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2009 - IR - Emerging Markets


Emerging Markets IR Seminar 2009

Emerging Markets IR Seminar 2009

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  • 1. Emerging MarketsIR SeminarJuly 2, 2009 1
  • 2. Forward Looking StatementsThis presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Actof 1995, as amended. Forward-looking statements are statements that are not historical facts. These statementsinclude financial and product development projections and estimates and their underlying assumptions,statements regarding plans, objectives, intentions and expectations with respect to future events, operations,products and services, and statements regarding future performance. Forward-looking statements are generallyidentified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “plans” and similarexpressions. Although sanofi-aventis’ management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements aresubject to various risks and uncertainties, many of which are difficult to predict and generally beyond thecontrol of sanofi-aventis, that could cause actual results and developments to differ materially from thoseexpressed in, or implied or projected by, the forward-looking information and statements. These risks anduncertainties include among other things, the uncertainties inherent in research and development, future clinicaldata and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or the EMEA,regarding whether and when to approve any drug, device or biological application that may be filed for any suchproduct candidates as well as their decisions regarding labelling and other matters that could affect theavailability or commercial potential of such products candidates, the absence of guarantee that the productscandidates if approved will be commercially successful, the future approval and commercial success oftherapeutic alternatives as well as those discussed or identified in the public filings with the SEC and the AMFmade by sanofi-aventis, including those listed under “Risk Factors” and “Cautionary Statement RegardingForward-Looking Statements” in sanofi-aventis’ annual report on Form 20-F for the year ended December 31,2008.Other than as required by applicable law, sanofi-aventis does not undertake any obligation to update or reviseany forward-looking information or statements. 2
  • 3. Agenda Emerging Markets Overview Hanspeter Spek, Executive VP, Pharmaceutical Operations Asia Pacific Overview Olivier Charmeil, Senior VP, Pharmaceutical Operations, Asia Pacific & Japan Focus on China Thomas Kelly, Vice President, Greater China Focus on Russia Patrick Aghanian, General Manager, Russia Intercontinental Overview Antoine Ortoli, Senior VP, Pharmaceutical Operations, Intercontinental Focus on Brazil Heraldo Marchezini, General Manager, Brazil Conclusion Chris Viehbacher, Chief Executive Officer Q&A Session 3
  • 4. Emerging Markets OverviewHanspeter SpekExecutive VP, Pharmaceutical Operations 4
  • 5. A Strong and Experienced Management TeamPresenting Today Antoine Ortoli Olivier Charmeil Senior Vice President, Senior Vice President, Intercontinental Asia-Pacific & Japan • VP – Australasia, Middle East, • Sr. VP – Business Management & Eastern Europe & Support, Pharmaceutical Ops • VP Latin America • GM France • GM Portugal • VP, Int’l Operations • CFO, Pharmaceutical division • Head of Finance, Asia Region • Background: Finance • Background: Bus. Development Thomas Kelly Heraldo Marchezini Vice President, Greater China General Manager, Brazil • GM, China • GM, Poland and Baltics • GM, Shanghai Schering Plough • Director & Sales Manager for • GM, Novo Nordisk Biotech, Beijing Hospital and Oncology, Brazil • Background: Marketing & Sales - China • Background: Marketing & Sales Patrick Aghanian General Manager, Russia • General Director, Russia - Sandoz • GM / Country President of Pharma Division, Russia - Novartis • GM for Russia and CIS, Consumer Healthcare Division - GSK • GM Consumer Healthcare Division, Ukraine - GSK • Background: Marketing & Sales 5
