Table of Contents
Free Translation of the French Language Original
The condensed half-year consolidated financial statements have been subject to a review by the
statutory auditors in accordance with professional standards applicable in France.
Table of Contents
Condensed half-year consolidated financial statements
Consolidated balance sheets – Assets
(€ million) | Note | June 30, 2009 | December 31, 2008 | |||
Property, plant and equipment | B.2. | 7,559 | 6,961 | |||
Goodwill | B.3. | 29,471 | 28,163 | |||
Intangible assets | B.3.-B.4. | 15,130 | 15,260 | |||
Investments in associates | B.5. | 2,142 | 2,459 | |||
Financial assets – non-current | B.6. | 884 | 821 | |||
Deferred tax assets | B.11. | 3,047 | 2,920 | |||
Non-current assets | 58,233 | 56,584 | ||||
Assets held for sale | 33 | - | ||||
Inventories | 4,271 | 3,590 | ||||
Accounts receivable | 5,869 | 5,303 | ||||
Other current assets | 1,949 | 1,881 | ||||
Financial assets – current | 189 | 403 | ||||
Cash and cash equivalents | B.8. | 6,214 | 4,226 | |||
Current assets | 18,525 | 15,403 | ||||
TOTAL ASSETS | 76,758 | 71,987 | ||||
The accompanying notes on pages 8 to 30 are an integral part of the condensed half-year consolidated financial statements. | ||||||
2
Table of Contents
Consolidated balance sheets – Liabilities & Equity
(€ million) | Note | June 30, 2009 | December 31, 2008 | |||
Equity attributable to equity holders of the Company
| 44,621
| 44,866
| ||||
Minority interests
| 163
| 205
| ||||
Total equity
| B.7.
| 44,784
| 45,071
| |||
Long-term debt | B.8. | 6,983 | 4,173 | |||
Provisions and other non-current liabilities | B.10. | 8,658 | 7,730 | |||
Deferred tax liabilities
| B.11.
| 5,546
| 5,668
| |||
Non-current liabilities
|
21,187
|
17,571
| ||||
Liabilities related to assets held for sale
| 6
| -
| ||||
Accounts payable
| 2,733
| 2,791
| ||||
Other current liabilities
| 5,112
| 4,721
| ||||
Short-term debt and current portion of long-term debt
| B.8.
| 2,936
| 1,833
| |||
Current liabilities
| 10,787
| 9,345
| ||||
TOTAL LIABILITIES & EQUITY
| 76,758
| 71,987
|
The accompanying notes on pages 8 to 30 are an integral part of the condensed half-year consolidated financial statements.
3
Table of Contents
Consolidated income statements
(€ million) | Note | 6 months to June 30, 2009 | 6 months to June 30, 2008 | 12 months to December 31, 2008 | ||||
Net sales | 14,545 | 13,626 | 27,568 | |||||
Other revenues | 703 | 570 | 1,249 | |||||
Cost of sales | (3,619) | (3,615) | (7,337) | |||||
Gross profit | 11,629 | 10,581 | 21,480 | |||||
Research and development expenses | (2,260) | (2,180) | (4,575) | |||||
Selling and general expenses | (3,627) | (3,572) | (7,168) | |||||
Other operating income | 450 | 316 | 556 | |||||
Other operating expenses | (170) | (138) | (353) | |||||
Amortization of intangibles | (1,805) | (1,709) | (3,483) | |||||
Operating income before restructuring, impairment of property, plant and equipment and intangibles, gains and losses on disposals, and litigation | 4,217 | 3,298 | 6,457 | |||||
Restructuring costs | B.14. | (907) | (207) | (585) | ||||
Impairment of property, plant and equipment and intangibles | B.4. | (28) | (126) | (1,554) | ||||
Gains and losses on disposals, and litigation | - | - | 76 | |||||
Operating income | 3,282 | 2,965 | 4,394 | |||||
Financial expenses | B.15. | (151) | (160) | (335) | ||||
Financial income | B.15. | 37 | 110 | 103 | ||||
Income before tax and associates | 3,168 | 2,915 | 4,162 | |||||
Income tax expense | B.16. | (795) | (771) | (682) | ||||
Share of profit/loss of associates | 496 | 411 | 812 | |||||
Net income | 2,869 | 2,555 | 4,292 | |||||
Net income attributable to minority interests | 232 | 220 | 441 | |||||
Net income attributable to equity holders of the Company | 2,637 | 2,335 | 3,851 | |||||
Average number of shares outstanding (million) | B.7.4. | 1,305.5 | 1,313.7 | 1,309.3 | ||||
Average number of shares outstanding after dilution (million) | B.7.4. | 1,306.5 | 1,315.8 | 1,310.9 | ||||
- Basic earnings per share (in euros) | 2.02 | 1.78 | 2.94 | |||||
- Diluted earnings per share (in euros) | 2.02 | 1.77 | 2.94 |
The accompanying notes on pages 8 to 30 are an integral part of the condensed half-year consolidated financial statements.
4
Table of Contents
Consolidated statements of recognized income and expense
(€ million) | 6 months to June 30, 2009 | 6 months to June 30, 2008 | 12 months to December 31, 2008 | ||||||
Net income for the period
| 2,869
|
| 2,555
|
| 4,292
|
| |||
Income/(expense) recognized directly in equity: | |||||||||
n Available-for-sale financial assets | 16 | (142 | ) | (132 | ) | ||||
n Cash flow hedges | (140 | ) | 4 | 104 | |||||
n Revaluation reserve | 130 | - | - | ||||||
n Actuarial gains and (losses) | (69 | ) | 130 | (829 | ) | ||||
n Currency translation differences | (167 | ) | (1,654 | ) | 948 | ||||
n Tax effect on income and expense recognized directly in equity (1) | 50 | (24 | ) | 132 | |||||
Total income/(expense) recognized directly in equity | (180 | ) | (1,686 | ) | 223 | ||||
Total recognized income/(expense) for the period | 2,689 | 869 | 4,515 | ||||||
Attributable to equity holders of the Company | 2,457 | 662 | 4,090 | ||||||
Attributable to minority interests | 232 | 207 | 425 |
(1) | See Note B.7.5. |
The accompanying notes on pages 8 to 30 are an integral part of the condensed half-year consolidated financial statements.
5
Table of Contents
Consolidated statements of changes in equity
(€ million) | Share capital | Additional paid-in earnings | Treasury shares | Stock options and other share- based | Other items recognized directly in | Attributable to equity holders of the Company | Attributable to minority interests | Total equity | ||||||||||||||||
Balance at January 1, 2008 | 2,732 | 47,162 | (2,275 | ) | 1,468 | (4,545 | ) | 44,542 | 177 | 44,719 | ||||||||||||||
Income/(expense) recognized directly in equity | - | 87 | - | - | (1,760 | ) | (1,673 | ) | (13 | ) | (1,686 | ) | ||||||||||||
Net income for the period | - | 2,335 | - | - | - | 2,335 | 220 | 2,555 | ||||||||||||||||
Total recognized income/(expense) for the period | - | 2,422 | - | - | (1,760 | ) | 662 | 207 | 869 | |||||||||||||||
Dividend paid out of 2007 earnings (€2.07 per share) | - | (2,702 | ) | - | - | - | (2,702 | ) | - | (2,702 | ) | |||||||||||||
Payment of dividends and equivalents to minority shareholders | - | - | - | - | - | - | (265 | ) | (265 | ) | ||||||||||||||
Share repurchase program | - | - | (1,225 | ) | - | - | (1,225 | ) | - | (1,225 | ) | |||||||||||||
Reduction in share capital | (103 | ) | (2,843 | ) | 2,946 | - | - | - | - | - | ||||||||||||||
Share-based payment: | ||||||||||||||||||||||||
n Exercise of stock options | 1 | 10 | - | - | - | 11 | - | 11 | ||||||||||||||||
n Proceeds from sale of treasury shares on exercise of stock options | - | - | 4 | - | - | 4 | - | 4 | ||||||||||||||||
n Value of services obtained from employees | - | - | - | 64 | - | 64 | - | 64 | ||||||||||||||||
n Tax effect of exercise of stock options | - | - | - | (12 | ) | - | (12 | ) | - | (12 | ) | |||||||||||||
Other movements | - | 7 | - | - | - | 7 | - | 7 | ||||||||||||||||
Balance at June 30, 2008 | 2,630 | 44,056 | (550 | ) | 1,520 | (6,305 | ) | 41,351 | 119 | 41,470 | ||||||||||||||
Income/(expense) recognized directly in equity | - | (780 | ) | - | - | 2,692 | 1,912 | (3 | ) | 1,909 | ||||||||||||||
Net income for the period | - | 1,516 | - | - | - | 1,516 | 221 | 1,737 | ||||||||||||||||
Total recognized income/(expense) for the period | - | 736 | - | - | 2,692 | 3,428 | 218 | 3,646 | ||||||||||||||||
Payment of dividends and equivalents to minority shareholders | - | - | - | - | - | - | (132 | ) | (132 | ) | ||||||||||||||
Share repurchase program | - | - | (2 | ) | - | - | (2 | ) | - | (2 | ) | |||||||||||||
Share-based payment: | ||||||||||||||||||||||||
n Exercise of stock options | 1 | 27 | - | - | - | 28 | - | 28 | ||||||||||||||||
n Value of services obtained from employees | - | - | - | 61 | - | 61 | - | 61 | ||||||||||||||||
Balance at December 31, 2008 | 2,631 | 44,819 | (552 | ) | 1,581 | (3,613 | ) | 44,866 | 205 | 45,071 | ||||||||||||||
Income/(expense) recognized directly in equity | - | 63 | - | - | (243 | ) | (180 | ) | - | (180 | ) | |||||||||||||
Net income for the period | - | 2,637 | - | - | - | 2,637 | 232 | 2,869 | ||||||||||||||||
Total recognized income/(expense) for the period | - | 2,700 | - | - | (243 | ) | 2,457 | 232 | 2,689 | |||||||||||||||
Dividend paid out of 2008 earnings (€2.20 per share) | - | (2,872 | ) | - | - | - | (2,872 | ) | - | (2,872 | ) | |||||||||||||
Payment of dividends and equivalents to minority shareholders | - | - | - | - | - | - | (313 | ) | (313 | ) | ||||||||||||||
Increase in share capital | 1 | - | - | - | 1 | - | 1 | |||||||||||||||||
Share-based payment: | ||||||||||||||||||||||||
n Proceeds from sale of treasury shares on exercise of stock options | - | - | 1 | - | - | 1 | - | 1 | ||||||||||||||||
n Value of services obtained from Employees | - | - | - | 66 | - | 66 | - | 66 | ||||||||||||||||
Zentiva step acquisition | - | 102(2) | - | - | - | 102 | 39 | 141 | ||||||||||||||||
Balance at June 30, 2009 | 2,631 | 44,750 | (551 | ) | 1,647 | (3,856 | ) | 44,621 | 163 | 44,784 |
(1) | See Note B.7.5. |
(2) | Adjustment to accumulated results prior to the acquisition of control over Zentiva, in particular the impairment loss recognized in 2007 against the equity-accounted interest in Zentiva (see Note B.5.). |
The accompanying notes on pages 8 to 30 are an integral part of the condensed half-year consolidated financial statements.
