Furthermore, a glargine biosimilar was launched in Q3 2015 in several European countries as well as in Japan.
  
(1) Including Animal Health business which is reported on a single line in the consolidated income statements in accordance with IFRS5 (Non-current held for sale and discontinued operations)

CHC
In Q1 2016, sales of CHC sales were €905 million down 3.1% at CER due to Venezuela impact and minor divestments (impact of -€52 million and -€15 million, respectively).

Vaccines
As already communicated on April 29, 2016, Sanofi Pasteur is experiencing Pentacel^® manufacturing delays and will not be able to meet all current demand. Supply improvements are expected in the second half of 2016.
There have been no announcements by healthcare authorities or Sanofi regarding additional availability of DengVaxia^® in public immunization programs in Q2 2016.

Financial Results

Other operating income/expenses
In Q2 2015, this line included a foreign exchange loss of €34 million booked in connection with Sanofi's Venezuelan operations.

Effective tax rate
As previously communicated on February 9, 2016, Sanofi estimates that its effective tax rate for 2016 will be between 24% and 25%.

Foreign Currency Impact

The main currency variations in Q2 2016 versus Q2 2015 were:

Based on the evolution of foreign currency rates since April 2016, Sanofi estimates that the currency impact on Q2 2016 sales, excluding Venezuela, should be around -4.0% to -4.5%.

The full year business EPS sensitivity to the U.S. Dollar, Japanese Yen, Chinese Yuan, Brazilian Real and Russian Ruble are the following:

Number of Shares

The average number of shares for EPS calculation was 1,286.8 million in Q2 2016 versus 1,305.9 million in
Q2 2015.

Share Buyback

In H1 2016, Sanofi repurchased 18.8 million shares totaling €1.4 billion; all shares were repurchased in Q1 2016.

Forward-Looking Statements
This document 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 forward-looking 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 labelling 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 initiatives 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, 2015. Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.