  • 6. Emerging Markets(1) Represent a StrategicOpportunity for Sustainable Growth Attractive market dynamics World population(2) RoW 43% Fast growing economies with strong GDP growth Japan Demographic changes 2% United States Expansion of government 5% healthcare coverage EU 5 5% Increasing purchasing power Brazil 3% of growing middle class Russia India 2% 18% Complex environment Mexico 2% Turkey Heterogeneous healthcare systems 1% China 19% Differences in local regulatory environment and market access China, India, Brazil, Russia, Investment in local infrastructure Mexico and Turkey represent 45% Improving IP environment of world population, but only ~10% of world Rx drugs sales(1) World less North America (USA, Canada), Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark), Japan and Australia/New Zealand(2) UN World population database and IMS 6
  • 7. Emerging Markets are a Key Growth DriverToday and… Tomorrow Growth contribution of Emerging Contribution to Pharma market growth (%)(1) Markets is projected to be around 70% in 2013(1) 100% Emerging Markets will outgrow 90% Emerging Markets per-capita GDP 80% Western Europe Growth in Emerging Markets will 70% more than offset the diminishing 60% U.S. growth contribution 50% North America Emerging Markets are expected to 40% reach >$500bn by 2020, up from 30% Japan less than $200bn in 2008(2) 20% Australia-NZ 10% 0% 2005 2008 2013e(1) IMS MIDAS and IMS Market Prognosis(2) Adapted from IMS, TNS Healthcare, UBS, and Internal Estimates 7
  • 8. Sanofi-aventis has a Well-Established LocalPresence in Emerging Markets Present in over 100 countries Close to 30,000 employees Growing field force of >15,000 sales representatives Local manufacturing capabilities R&D Pharma R&D Vaccines and clinical development units Production Pharma 40 production facilities Production Vaccines Distribution Pharma 4 R&D sites 2008 Headcount Split in Emerging Markets Broad product portfolio in Others Africa & all relevant market segments Middle East adapted to local needs By Region Asia Pacific Latin America Eastern Europe Management R&D & Support By Function Production Sales Force 0 5 000 10 000 15 000 20 000 25 000 30 000 8
  • 9. Sanofi-aventis has the Leading Position inEmerging Markets Leading company in Emerging Market Share in Emerging Markets(1) Markets(1) Overall market share of 6% 6% Commanding positions #1 in Eastern Europe(2) with a market share of 7.8% #1 in Latin America with a market share of 7.7% sanofi-aventis Pfizer+Wyeth #1 in Africa/Middle East with Merck + SP a market share of 9.1% Novartis GSK #3 in Asia with a market share of 2.9% Emerging markets(1) IMS MIDAS MAT Q1 2009, sanofi-aventis including Zentiva, Medley and Kendrick(2) Eastern Europe perimeter includes Russia and Turkey 9
  • 10. Sanofi-aventis has Consistently DeliveredDouble-Digit Growth in Emerging Markets 2008 sales in Emerging Markets Historical Sales in Emerging Markets - were €6,540m, +10.2% (24% of Regional Breakdown (€m) consolidated sales) 10000 A leadership position recently 9000 reinforced through acquisitions Growth(1) 8000 > €900m of additional sales 7000 2008 Pro forma total sales in 6,280 6,540 Net sales in €m Emerging Markets of €7,456m 6000 5,820 Eastern Europe 5,037 Top positions in many markets(4) 5000 Latin America #1 in Brazil #1 in Turkey 4000 #2 in Russia #3 in South Africa 3000 Asia Pacific(2) #3 in Greater China(5) #1 in Algeria #1 in Mexico #1 in Morroco 2000 Africa & Middle #3 in South Korea East 1000 (3) Others 0 2005 2006 2007 2008(1) Growth is on a comparable basis (3) Notably including Turkey and Puerto Rico (5) Includes PRC, Taiwan and Hong Kong(2) Excluding Japan, Australia and New Zealand (4) IMS, based on pro forma 2008 (6) Includes acquisitions of Zentiva, Medley and Kendrick 10