6
Table of Contents
Consolidated statements of cash flows
(€ million) | Note | 6 months to June 30, 2009 | 6 months to June 30, 2008 | 12 months to December 31, 2008 | ||||||
Net income attributable to equity holders of the Company
| 2,637
|
| 2,335
|
| 3,851
| |||||
Minority interests, excluding BMS(1) | 13 | 8 | 19 | |||||||
Share of undistributed earnings of associates | 19 | (55) | 19 | |||||||
Depreciation, amortization and impairment of property, plant and equipment and intangible assets | 2,271 | 2,275 | 5,985 | |||||||
Gains and losses on disposals of non-current assets, net of tax(2) | (13) | (33) | (45) | |||||||
Net change in deferred taxes | (587) | (361) | (1,473) | |||||||
Net change in provisions | 574 | 114 | 56 | |||||||
Cost of employee benefits (stock options & other share-based payments) | 66 | 64 | 125 | |||||||
Impact of the workdown of acquired inventories remeasured at fair value | 19 | - | - | |||||||
Unrealized (gains) and losses | 366 | (5) | (415 | )(5) | (13) | |||||
Operating cash flow before changes in working capital
| 5,365
|
| 3,932
|
| 8,524
| |||||
(Increase)/decrease in inventories | (441) | (71) | (84) | |||||||
(Increase)/decrease in accounts receivable | (357) | (391) | (309) | |||||||
Increase/(decrease) in accounts payable | (237) | (149) | (28) | |||||||
Net change in other current assets, financial assets (current) and other current liabilities | 48 | (79) | 420 | |||||||
Net cash provided by operating activities(3)
| 4,378
|
| 3,242
|
| 8,523
| |||||
Acquisitions of property, plant and equipment and intangibles | B.2. - B.3. | (824) | (796) | (1,606) | ||||||
Acquisitions of investments in consolidated undertakings, net of cash acquired | B.1. | (1,825) | - | (661) | ||||||
Acquisitions of available-for-sale financial assets | (3) | (2) | (6) | |||||||
Proceeds from disposals of property, plant and equipment, intangibles and other non-current assets, net of tax(4) | 28 | 102 | 123 | |||||||
Net change in loans and other non-current financial assets | (13) | 4 | (4) | |||||||
Net cash used in investing activities
| (2,637)
|
| (692)
|
| (2,154)
| |||||
Issuance of sanofi-aventis shares | 2 | 17 | 51 | |||||||
Dividends paid: | ||||||||||
n to sanofi-aventis shareholders | (2,872) | (2,702) | (2,702) | |||||||
n to minority shareholders, excluding BMS(1) | (5) | (4) | (6) | |||||||
Additional long-term borrowings | B.8.1. | 3,202 | 586 | 765 | ||||||
Repayments of long-term borrowings | (34) | (18) | (1,253) | |||||||
Net change in short-term borrowings | (66) | 55 | 557 | |||||||
Acquisitions of treasury shares | - | (1,225) | (1,227) | |||||||
Disposals of treasury shares, net of tax
| 1 | 4 | 6 | |||||||
Net cash provided by/(used in) financing activities | 228 | (3,287) | (3,809) | |||||||
Impact of exchange rates on cash and cash equivalents | 19 | (28) | (45) | |||||||
Net change in cash and cash equivalents | 1,988 | (765) | 2,515 | |||||||
Cash and cash equivalents, beginning of period | 4,226 | 1,711 | 1,711 | |||||||
Cash and cash equivalents, end of period | B.8. | 6,214 | 946 | 4,226 |
(1) | Alliance agreements with Bristol-Myers Squibb (BMS), see Note C.1. to the consolidated financial statements for the year ended December 31, 2008. |
(2) | Including available-for-sale financial assets. |
(3) | Including: |
Income tax paid | (1,374) | (1,214) | (2,317) | |||||
Interest paid | (109) | (121) | (317) | |||||
Interest received | 58 | 60 | 132 | |||||
Dividends received | 3 | 3 | 5 |
(4) | Property, plant and equipment, intangible assets, investments in consolidated subsidiaries and participating interests. |
(5) | Arising primarily on the translation of U.S. dollar surplus cash from American subsidiaries transferred to the sanofi-aventis parent company, see Note B.9.2. |
The accompanying notes on pages 8 to 30 are an integral part of the condensed half-year consolidated financial statements.
7
Table of Contents
NOTES TO THE CONDENSED HALF-YEAR CONSOLIDATED
FINANCIAL STATEMENTS – SIX MONTHS ENDED JUNE 30, 2009
INTRODUCTION
The sanofi-aventis Group (sanofi-aventis and its subsidiaries) is a leading player in the world pharmaceuticals industry, engaged in the development, manufacture and marketing of healthcare products in seven major therapeutic fields: thrombosis, cardiovascular, metabolic disorders, oncology, central nervous system, internal medicine and vaccines.
Its international R&D effort provides a platform for the Group to develop leadership positions in its markets.
Sanofi-aventis, the parent company, is asociété anonyme (a form of limited liability company) incorporated under the laws of France. The registered office is at 174, avenue de France, 75013 Paris, France.
Sanofi-aventis is listed in Paris (Euronext: SAN) and New York (NYSE: SNY).
The half-year consolidated financial statements for the six months ended June 30, 2009 were reviewed by the sanofi-aventis Board of Directors at the Board meeting held on July 28, 2009.
A. | Basis of preparation of the half-year consolidated financial statements and accounting policies |
A.1. Basis of preparation of the half-year consolidated financial statements and accounting policies
The half-year consolidated financial statements have been prepared and presented in condensed format in accordance with IAS 34 (Interim Financial Reporting). The accompanying notes therefore relate to significant items for the period, and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2008.
The consolidated financial statements as of June 30, 2009, have been prepared in compliance with standards and interpretations adopted by the European Union and with those issued by the IASB. Except as described below, the accounting policies applied as of June 30, 2009 are consistent with those described in the notes to consolidated financial statements for the year ended December 31, 2008.
n | Segment information for the six months ended June 30, 2009 is reported in accordance with IFRS 8 (Operating Segments). IFRS 8 requires segment information to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. Segment information is provided in note B.17. The changes made by sanofi-aventis to its operating segments have had no effect on the allocation of goodwill for the purpose of impairment testing. |
n | Standards, amendments and interpretations mandatorily applicable from January 1, 2009 and issued in 2008 or earlier are described in note B.28. to the consolidated financial statements for the year ended December 31, 2008, and have not had a material impact on the consolidated half-year financial information for the six months ended June 30, 2009. |
International Financial Reporting Standards as adopted by the European Union as at June 30, 2009 are available under the headingIASs/IFRSs, SICs and IFRICs adopted by the Commission on the following website:http://ec.europa.eu/internal_market/accounting/ias/index_en.htm
8
Table of Contents
The financial statements for the year to December 31, 2009, and the comparative information presented therein, will be prepared in compliance with standards and interpretations applicable at that date. The information contained in this half-year report relating to the periods ended December 31, 2008 and June 30, 2009 may therefore be subject to change if new or amended standards and interpretations are issued by the IASB and adopted by the European Union.
A.2. | Use of estimates |
The preparation of financial statements requires management to make reasonable estimates and assumptions, based on information available at the date of preparation of the financial statements, that may affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements, and disclosures of contingent assets and contingent liabilities.
Examples of estimates and assumptions include:
n | amounts deducted from sales for projected sales returns, chargeback incentives, rebates and price reductions; |
n | the extent of impairment of accounts receivable and of provisions for product claims; |
n | impairment of property, plant and equipment, goodwill, intangible assets and investments in associates; |
n | the valuation of goodwill and the valuation and useful life of acquired intangible assets; |
n | the amount of post-employment benefit obligations; |
n | the amount of provisions for restructuring, litigation, tax risks and environmental risks; |
n | share-based payment expenses, including awards of stock options and restricted shares; |
n | the fair values of financial assets and derivative financial instruments. |
For the purposes of the half-year financial information, and as allowed under IAS 34, sanofi-aventis has determined income tax expense on the basis of an estimate of the effective tax rate for the full financial year. This rate is applied toIncome before tax and associates. The estimated effective tax rate is based on the tax rates that will be applicable to projected pre-tax profits or losses arising in the various tax jurisdictions in which sanofi-aventis operates.
Actual amounts could vary from these estimates.
A.3. | Seasonal trends |
The operations of sanofi-aventis are not subject to significant seasonal fluctuations.
B. | Significant items during the first half of 2009 |
B.1. | Changes in the scope of consolidation |
The main changes in the scope of consolidation during the first half of 2009 were as follows:
n | On March 11, 2009, sanofi-aventis successfully closed its offer forZentiva N.V. (Zentiva). As of June 30, 2009, sanofi-aventis held about 99.1% of Zentiva’s share capital through its subsidiary sanofi-aventis Europe. The purchase price was€1,199 million, including acquisition costs. Prior to this acquisition, sanofi-aventis had owned 24.9% of Zentiva, which was accounted for as an associate using the equity method (see Note B.5.). The Zentiva group reported sales of CZK 18,378 million (€735 million) in 2008. |
9
Table of Contents
n | On March 31, 2009, sanofi-aventis took 100% control ofLaboratorios Kendrick (Kendrick) through its subsidiary sanofi-aventis Mexico. Kendrick is one of the leading manufacturers of generics in Mexico, with sales of approximately€26 million in 2008 and an estimated market share of 15% (IMS MAT January 2009). |
n | On April 27, 2009, sanofi-aventis acquired 100% of the shares ofMedley, Brazil’s third largest pharmaceutical company and no.1 generics company, with sales of around€153 million in 2008 (more than two-thirds of which were in generics) and a 5.7% market share (IMS MAT February 2009). The purchase price, on the basis of a€500 million enterprise value, was€340 million including acquisition costs. The potential consequences of this acquisition are currently under examination by the competition department of the Brazilian Ministry of Justice (CADE); this examination, and the accompanying transitory measures, relate to only a limited part of Medley’s activities. |
n | On April 27, 2009, sanofi-aventis took 100% control ofBiPar Sciences, Inc. (BiPar), an American biopharmaceutical company developing novel tumorselective approaches for the treatment of different types of cancers. BiPar is the leading company in the emerging field of DNA (DeoxyriboNucleic Acid) repair using Poly ADP-Ribose Polymerase (PARP) inhibitors. The pivotal Phase III trial for BSI-201, BiPar’s lead product candidate in metastatic triple negative breast cancer, started in July 2009. The purchase price is contingent on the achievement (regarded as probable) of milestones related to the development of BSI-201, and could reach $500 million. |
B.2. | Property, plant and equipment |
Acquisitions of property, plant and equipment totaled€595 million in the first half of 2009. Of this amount,€389 million related to investments in the Pharmaceuticals segment, primarily in industrial facilities (€194 million) and plant and installations at research sites (€152 million). The remaining€206 million related to acquisitions made in the Vaccines segment.
10
Table of Contents
B.3. | Intangible assets and goodwill |
Movements in intangible assets and goodwill during the first half of 2009 are shown below:
(€ million) | Acquired Aventis R&D | Other acquired R&D(1) | Rights to marketed Aventis products | Products, trademarks and other | Software | Total intangible assets | ||||||||||||
Gross value at January 1, 2009 | 2,453 | 557 | 30,319 | 1,761 | 585 | 35,675 | ||||||||||||
Changes in scope of consolidation | - | 628 | - | 1,031 | 9 | 1,668 | ||||||||||||
Acquisitions and other increases | - | 64 | - | 54 | 17 | 135 | ||||||||||||
Disposals and other decreases | - | (35 | ) | - | - | - | (35 | ) | ||||||||||
Translation differences | (29 | ) | (35 | ) | (297 | ) | 47 | 1 | (313 | ) | ||||||||
Transfers | (5 | ) | (1 | ) | 5 | 1 | - | - | ||||||||||
Gross value at June 30, 2009 | 2,419 | 1,178 | 30,027 | 2,894 | 612 | 37,130 | ||||||||||||
Accumulated amortization and impairment at January 1, 2009 | (1,484 | ) | (46 | ) | (17,399 | ) | (998 | ) | (488 | ) | (20,415 | ) | ||||||
Amortization expense | - | (16 | ) | (1,660 | ) | (129 | ) | (24 | ) | (1,829 | ) | |||||||
Impairment losses, net of reversals | - | (20 | ) | (8 | ) | - | - | (28 | ) | |||||||||
Disposals and other decreases | - | 35 | - | - | - | 35 | ||||||||||||
Translation differences | 18 | 1 | 207 | 12 | (1 | ) | 237 | |||||||||||
Accumulated amortization and impairment at June 30, 2009 | (1,466 | ) | (46 | ) | (18,860 | ) | (1,115 | ) | (513 | ) | (22,000 | ) | ||||||
Carrying amount at January 1, 2009 | 969 | 511 | 12,920 | 763 | 97 | 15,260 | ||||||||||||
Carrying amount at June 30, 2009 | 953 | 1,132 | 11,167 | 1,779 | 99 | 15,130 |
(1) | Excluding amounts arising under the Aventis purchase price allocation. |
The provisional Zentiva purchase price allocation resulted in the recognition of intangible assets totaling€908 million, represented mainly by the value of marketed products and the Zentiva trademark. Goodwill amounted to€976 million.
The provisional Medley purchase price allocation resulted in the recognition of intangible assets totaling€168 million. Goodwill amounted to€372 million.
In the provisional BiPar purchase price allocation, a value of€545 million was attributed to BSI-201, the principal product currently under development.
Acquisitions of intangible assets other than software during the first half of 2009 amounted to€118 million.
Goodwill breaks down as follows:
(€ million) | Gross value | Accumulated amortization and | Carrying amount | ||||||
Balances at January 1, 2009 | 28,188 | (25 | ) | 28,163 | |||||
Changes in scope of consolidation | 1,443 | - | 1,443 | ||||||
Disposals and other decreases | (2 | ) | - | (2 | ) | ||||
Translation differences | (134 | ) | 1 | (133 | ) | ||||
Balances at June 30, 2009 | 29,495 | (24 | ) | 29,471 |
11
Table of Contents
B.4. | Impairment of property, plant and equipment, goodwill and intangibles |
As of June 30, 2009, the results of impairment tests conducted in accordance with IAS 36 (Impairment of Assets) led to the recognition of impairment losses totaling€28 million on the rights to TroVax® and the product Di-Antalvic®.
B.5. | Investments in associates |
Associates consist of companies over which sanofi-aventis exercises significant influence, and joint ventures. Sanofi-aventis accounts for joint ventures using the equity method (i.e. as associates), in accordance with the allowed alternative treatment specified in IAS 31(Financial Reporting of Interests in Joint Ventures).
Investments in associates break down as follows:
(€ million) | % interest | June 30, 2009 | December 31, 2008 | |||
Sanofi Pasteur MSD | 50.0 | 392 | 427 | |||
Merial | 50.0 | 1,228 | 1,203 | |||
InfraServ Höchst | 31.2 | 91 | 96 | |||
Zentiva(1) | 24.9 | - | 332 | |||
Entities and companies managed by Bristol-Myers Squibb(2) | 49.9 | 220 | 196 | |||
Financière des Laboratoires de Cosmétologie Yves Rocher | 39.1 | 121 | 119 | |||
Other investments in associates | - | 90 | 86 | |||
Total | 2,142 | 2,459 |
(1) | Ownership interest held as of December 31, 2008; Zentiva was fully consolidated as of June 30, 2009 (see Note B.1.). The carrying amount of the investment as of December 31, 2008 is net of an impairment loss of€102 million recognized in 2007. |
(2) | Under the terms of the agreements with Bristol-Myers Squibb (BMS) (see Note C.1. to the 2008 full-year consolidated financial statements), the Group’s share of the net assets of entities and companies majority-owned by BMS is recorded inInvestments in associates. |
Transactions with associates
The financial statements include commercial transactions between the Group and certain of its associates that qualify as related parties. The principal transactions of this nature are summarized below:
(€ million) | 6 months to June 30, 2009 | 6 months to June 30, 2008 | 12 months to December 31, 2008 | |||
Sales | 225 | 204 | 432 | |||
Royalties(1) | 588 | 469 | 1,014 | |||
Purchases | 116 | 145 | 254 |
(1) | This item mainly relates to transactions with entities managed by BMS. |
B.6. | Financial assets – non-current |
The main items included inFinancial assets – non-current are:
(€ million) | June 30, 2009 | December 31, 2008 | ||
Available-for-sale financial assets(1) | 503 | 491 | ||
Pre-funded pension obligations | 1 | 1 | ||
Long-term loans, advances and receivables (2) | 282 | 186 | ||
Assets recognized under the fair value option | 67 | 72 | ||
Derivative instruments | 31 | 71 | ||
Total | 884 | 821 | ||
(1) | Includes 14.8 million shares representing 19% of the capital of Regeneron Pharmaceuticals, valued at€188 million on the basis of the quoted stock market price as of June 30, 2009 (versus€195 million as of December 31, 2008). |
(2) | Increase mainly due to the indemnity (recognized as a receivable) covering liabilities assumed as part of the Medley acquisition. |
12
Table of Contents
B.7. | Equity |
B.7.1. | Share capital |
The share capital of€2,631,116,430 consists of 1,315,558,215 shares with a par value of€2.
Treasury shares are deducted from shareholders’ equity. Gains and losses on disposals of treasury shares are taken directly to equity and are not recognized in net income for the period.