  • 11. Sanofi-aventis serves Emerging Marketswith a Broad and Diversified Offering 2008 Emerging Markets Sales as a % of Total Sales Rx Drugs Vaccines(1) OTC Generics (3) pro forma pro forma(4) 22.1% 23.3% 53.9% 72.6% Total Sales Total Sales(2) Total Sales Total Sales €23,157m €2,861m €1,311m €1,154m Emerging Emerging Emerging Emerging Markets Sales Markets Sales Markets Sales Markets Sales €5,098m €814m €706m €838m Well-positioned to capture both innovation- and volume-driven growth in markets characterized by out-of-pocket spending and income disparity(1) Vaccines proportion based on worldwide presence including Sanofi Pasteur consolidated sales and (3) Including 15% of Zentiva 50% of Sanofi Pasteur MSD joint venture non-consolidated sales (€1,272m) in 2008 (4) Including Medley, Kendrick and 85% of Zentiva(2) Consolidated sales, which excludes sales by SPMSD in Europe 11
  • 12. Leading Brands in Emerging MarketsDo Not Necessarily Match with Worldwide Top 7 Top 7 Products in Emerging Markets in 2008 Top 7 Top 7 Top 7 Top 7 Top 7 Top 7 Worldwide Brazil Russia India China Mexico48% of sales 39% of sales 50% of sales 39% of sales 67% of sales 37% of sales Lovenox® Dorflex® Essentiale® Cardace® Plavix® Lovenox® Plavix® Lovenox® No Spa® Combiflam® Aprovel® Plavix® Lantus® Lantus® Lantus® Lovenox® Eloxatin® Taxotere® Taxotere® Puran® Plavix® Amaryl® Essentiale® Lantus® Eloxatin® Dermacyd® Magné B6® Lantus® Taxotere® Novalgin® Aprovel® Profenid® Lozap® Avil® Lantus® Aprovel® Ambien® Novalgina® Depakine® Allegra® Depakine® Histiacil® A well-adapted product portfolio with strong local brands including OTC and mature or off-patent Rx drugs 12
  • 13. Affordability of Medicines is Key to SuccessfulMarket Access in Emerging Markets Pricing strategies and product % Pharmaceutical Spend by Payer(1) offerings adapted to each market‘s specificities and dynamics 100% 90% Tiered Healthcare system 80% Collective versus individual 70% healthcare spend 60% Level of regionalization 50% 40% Out-of-pocket variability 30% Therapeutic areas 20% 10% Product lifecycles 0% Volume based business models ia il ina sia o az xic Ind s Ch Br Ru Me Change of mix in overall portfolio from branded Rx to generics % Public % Other private % Out of pocket Public health needs Ability and willingness-to-pay(1) IMS – The opportunity in emerging markets, May 2009 13
  • 14. Sanofi-aventis Broadens its Offering ofLow-Cost Medicines through Acquisitions Successful acquisitions of Pro forma 2008 Generics Sales Zentiva, Medley and Kendrick in Emerging Markets(1) (€m) Regional platforms with competitive development and 179 production capabilities Large portfolio of affordable and quality medicines Distribution synergies 838 626 #8 generic player globally(2) with a targeted regional approach #1 in Central & Eastern Europe #1 in Latin America (3) Total(1) Internal sources & company reports on a pro forma 2008 basis(2) IMS MIDAS FY 2008 IMS Health except GERS (France), Cegedim (Romania), Business Credits (Ukraine)(3) Excluding OTC sales 14
  • 15. Strong Brands Drive Ranking as Top OTCCompany in Emerging Markets Ranked #4 OTC player in Emerging OTC Sales in Emerging Markets(1) Markets 1,00 €bn Top 5 flagship brands account for 33% Relevance of OTC brands in Emerging 0,75 Markets linked to Growing awareness of health and well- being 0,50 High level of out-of-pocket healthcare expenditure sanofi-aventis 0,25 Per-capita OTC consumption in Emerging Novartis Markets still low and therefore significant Bayer GSK J&J upside remains 0,00 NO-SPA®(1) Nicholas Hall, 2008 15