Treasury shares held by sanofi-aventis are as follows:
Number of shares (million) | % | |||
June 30, 2009 | 10.0 | 0.76% | ||
December 31, 2008 | 10.0 | 0.76% | ||
June 30, 2008 | 9.9 | 0.76% | ||
January 1, 2008 | 37.7 | 2.76% |
A total of 32,752 sanofi-aventis shares were issued under stock subscription option plans during the first half of 2009.
B.7.2. | Restricted share plan |
The Board of Directors, meeting on March 2, 2009, decided to award a restricted share plan comprising 1,194,064 shares, of which 604,004 will vest after a four-year service period and 590,060 will vest after a two-year service period but will be non-transferable for a further two-year lock-up period (these shares include 65,000 that are also subject to performance conditions).
In compliance with IFRS 2 (Share-Based Payment), sanofi-aventis has measured the fair value of this plan by reference to the fair value of the equity instruments awarded, representing the fair value of the services rendered during the period.
The plan was measured as of the date of grant. The fair value of each share awarded is equal to the listed market price of the share as of that date (€41.10), adjusted for dividends expected during the vesting period.
On this basis, the fair value of the restricted share plan is€37 million.
This amount is being recognized as an expense over the vesting period, with the matching entry recorded directly in equity.
An expense of€4 million was recognized for this plan in the six months ended June 30, 2009.
The number of restricted shares outstanding as of June 30, 2009 was 1,187,614.
B.7.3. | Stock option plans |
On March 2, 2009, the Board of Directors granted 7,736,480 stock subscription options at an exercise price of€45.09. The vesting period is four years and the plan expires on March 2, 2019.
13
Table of Contents
The following assumptions were used in determining the fair value of this plan:
n | dividend yield: 5.72%; |
n | life of the plan: 6 years; |
n | volatility of sanofi-aventis shares, computed on a historical basis: 27.06%; |
n | risk-free interest rate: 2.84%. |
On this basis, the fair value of one option is€4.95.
The fair value of the stock option plan awarded in 2009 is€34 million.
This amount is recognized as an expense over the vesting period, with the matching entry recognized directly in equity.
An expense of€3 million was recognized for this plan in the six months ended June 30, 2009.
The total expense recognized for stock option plans in the six months ended June 30, 2009 was€62 million, compared with€64 million in the six months ended June 30, 2008.
The table below provides summary information about options outstanding and exercisable as of June 30, 2009:
Outstanding | Exercisable | |||||||||
Range of exercise prices per share | Number of options | Average residual life (years) | Weighted average exercise price per share (€) | Number of options | Weighted average exercise price per share (€) | |||||
From€1.00 to€10.00 per share | 43,870 | 5.69 | 7.19 | 43,870 | 7.19 | |||||
From€10.00 to€20.00 per share | 68,394 | 7.46 | 14.87 | 68,394 | 14.87 | |||||
From€20.00 to€30.00 per share | 30,520 | 8.99 | 28.38 | 30,520 | 28.38 | |||||
From€30.00 to€40.00 per share | 334,820 | 9.75 | 38.08 | 334,820 | 38.08 | |||||
From€40.00 to€50.00 per share | 16,506,422 | 6.36 | 43.09 | 8,813,792 | 41.34 | |||||
From€50.00 to€60.00 per share | 11,931,148 | 3.08 | 52.48 | 11,931,148 | 52.48 | |||||
From€60.00 to€70.00 per share | 40,209,788 | 5.28 | 66.03 | 17,542,973 | 67.92 | |||||
From€70.00 to€80.00 per share | 23,311,791 | 4.44 | 70.80 | 23,311,791 | 70.80 | |||||
Total | 92,436,753 | 62,077,308 | ||||||||
of which stock purchase options | 8,038,940 | |||||||||
of which stock subscription options | 84,397,813 |
B.7.4. | Number of shares used to compute diluted earnings per share |
The number of shares used to compute diluted earnings per share is obtained by adding stock options and restricted shares with potentially dilutive effect to the average number of shares outstanding.
(million) | June 30, 2009 | June 30, 2008 | December 31, 2008 | |||
Average number of shares outstanding | 1,305.5 | 1,313.7 | 1,309.3 | |||
Adjustment for options with potentially dilutive effect | 0.7 | 2.1 | 1.6 | |||
Adjustment for restricted shares with potentially dilutive effect | 0.3 | - | - | |||
Average number of shares used to compute diluted earnings per share | 1,306.5 | 1,315.8 | 1,310.9 |
As of June 30, 2009, a total of 83.4 million stock options were excluded from the calculation of diluted earnings per share because they did not have a potentially dilutive effect, compared with 76.2 million as of December 31, 2008 and 74.1 million as of June 30, 2008.
14
Table of Contents
B.7.5. | Income and expense recognized directly in equity |
Changes in income and expense recognized directly in equity are as follows:
(€ million) | 6 months to June 30, 2009 | 6 months to June 30, 2008 | 12 months to December 31, 2008 | ||||||
Balance, beginning of period | (4,436 | ) | (4,659 | ) | (4,659 | ) | |||
Available-for-sale financial assets: | |||||||||
n Change in fair value | 16 | (1) | (142 | ) | (132 | ) | |||
n Tax effect | (7 | ) | 20 | 33 | |||||
Cash flow hedges: | |||||||||
n Change in fair value | (140 | ) (2) | 4 | 104 | |||||
n Tax effect | 49 | (1 | ) | (37 | ) | ||||
Revaluation reserve(3): | |||||||||
n Fair value remeasurement | 130 | - | - | ||||||
n Tax effect | (24 | ) | - | - | |||||
Actuarial gains/(losses): | |||||||||
n Asset ceiling | - | - | 2 | ||||||
n Actuarial gains/(losses) excluding associates and joint ventures (see Note B.10.1.) | (70 | ) | 132 | (824 | ) | ||||
n Actuarial gains/(losses) of associates and joint ventures | 1 | (2 | ) | (7 | ) | ||||
n Deferred taxes on actuarial gains and losses | 26 | (43 | ) | 136 | |||||
Cumulative translation differences: | |||||||||
n Cumulative translation difference on foreign subsidiaries | (149 | ) | (1,654 | ) | 948 | ||||
n Hedges of net investments in foreign operations | (18 | ) | - | - | |||||
n Tax effect | 6 | - | - | ||||||
Balance, end of period | (4,616 | ) | (6,345 | ) | (4,436 | ) | |||
Attributable to equity holders of the Company | (4,599 | ) | (6,331 | ) | (4,419 | ) | |||
Attributable to minority interests | (17 | ) | (14 | ) | (17 | ) |
(1) | Includes matching entries for changes recognized in the income statement of€(1) million. |
(2) | Includes matching entries for changes recognized in the income statement of€(123) million in operating income and€(4) million in financial income/expense. |
(3) | Fair value remeasurement of Zentiva’s identifiable net assets as of the date on which control was obtained, corresponding to the 24.9% ownership interest held by sanofi-aventis before it obtained control (see Note B.5.). |
B.8. | Debt, cash and cash equivalents |
The table below shows changes in the Group’s financial position:
(€ million) | June 30, 2009 | December 31, 2008 | ||||
Long-term debt, at amortized cost | 6,983 | 4,173 | ||||
Short-term debt and current portion of long-term debt | 2,936 | 1,833 | ||||
Total debt | 9,919 | 6,006 | ||||
Cash and cash equivalents | (6,214 | ) | (4,226 | ) | ||
Debt, net of cash and cash equivalents | 3,705 | 1,780 |
Trends in the gearing ratio are shown below:
(€ million) | June 30, 2009 | December 31, 2008 | ||||
Debt, net of cash and cash equivalents | 3,705 | 1,780 | ||||
Total equity | 44,784 | 45,071 | ||||
‘Gearing ratio | 8.3 | % | 3.9 | % |
15
Table of Contents
B.8.1. | Net debt at value on redemption |
A reconciliation of carrying amount to value on redemption is shown below:
(€ million) | Carrying amount: June 30, 2009 | Amortized cost | Adjustment to debt measured at fair value | Value on redemption: June 30, 2009 | Value on redemption: December 31, 2008 | |||||||||
Long-term debt | 6,983 | 17 | (38 | ) | 6,962 | 4,123 | ||||||||
Short-term debt and current portion of long-term debt | 2,936 | - | (26 | ) | 2,910 | 1,815 | ||||||||
Total debt | 9,919 | 17 | (64 | ) | 9,872 | 5,938 | ||||||||
Cash and cash equivalents | (6,214 | ) | - | - | (6,214 | ) | (4,226 | ) | ||||||
Debt, net of cash and cash equivalents | 3,705 | 17 | (64 | ) | 3,658 | 1,712 |
Debt, net of cash and cash equivalents by type, at value on redemption is detailed as follows:
June 30, 2009 | December 31, 2008 | |||||||||||||||
(€ million) | non-current | current | Total | non-current | current | Total | ||||||||||
Bond issues | 5,217 | 891 | 6,108 | 2,418 | 488 | 2,906 | ||||||||||
Credit facility drawdowns | 1,000 | 3 | 1,003 | 1,000 | 34 | 1,034 | ||||||||||
Other bank borrowings | 710 | 683 | 1,393 | 670 | 262 | 932 | ||||||||||
Commercial paper | - | 707 | 707 | - | 717 | 717 | ||||||||||
Finance lease obligations | 21 | 4 | 25 | 21 | 4 | 25 | ||||||||||
Other borrowings | 14 | 266 | 280 | 14 | 11 | 25 | ||||||||||
Bank credit balances | - | 356 | 356 | - | 299 | 299 | ||||||||||
Total debt | 6,962 | 2,910 | 9,872 | 4,123 | 1,815 | 5,938 | ||||||||||
Cash and cash equivalents | - | (6,214 | ) | (6,214 | ) | - | (4,226 | ) | (4,226 | ) | ||||||
Debt, net of cash and cash equivalents | 6,962 | (3,304 | ) | 3,658 | 4,123 | (2,411 | ) | 1,712 |
Undrawn confirmed credit facilities not used to back French and U.S. commercial paper programs were€10.6 billion as of June 30, 2009 and€10.8 billion as of December 31, 2008.
Main financing and debt reduction transactions during the period
The following refinancing transactions took place during the first half of 2009:
n | €1.5 billion fixed-rate bond issue (interest: 3.5% p.a.), maturing May 17, 2013; |
n | €1.5 billion fixed-rate bond issue (interest: 4.5% p.a.), maturing May 18, 2016; |
n | CHF 250 million fixed-rate bond issue (interest: 3.25% p.a.), fungible with the CHF 275 million bond issue maturing December 2012, which is increased to CHF 525 million (€344 million). |
In addition, the increase in net debt during the first half of 2009 reflects the first-time consolidation of acquired entities, in particular Zentiva.
The financing in place as of June 30, 2009 at sanofi-aventis parent company level (where the bulk of the Group’s financing is centralized) is not subject to covenants regarding financial ratios, or to any clause linking credit spreads or fees to the sanofi-aventis credit rating.
16
Table of Contents
B.8.2. | Market value of debt, net of cash and cash equivalents |
The market value of debt, net of cash and cash equivalents (excluding derivative instruments) as of June 30, 2009 was€3,754 million (€1,779 million as of December 31, 2008), compared with a value on redemption of€3,658 million (€1,712 million as of December 31, 2008).
B.9. | Derivative financial instruments |
B.9.1. | Currency derivatives used to manage operational risk exposures |
The table below shows operational currency hedging instruments in place as of June 30, 2009, with the notional amount translated into euros at the relevant closing exchange rate.
June 30, 2009 | Of which derivatives designated as cash flow hedges | Of which derivatives not eligible for hedge accounting | ||||||||||||||
(€ million) | Notional amount | Fair value | Notional amount | Fair value | Of which recognized in equity | Notional amount | Fair value | |||||||||
Forward currency sales | 2,044 | 52 | 473 | 4 | 4 | 1,571 | 48 | |||||||||
n of which U.S. dollar | 1,419 | 52 | 355 | 4 | 3 | 1,064 | 49 | |||||||||
n of which Japanese yen | 161 | 2 | 81 | - | - | 80 | 2 | |||||||||
Forward currency purchases | 281 | 1 | 94 | - | - | 187 | 1 | |||||||||
n of which U.S. dollar | 94 | - | 94 | - | - | - | - | |||||||||
n of which Hungarian forint | 93 | 4 | - | - | - | 93 | 4 | |||||||||
Put options purchased | 468 | 23 | 53 | 3 | 5 | 415 | 20 | |||||||||
n of which U.S. dollar | 336 | 18 | 53 | 3 | 5 | 283 | 15 | |||||||||
Call options written | 833 | 19 | - | - | - | 833 | 19 | |||||||||
n of which U.S. dollar | 593 | 14 | - | - | - | 593 | 14 | |||||||||
Put options written | 71 | (10 | ) | - | - | - | 71 | (10 | ) | |||||||
n of which U.S. dollar | 71 | (10 | ) | - | - | - | 71 | (10 | ) | |||||||
Call options purchased | 141 | - | - | - | - | 141 | - | |||||||||
n of which U.S. dollar | 141 | - | - | - | - | 141 | - | |||||||||
Total | 3,838 | 85 | 620 | 7 | 9 | 3,218 | 78 |
As of June 30, 2009, none of these instruments had an expiry date after December 31, 2009.
These positions hedge:
• | Material foreign-currency cash flows arising after the balance sheet date in relation to transactions carried out during the six months to June 30, 2009 and recognized in the consolidated balance sheet as of that date. Gains and losses on these hedging instruments (forward contracts and options) have been and will continue to be calculated and recognized in parallel with the recognition of gains and losses on the hedged items. |
• | Forecast foreign-currency cash flows relating to commercial transactions to be carried out in the second half of 2009. As regards the U.S. dollar, this portfolio (forward contracts and options) would cover approximately 20% of the forecast net cash flows in that currency during the second half of 2009, subject to the knock-out level ($1.62 to the euro) not being reached on knock-out options that were in the money as of June 30, 2009. |
17
Table of Contents
B.9.2. | Currency and interest rate derivatives used to manage financial risk exposure |
Some of the Group’s financing activities, such as U.S. commercial paper issues and the cash pooling arrangements for foreign subsidiaries outside the euro zone, expose certain entities, especially the sanofi-aventis parent company, to financial foreign exchange risk (i.e. the risk of changes in the value of loans and borrowings denominated in a currency other than the functional currency of the lender or borrower).
The net foreign exchange exposure for each currency and entity is hedged by firm financial instruments, usually currency swaps. The table below shows instruments of this type held as of June 30, 2009:
June 30, 2009 (€ million) | Notional amount | Fair value | Expiry | ||||
Forward currency purchases | 8,472 | (466 | ) | ||||
n of which U.S. dollar (1) | 7,288 | (460 | ) | 2009 | |||
n of which Pound sterling (1) | 296 | 1 | 2009 | ||||
n of which Swiss franc (1) | 205 | (2 | ) | 2009 | |||
Forward currency sales | 2,155 | 9 | |||||
n of which U.S. dollar (1) | 976 | 6 | 2009 | ||||
n of which Japanese yen (1) | 853 | 5 | 2009 | ||||
n of which Hungarian forint (1) | 115 | 2 | 2009 | ||||
Total | 10,627 | (457 | ) |
(1) | Includes€6,333 million used to hedge U.S. dollar intragroup deposits placed with the sanofi-aventis parent company, and€248 million forward purchases against the Brazilian real (hedging a $350 million local borrowing). |
To limit risk and optimize the cost of its short-term and medium-term debt, sanofi-aventis uses derivative instruments that alter the structure of its debt. The table below shows the most significant instruments of this type in place at June 30, 2009:
Notional amounts by expiry date as of June 30, 2009 | Of which derivatives designated as fair value hedges | Of which derivatives designated as cash flow hedges | ||||||||||||||||||||||||||
(€ million) | 2009 | 2010 | 2012 | 2013 | 2015 | Total | Fair value | Notional Amount | Fair value | Notional Amount | Fair Value | Of which recognized in equity | ||||||||||||||||
Interest rate swap. pay€3.69% / Receive€ floating(1) | - | 1,000 | - | - | - | 1,000 | (29 | ) | - | - | 1,000 | (29 | ) | (25 | ) | |||||||||||||
Cross-currency Swaps | ||||||||||||||||||||||||||||
- pay€ floating(1) / receive GBP 5.50% | - | 299 | - | - | - | 299 | (54 | ) | 299 | (54 | ) | - | - | - | ||||||||||||||
- pay€ floating(1) / receive JPY 0.22% | 116 | - | - | - | - | 116 | 25 | 116 | 25 | - | - | - | ||||||||||||||||
- pay€ floating(1) / receive JPY floating (2) | - | - | - | 92 | - | 92 | 19 | - | - | - | - | - | ||||||||||||||||
- pay€ floating(3) / receive CHF 2.75% | - | 122 | - | - | - | 122 | 11 | 122 | 11 | - | - | - | ||||||||||||||||
- pay€ floating(1) / receive CHF 3.26% | - | - | 167 | - | - | 167 | 1 | 167 | 1 | - | - | - | ||||||||||||||||
- pay€ 4.89% / receive CHF 3.26% | - | - | 180 | - | - | 180 | (4 | ) | - | - | 180 | (4 | ) | (2 | ) | |||||||||||||
- pay€ 4.87% / receive CHF 3.38% | - | - | - | - | 244 | 244 | 11 | - | - | 244 | 11 | (5 | ) | |||||||||||||||
Total | 116 | 1,421 | 347 | 92 | 244 | 2,220 | (20 | ) | 704 | (17 | ) | 1,424 | (22 | ) | (32 | ) |
(1) | Floating: benchmark rate 3-month Euribor |
(2) | Floating: benchmark rate 3-month Libor JPY |
(3) | Floating: benchmark rate 6-month Euribor |
18
Table of Contents
B.10. | Provisions and other non-current liabilities |
(€ million) | Provisions for pensions benefits | Restructuring provisions | Other provisions | Other non-current liabilities | Total | ||||||||||
Balance at January 1, 2009 | 4,068 | 366 | 3,084 | 212 | 7,730 | ||||||||||
Changes in scope of consolidation | 9 | - | 220 | 9 | 238 | ||||||||||
Increase in provisions and liabilities | 216 | 644 | (3) | 257 | 76 | 1,193 | |||||||||
Reversals of utilized provisions | (309 | ) | (13 | ) | (48 | ) | - | (370 | ) | ||||||
Reversals of unutilized provisions | (8 | ) | - | (73 | )(4) | - | (81 | ) | |||||||
Transfers(1) | - | (80 | ) | (35 | ) | (81 | ) | (196 | ) | ||||||
Impact of discounting | - | 2 | 18 | - | 20 | ||||||||||
Translation differences | 41 | - | 5 | (4 | ) | 42 | |||||||||
Unrealized gains/losses | - | - | - | 12 | 12 | ||||||||||
Actuarial gains and losses on defined-benefit plans(2) | 70 | - | - | - | 70 | ||||||||||
Balance at June 30, 2009 | 4,087 | 919 | 3,428 | 224 | 8,658 |
(1) | This line includes in particular transfers between current and non-current provisions. |
(2) | See Note B.10.1. |
(3) | See Note B.14. |
(4) | These reversals mainly relate to settlements of disputes during the period where the outcome was more favorable than originally expected. |
B.10.1. | Provisions for pensions and other long-term benefits |
Sanofi-aventis applies the option allowed by the amendment to IAS 19, under which all actuarial gains and losses under defined-benefit plans are recognized in the balance sheet with the matching entry recorded as a component of equity. Under this method, sanofi-aventis reviews the relevant assumptions (in particular discount rates and the fair value of plan assets) at each balance sheet date.
For disclosures about the sensitivity of pension and other long-term employee benefit obligations, and the assumptions used as of December 31, 2008, refer to Note D.18.1. to the consolidated financial statements for the year ended December 31, 2008.
As of June 30, 2009, the principal assumptions used for the euro zone, the United States and the United Kingdom were reviewed to take into account changes during the six-month period.
Actuarial gains and losses on pensions and other post-employment benefits (pre-tax amounts) recognized with a matching entry in equity break down as follows:
(€ million) | 6 months to June 30, 2009 | 6 months to June 30, 2008 | 12 months to December 31, 2008 | ||||||
Actuarial gains/(losses) on plan assets | 67 | (507 | ) | (1,360 | ) | ||||
Actuarial gains/(losses) on benefit obligations | (137 | ) | 639 | 536 | |||||
Decrease/(increase) in provisions | (70 | ) | 132 | (824 | ) |
19
Table of Contents
B.11. | Net deferred tax position |
The net deferred tax position breaks down as follows:
(€ million) | June 30, 2009 | December 31, 2008 | ||||
Deferred tax on: | ||||||
n Consolidation adjustments (intragroup margin on inventory) | 866 | 845 | ||||
n Provision for pensions and other employee benefits | 1,091 | 1,070 | ||||
n Remeasurement of intangible assets(1) | (4,640 | ) | (4,805 | ) | ||
n Recognition of property, plant and equipment at fair value | (70 | ) | (65 | ) | ||
n Tax cost of distributions made from reserves | (679 | ) | (769 | ) | ||
n Stock options | 2 | 6 | ||||
n Tax losses available for carry-forward | 103 | 171 | ||||
n Other non deductible provisions and other items | 828 | 799 | ||||
Net deferred tax liability | (2,499 | ) | (2,748 | ) |
(1) | Mainly associated with the acquisition of Aventis in 2004. |
B.12. | Commitments |
The main collaboration agreements in the Pharmaceuticals segment signed during the first half of 2009 are described below:
On May 14, 2009, sanofi-aventis and Kyowa Hakko Kirin Co., Ltd announced the signature of a collaboration and licensing agreement under which sanofi-aventis obtained the worldwide rights to an anti-LIGHT fully human monoclonal antibody. This anti-LIGHT antibody is presently at preclinical stage, and is expected to be first in class in the treatment of ulcerative colitis and Crohn’s disease. Under the terms of the agreement, sanofi-aventis will have exclusive rights to develop the product worldwide, except in Japan and Asian countries where the two parties will co-develop the product. In addition, each party has an option to co-promote the product in the territory of the other party. Kyowa Hakko Kirin will receive an upfront payment plus milestone payments, the total amount of which could reach $315 million. Kyowa Hakko Kirin will also be entitled to receive royalties and milestone payments linked to sales performance.
On May 28, 2009, sanofi-aventis and Exelixis, Inc. announced a global license agreement for the XL147 and XL765 molecules, and an exclusive collaboration for the discovery of inhibitors of phosphoinositide-3 kinase (PI3K) for the management of malignant tumors. Under the terms of the agreements, sanofi-aventis will pay Exelixis an upfront cash payment plus development and regulatory milestone payments that could reach over $1 billion in aggregate for existing and future programs under the two agreements. In addition, Exelixis will be entitled to receive royalties on sales of marketed products and milestone payments linked to the sales performance of those products.
In June 2009, sanofi-aventis announced its intention to donate to the World Health Organization (WHO) up to 10% of its output of influenza vaccine, or 100 million doses, to help developing countries deal with the influenza pandemic. This donation is a response by sanofi-aventis to the 2009 influenza pandemic caused by the emergence of the new A(H1N1) influenza strain, and includes a previous commitment made by sanofi-aventis in 2008 in the context of the A(H5N1) pandemic threat.
20
Table of Contents
B.13. | Legal and arbitral proceedings |
Sanofi-aventis and its subsidiaries and affiliates may be involved in litigation, arbitration or other legal proceedings. These proceedings typically are related to product liability claims, proceedings relating to intellectual property rights (particularly claims by generic product manufacturers seeking to limit the patent protection of sanofi-aventis products), compliance and trade practices, and claims under warranties or indemnification arrangements relating to business divestitures.
The matters discussed below constitute the most significant developments since publication of the disclosures concerning legal proceedings in the Company’s financial statements for the year ended December 31, 2008.
a) Products
n | Sanofi Pasteur Hepatitis B Vaccine Litigation |
On July 9, 2009, theCour de Cassation (the French Supreme Court) upheld a decision of the Court of Appeal of Lyon sentencing Sanofi Pasteur MSD SNC to pay damages of€120,000 to a plaintiff whose multiple sclerosis syndrome appeared shortly after her vaccination against Hepatitis B.
n | Sanofi Pasteur Inc. Thimerosal Litigation |
On February 12, 2009, the U.S. Court of Federal Claims announced decisions in the first three test cases which were the subject of hearings completed in 2007. In each decision it was held that the petitioners failed to establish that their claimed injuries were caused in any way by thimerosal-containing vaccines and the MMR vaccine, and no compensation was awarded to any of them under the National Vaccine Injury Compensation Program (VICP). The claimants have asked for review of the decisions by the Claims Court, and thereafter may seek appellate review in the U.S. Court of Appeals for the Federal Circuit.
n | Other Blood Products Litigation |
In 2009, the Group and other defendants started negotiating a final settlement with the plaintiffs in the U.S. The amount to be paid to the plaintiffs by the Group, if the settlement is finalized, will be fully covered by the existing reserves.
n | Plavix® Product litigation |
Claims filed with the U.S. District Court of New Jersey has been tolled pending U.S. Supreme Court decision in the caseWyeth vs. Levine. Following the decision in this case in March 2009, 23 amended complaints have now been filed reactivating these cases. The tolling agreement remains in effect for additional potential plaintiffs. Motion to dismiss partially the complaints were filed by the defendant.
b) Patents
n | Actonel® Patent Litigation |
In May 2009, the U.S. Court of Appeals for the Federal Circuit ruled in favor of Procter & Gamble and confirmed the validity of the ‘122 patent.
In March 2009, P&G and Roche brought suit in the U.S. District Court of Delaware in response to Apotex application to market a generic version of the 150 mg Actonel® tablets.
21
Table of Contents
n | Lovenox® Patent Litigation |
United States:On April 27, 2009, the U.S. Supreme Court denied sanofi-aventis’ petition for a writ of certiorari following a decision by a U.S. court (upheld on appeal in May 2008) to the effect that sanofi-aventis patent is unenforceable. In the first semester 2009, the U.S. District Court for the Central District of California dismissed Amphastar’s antitrust counterclaims in the Lovenox® patent litigation.
Europe:On April 2, 2009, the German Federal Patent Court revoked the German Patent (DE 41 21 115) on the active ingredient covering Clexane® following the oppositions filed by the companies Hexal, Ratiopharm, Chemi and Opocrin. Sanofi-aventis is not aware of any enoxaparin biosimilars having been submitted for the German market.
n | Ramipril® Patent Litigation |
In the patent infringement actions against Apotex and Novopharm, the Federal Court of Canada ruled on June 29, 2009 that the asserted patent was invalid.
n | Eloxatin® Patent Litigation |
In June 2009, the U.S. District Court for the District of New Jersey granted a summary judgment motion in favor of certain generic manufacturers. The District Court held that the generic oxaliplatin products that would be introduced by these generic challengers would not infringe the ‘874 patent. On June 30, 2009, judgment was entered by the District Court in favor of the generic challengers. Sanofi-aventis appealed the District Court’s decision, and in July 2009 the Appellate Court issued an order temporarily staying the district court’s judgment. The Appellate Court has declined to hear an emergency motion filed by the defendants to request that the Appellate Court clarify whether it intended the Stay Order to enjoin the FDA from granting final approval to the defendants or to operate as an injunction against the defendants marketing their versions of oxaliplatin during the pendency of the appeal. As of the date of this report, the FDA has not granted final approval to any of the generic manufacturers.
n | SoloSTAR® Patent Litigation |
On February 11, 2009 the German Patent and Trademark Office cancelled at the request of sanofi-aventis Novo Nordisk’s German Utility Model DE 200 23 819. The same Utility Model was already at issue in the infringement suit filed by Novo Nordisk regarding the SoloSTAR® disposable insulin pen that had been dismissed on May 20, 2008 by the Court of Mannheim.
c) Government Investigations, Competition Law and Regulatory Claims
n | Government Investigations – Pricing and Marketing Practices |
Private Label.In May 2009, sanofi-aventis U.S. entered into a civil settlement with the U.S. Department of Justice and the U.S. Attorney’s Office for the District of Massachusetts to resolve a Medicaid “best price” investigation involving one of its predecessor companies, Aventis Pharmaceuticals Inc. (API). The settlement ended an investigation into whether sales by API of certain products to a managed care organization for resale under that organization’s private label should have been included in the “best price” calculations used to compute Medicaid rebates for API products. The settlement called for payment of $95.5 million (plus interest) which includes payment of approximately $55.5 million to resolve all federal claims and the establishment of an “opt-in” fund of approximately $40 million for states desiring to resolve Medicaid rebate claims relating to the same conduct. The total amount of the settlement was fully covered by existing reserves.
22
Table of Contents
n | Civil Suits – Pricing and Marketing Practices |
AWP Public Entity Suits. In May 2009, sanofi-aventis U.S. entered into a group settlement (with six other pharmaceutical companies) to resolve claims for alleged AWP-based drug overcharges brought by the State of Alabama against Aventis Pharmaceuticals Inc. and Sanofi-Synthelabo, Inc., predecessor companies to sanofi-aventis. The settlement grows out of a lawsuit brought by the Office of the Attorney General prior to the formation of sanofi-aventis and covers all AWP-based claims against sanofi-aventis and all of its predecessors, subsidiaries and other corporate affiliates involving the State’s Medicaid program. The settlement with the State of Alabama involves confidential contributions by the companies, including sanofi-aventis, to a group settlement of $89 million.
§ 340B Suits.The §340B litigation, pending in a U.S. District Court in California, is between Plaintiffs County of Santa Clara and County of Santa Cruz and Defendants Aventis Pharmaceuticals Inc. and fourteen other pharmaceutical companies. Plaintiffs allege that the Defendants had overcharged Public Health Service entities for their pharmaceutical products in breach of pharmaceutical pricing agreements between Defendants and the Secretary of Health and Human Services. In May 2009, the Court denied Plaintiffs’ motion for class certification without prejudice.
d) Other litigation and arbitration
n | Zimulti® (rimonabant) class action |
In March 2009, hearings were held before the U.S. District Court for the Southern District of New York in respect of a motion to dismiss the putative securities class action law suit previously brought against sanofi-aventis. The plaintiffs in the suit purport to represent a class of persons who relied on allegedly misleading or inaccurate statements made by or on behalf of the Company regarding the drug candidate Zimulti® (rimonabant) prior to its failure to obtain FDA approval in 2007.
23
Table of Contents
B.14. | Restructuring costs |
Under IAS 37 (Provisions, Contingent Liabilities and Contingent Assets), restructuring provisions are recognized if the Group has a detailed, formal restructuring plan at the balance sheet date and has announced its intention to implement this plan to those affected by it.
The restructuring costs recognized in the first half of 2009 relate mainly to measures announced by sanofi-aventis in June 2009, intended to improve innovation by transforming Research & Development operations in France and to streamline the Group’s organizational structures by adapting central functions. These costs consist mainly of employee-related charges, arising from early retirement benefits and termination benefits under the voluntary redundancy plans announced.
They also reflect, though to a lesser extent, ongoing measures to adjust the French sales force plus the ongoing adaptation of industrial facilities in France.
B.15. | Financial income and expenses |
The main components of financial income and expenses are as follows:
(€ million) | 6 months to June 30, 2009 |
| 6 months to June 30, 2008 |
| 12 months to December 31, 2008 |
| |||
Cost of debt(1) | (145 | ) | (148 | ) | (315 | ) | |||
Interest income | 58 | 60 | 132 | ||||||
Cost of debt, net of cash and cash equivalents | (87 | ) | (88 | ) | (183 | ) | |||
Foreign exchange gains/(losses) (non-operating) | (24 | ) | 10 | (74 | ) | ||||
Unwinding of discount(2) | (20 | ) | (18 | ) | (37 | ) | |||
Net gains/(losses) on disposals of financial assets | - | 38 | 41 | ||||||
Impairment losses on financial assets, net of reversals | - | (5 | ) | (8 | ) | ||||
Other items | 17 | 13 | 29 | ||||||
Net financial income/(expenses) | (114 | ) | (50 | ) | (232 | ) | |||
comprising: Financial expenses | (151 | ) | (160 | ) | (335 | ) | |||
Financial income | 37 | 110 | 103 |
(1) | Of which income/expenses on interest rate derivatives used to hedge debt:€(1) million for the six months to June 30, 2009,€2 million for the six months to June 30, 2008 and€(2) million for the year ended December 31, 2008. |
(2) | Mainly environmental provisions. |
B.16. | Income tax expense |
The difference between the effective tax rate and the standard corporate income tax rate applicable in France is explained as follows:
(as a percentage) | 6 months to June 30, 2009 (1) |
| 6 months to June 30, 2008 (1) |
| 12 months to December 31, 2008 |
| |||
Standard tax rate applicable in France | 34 | 34 | 34 | ||||||
Impact of reduced-rate income tax on royalties in France | (8 | ) | (8 | ) | (12 | ) | |||
Impact of tax borne by BMS for the territory managed by sanofi-aventis | (3 | ) | (3 | ) | (4 | ) | |||
Other | 2 | 3 | (2 | ) | |||||
Effective tax rate | 25 | 26 | 16 |
(1) | Rate calculated on the basis of the estimated full-year effective tax rate (see Note A.2.). |
24
Table of Contents
B.17. | Segment information |
In compliance with IFRS 8 (Operating Segments), the segment information reported by sanofi-aventis is prepared on the basis of internal management data provided to the Chief Executive Officer, the principal operating decision-maker within the Group. The performance of operating segments is monitored individually for internal reporting purposes, using identical performance measures. The published data derived from the Group’s internal reporting systems are prepared in accordance with IFRSs as applied by sanofi-aventis in the preparation of its consolidated financial statements.
The Group has reviewed its operating segments in 2009, and reports a Pharmaceuticals segment and a Human Vaccines (Vaccines) segment. All the Group’s other activities are combined in a separate segment, “Other”. These segments reflect the internal organizational structure, and the operating segments the Group evaluates performance and allocates resources.
The Pharmaceuticals segment includes all activities involving research, development, production and sale of drugs. The pharmaceuticals portfolio includes flagship products from the six major therapeutic fields, plus a broad range of prescription drugs, over-the-counter (OTC) drugs and generic drugs. This segment also includes all associates and joint ventures involved in activities related to pharmaceuticals, in particular the entities majority owned by BMS.
The Human Vaccines segment is wholly dedicated to vaccines and includes research, development, production and sale of vaccines. This segment also includes the Sanofi Pasteur MSD joint venture.
The “Other” segment consists of all those activities that do not constitute reportable segments under IFRS 8, and includes in particular the Group’s interest in Yves Rocher, the Animal Health business (Merial), and the effect of retained obligations of divested activities.
Inter-segment transactions are not material.
Segment profit
The measure of segment profit used by sanofi-aventis is “Business operating income”. This measure, adopted in compliance with IFRS 8, is also the measure used internally to evaluate the performance of operating managers and to allocate resources.
“Business operating income” is equivalent to “Operating income before restructuring, impairment of property, plant and equipment and intangibles, gains and losses on disposals, and litigation” as defined in note B.20. to the consolidated financial statements for the year ended December 31, 2008, modified as follows:
n | amortization of intangible assets is reversed out; |
n | the share of profits and losses of associates and net income attributable to minority interests are added; |
n | other impacts associated with acquisitions (primarily, the workdown of acquired inventories remeasured at fair value at the acquisition date, and the impacts of purchase accounting on associates) are reversed out. |
25
Table of Contents
The table below shows business operating income and business net income by segment:
6 months to June 30, 2009 | ||||||||||||
(€ million) | Pharmaceuticals | Vaccines | Other | Total | ||||||||
Net sales | 13,206 | 1,339 | - | 14,545 | ||||||||
Other revenues | 688 | 15 | - | 703 | ||||||||
Cost of sales | (3,104 | ) | (496 | ) | - | (3,600 | ) | |||||
Research and development expenses | (2,039 | ) | (221 | ) | - | (2,260 | ) | |||||
Selling and general expenses | (3,351 | ) | (275 | ) | (1 | ) | (3,627 | ) | ||||
Other operating income and expenses | 183 | (2 | ) | 99 | 280 | |||||||
Share of profit/loss of associates | 389 | 14 | 136 | 539 | ||||||||
Net income attributable to minority interests | (232 | ) | - | - | (232 | ) | ||||||
Business operating income | 5,740 | 374 | 234 | 6,348 | ||||||||
Financial income and expenses | (114 | ) | ||||||||||
Income tax expense | (1,718 | ) | ||||||||||
Business net income | 4,516 |
6 months to June 30, 2008 | |||||||||||
(€ million) | Pharmaceuticals | Vaccines | Other | Total | |||||||
Net sales | 12,421 | 1,205 | - | 13,626 | |||||||
Other revenues | 552 | 18 | - | 570 | |||||||
Cost of sales | (3,152 | ) | (463 | ) | - | (3,615 | ) | ||||
Research and development expenses | (1,993 | ) | (187 | ) | - | (2,180 | ) | ||||
Selling and general expenses | (3,334 | ) | (243 | ) | 5 | (3,572 | ) | ||||
Other operating income and expenses | 126 | (1 | ) | 53 | 178 | ||||||
Share of profit/loss of associates | 321 | 5 | 125 | 451 | |||||||
Net income attributable to minority interests | (220 | ) | - | - | (220 | ) | |||||
Business operating income | 4,721 | 334 | 183 | 5,238 | |||||||
Financial income and expenses | (88 | ) | |||||||||
Income tax expense | (1,456 | ) | |||||||||
Business net income | 3,694 |
12 months to December 31, 2008 | ||||||||||||
(€ million) | Pharmaceuticals | Vaccines | Other | Total | ||||||||
Net Sales | 24,707 | 2,861 | - | 27,568 | ||||||||
Other revenues | 1,208 | 41 | - | 1,249 | ||||||||
Cost of sales | (6,231 | ) | (1,104 | ) | - | (7,335 | ) | |||||
Research and development expenses | (4,150 | ) | (425 | ) | - | (4,575 | ) | |||||
Selling and general expenses | (6,662 | ) | (520 | ) | 14 | (7,168 | ) | |||||
Other operating income and expenses | 297 | 1 | (95 | ) | 203 | |||||||
Share of profit/loss of associates | 671 | 28 | 191 | 890 | ||||||||
Net income attributable to minority interests | (441 | ) | - | - | (441 | ) | ||||||
Business operating income | 9,399 | 882 | 110 | 10,391 | ||||||||
Financial income and expenses | (270 | ) | ||||||||||
Income tax expense | (2,807 | ) | ||||||||||
Business net income | 7,314 |
“Business net income” is determined by deducting net financial expense and the relevant income tax expense from “Business operating income”.
“Business net income” is equivalent to “Net income attributable to equity holders of the Company” before amortization and impairment of intangible assets, other impacts arising from the consequences of acquisitions, major restructuring, significant gains and losses on disposals fo non-current assets, and costs or provisions associated with major litigation.
26
Table of Contents
A reconciliation of “Business net income” to “Net income attributable to equity holders of the Company” is provided below:
(€ million) | 6 months to 2009 | 6 months to 2008 | 12 months to 2008 | ||||||
Business net income | 4,516 | 3,694 | 7,314 | ||||||
Expenses arising on the workdown of acquired inventories(2) | (19 | ) | - | (2 | ) | ||||
Amortization of intangible assets | (1,805 | ) | (1,709 | ) | (3,483 | ) | |||
Impairment of intangible assets | (28 | ) | (126 | ) | (1,554 | ) | |||
Restructuring costs | (907 | ) | (207 | ) | (585 | ) | |||
Other items(1) | - | 38 | 335 | ||||||
Tax effect on the items listed above | 923 | 685 | 1,904 | ||||||
Expenses arising from impact of acquisitions on associates(3) | (43 | ) | (40 | ) | (78 | ) | |||
Net income attributable to equity holders of the Company | 2,637 | 2,335 | 3,851 | ||||||
(1) Other items comprise: |
| ||||||||
Gain on sale of Millennium shares | - | 38 | 38 | ||||||
Reversal of provisions for major litigation | - | - | 76 | ||||||
Net charge to/(reversal of) provisions for tax exposures | - | - | 221 |
(2) | Expenses arising from the impacts of acquisitions on inventories: workdown of inventories remeasured at fair value at the acquisition date. |
(3) | Expenses arising from the impacts of acquisitions on associates: workdown of acquired inventories, amortization and impairment of intangible assets, and impairment of goodwill. |
Other segment information
The tables below show information by operating segment on the carrying amount of investments in associates and joint ventures accounted for by the equity method, and on acquisitions of property, plant and equipment and intangible assets.
The principal entities accounted for by the equity method allocated to each operating segment are, for the Pharmaceuticals segment, the entities majority owned by BMS (see Note C.1. to the consolidated financial statements for the year ended December 31, 2008), Handock, Infraserv, and Zentiva (for 2008 only); for the Vaccines segment, Sanofi Pasteur MSD; and for the “Other” segment, Merial and Yves Rocher.
Acquisitions of property, plant and equipment and intangible assets represent acquisitions paid for during the period, and exclude assets acquired under finance leases.
June 30, 2009 | |||||||||
(€ million) | Pharmaceuticals | Vaccines | Other | Total | |||||
Investments in associates and joint ventures accounted for by the equity method | 397 | 396 | 1,349 | 2,142 | |||||
Acquisitions of property, plant and equipment | 478 | 221 | - | 699 | |||||
Acquisitions of intangible assets | 119 | 6 | - | 125 | |||||
June 30, 2008 | |||||||||
(€ million) | Pharmaceuticals | Vaccines | Other | Total | |||||
Investments in associates and joint ventures accounted for by the equity method | 713 | (1) | 443 | 1,285 | 2,441 | ||||
Acquisitions of property, plant and equipment | 426 | 172 | - | 598 | |||||
Acquisitions of intangible assets | 186 | 12 | - | 198 |
(1) | Includes Zentiva as of this date. |
December 31, 2008 | |||||||||
(€ million) | Pharmaceuticals | Vaccines | Other | Total | |||||
Investments in associates and joint ventures accounted for by the equity method | 706 | (1) | 431 | 1,322 | 2,459 | ||||
Acquisitions of property, plant and equipment | 967 | 375 | - | 1,342 | |||||
Acquisitions of intangible assets | 225 | 39 | - | 264 |
(1) | Includes Zentiva as of this date. |
27
Table of Contents
Information by geographic region
The geographical information on net sales provided below is based on the geographic location of the customer.
In accordance with IFRS 8, the non-current assets reported below exclude financial instruments, deferred tax assets, and pre-funded pension obligations.
June 30, 2009 | |||||||||
(€ million) | Total | Europe | United States | Other Countries | |||||
Net sales | 14,545 | 6,027 | (1) | 4,733 | 3,785 | ||||
Non-current assets: | |||||||||
- property, plant and equipment | 7,559 | 5,660 | 1,051 | 848 | |||||
- intangible assets | 15,130 | 4,925 | 6,923 | 3,282 | |||||
- goodwill | 29,471 | 13,386 | 11,033 | 5,052 |
(1) | of which France:€1,655 million. |
June 30, 2008 | |||||||||
(€ million) | Total | Europe | United States | Other Countries | |||||
Net sales | 13,626 | 6,132 | (1) | 4,149 | 3,345 | ||||
Non current assets: | |||||||||
- property, plant and equipment | 6,548 | 5,008 | 840 | 700 | |||||
- intangible assets | 16,832 | 5,684 | 7,425 | 3,723 | |||||
- goodwill | 26,439 | 12,430 | 9,686 | 4,323 |
(1) | of which France:€1,780 million. |
December 31, 2008 | |||||||||
(€ million) | Total | Europe | United States | Other Countries | |||||
Net sales | 27,568 | 12,096 | (1) | 8,609 | 6,863 | ||||
Non current assets: | |||||||||
- property, plant and equipment | 6,961 | 5,174 | 1,042 | 745 | |||||
- intangible assets | 15,260 | 4,573 | 7,225 | 3,462 | |||||
- goodwill | 28,163 | 12,414 | 11,190 | 4,559 |
(1) | of which France:€3,447 million. |
As described in Note D.5. to the annual consolidated financial statements, France is not a cash-generating unit. Consequently, information about non-current assets is provided for Europe.
28
Table of Contents
Net sales by product
Net sales of sanofi-aventis comprise net sales generated by the Pharmaceuticals segment and net sales generated by the Vaccines segment. The table below shows net sales of the seven flagship products and of the other major products of the Pharmaceuticals segment:
(€ million) | 6 months to 2009 | 6 months to 2008 | 12 months to December 31, 2008 | |||
Lovenox® | 1,542 | 1,354 | 2,738 | |||
Lantus® | 1,539 | 1,133 | 2,450 | |||
Plavix® | 1,389 | 1,323 | 2,609 | |||
Taxotere® | 1,118 | 987 | 2,033 | |||
Eloxatine® | 697 | 666 | 1,345 | |||
Aprovel®/ CoAprovel® | 620 | 600 | 1,202 | |||
Apidra® | 66 | 43 | 98 | |||
Flagship Products | 6,971 | 6,106 | 12,475 | |||
Stilnox®/ Ambien®/ Myslee® | 447 | 398 | 822 | |||
Allegra® | 438 | 364 | 666 | |||
Copaxone® | 231 | 420 | 622 | |||
Tritace® | 221 | 263 | 491 | |||
Amaryl® | 207 | 183 | 379 | |||
Depakine® | 165 | 159 | 322 | |||
Xatral® | 153 | 162 | 319 | |||
Actonel® | 137 | 162 | 330 | |||
Nasacort® | 120 | 130 | 240 | |||
Other products | 3,099 | 3,315 | 6,484 | |||
OTC | 640 | 587 | 1,203 | |||
Generics | 377 | 172 | 354 | |||
Total Pharmaceuticals | 13,206 | 12,421 | 24,707 | |||
Net sales of the principal vaccine types sold by the Vaccines segment are shown below:
| ||||||
(€ million) | 6 months to June 30, 2009 | 6 months to June 30, 2008 | 12 months to December 31, 2008 | |||
Pediatric and Polio Vaccines | 495 | 355 | 768 | |||
Meningitis/Pneumonia Vaccines | 259 | 225 | 472 | |||
Adult & Adolescent Booster Vaccines | 202 | 200 | 399 | |||
Travel & Other Endemics Vaccines | 165 | 157 | 309 | |||
Influenza Vaccines (1) | 120 | 200 | 736 | |||
Other Vaccines | 98 | 68 | 177 | |||
Total Vaccines | 1,339 | 1,205 | 2,861 |
(1) | Seasonal and pandemic influenza vaccines. |
Split of net sales
In the first half of 2009, the Group’s three largest customers accounted for approximately 8.3%, 7.9% and 7.5% of gross sales, respectively.
29
Table of Contents
C. Events subsequent to the balance sheet date (June 30, 2009)
On July 27, 2009, sanofi-aventis announced the acquisition of Merieux Alliance’s French subsidiary ShanH, which owns a majority stake in vaccine company Shantha Biotechnics (Shantha). Shantha, based in Hyderabad (India), develops, manufactures and markets several important vaccines. The transaction values Shantha at€550 million. For the current fiscal year, sales of Shantha are expected to be around $90 miilion.
30