  • 16. Leader in Vaccines in Emerging Markets Vaccines are important gateway Vaccines Sales in Emerging Markets(2) products in Emerging Markets Rest of Emerging Markets Leadership in Emerging Markets(1) (€m) BRIC-M + 11% CAGR #1 in Brazil, India, #1 International 900 €814m Mexico, Turkey company in Russia 800 and South Africa and China 700 The largest vaccine portfolio 600 Well-adapted current offering 500 New pipeline projects (Hexaxim™, 400 Imojev™, Dengue, Rabies mAb) 300 Strong relationships with local 200 health authorities and NGOs 100 Local production and distribution 0 partnerships 2006 2007 2008 Double-digit growth to continue(1) Based on reported FY2008 results and sanofi-aventis internal estimates(2) Growth is on a comparable basis 16
  • 17. Our Presentation Focuses on Three of theFastest Growing Emerging Markets 2008 Rank(1) 2013 Rank(1) China United States United States Japan Japan Ageing population, expansion of France China wealthy middle class and a better- Germany Germany funded healthcare system will France China continue to drive market growth of Italy Spain medicines and vaccines United Kingdom Italy Brazil Spain Brazil Canada Canada Large self-pay market is a major Brazil United Kingdom opportunity given our portfolio of Mexico Venezuela mature Rx brands, branded Turkey Turkey generics and OTC India India Russia South Korea Mexico Australia South Korea Growing average income and Greece Russia increasing government healthcare Poland Greece funding will support greater drug Netherlands Poland consumption Belgium Australia Russia Netherlands(1) IMS – The opportunity in emerging markets, May 2009 17
  • 18. Asia Pacific OverviewOlivier CharmeilSenior VP, Pharmaceutical Operations, Asia Pacific & Japan 18
  • 19. Huge Potential in Asia Pacific givenSocioeconomic and Demographic Trends The pharma market is estimated Population Healthcare Healthcare spending spending at €43bn(1) m per capita(2) % of GDP(3) Strong growth(1) in Greater GREATER CHINA 1,360m $350 4.5% China and Russia >20% INDIA 1,150m $100 4.9% INDONESIA 229m $100 2.2% PAKISTAN 161m $50 2.0% BANGLADESH 156m $50 3.1% RUSSIA 143m $650 5.3% PHILIPPINES 86m $200 3.3% VIETNAM 86m $250 6.6% THAILAND 63m $350 3.5% KOREA 48m $1,500 6.5% MALAYSIA - SGP 30m $450 4.0%(1) IMS MAT Q1-09(2) WHO – Per capita total healthcare expenditure ($) in 2006(3) WHO – Total heathcare expenditure as % of GDP in 2006 19
  • 20. Sanofi-aventis is Well Positioned to SeizeOpportunities in Emerging Markets in Asia RUSSIA GREATER CHINA Sales Growth Rank Sales Growth Rank €380m +34% 2 €540m +27% 3 INDIA SOUTH-EAST ASIA 14 countries Sales Growth Rank Sales Growth Rank 10,300 employees €195m +7% 11 €917m +8% 3 10 manufacturing plants 11 clinical research unitsSource: Internal data for 2008 Sales and Growth - IMS MAT Q1-09 for Rank 20
  • 21. Well-Balanced Portfolio with Rx, OTC & Gx and Core & Local Brands Main Segments 2008 sanofi-aventis pro forma sales split (1) (1) Main Products 100% CHINA Vaccines 90% Generics Plavix® Aprovel® Lantus® Taxotere® 80% OTC 70% RUSSIA 60% Plavix® No Spa® Essentiale® Lozap® 50% 40% Rx Ethical INDIA 30% Tritace® Amaryl® Lovenox® 20% 10% SOUTH EAST 0% ASIA Plavix® Aprovel® Lantus® Flagyl® Lactacyd®Source: Based on (Asia Pacific + Russia) Pro Forma 2008 Sales including Zentiva in Russia 21
  • 22. Asia Pacific is Key Source of Growth andInnovation in a Complex Environment Value of Asia Pacific Challenges Highly heterogeneous Rapid market growth HC systems, income, regions €60bn additional sales in 2008-13 Protectionism 50% of worldwide growth (ex Japan) Aggressive low-cost local competitors Key contributor to the "next billion consumers" Importance of non-Rx medicine Growing middle class Gx, OTC / OTx, Traditional Chinese Medicine (TCM) China, India, Indonesia Constant need for flexibility Value as platform for low-cost / Local talent management high quality services & products (development & retention) 22
  • 23. Fragmented & Heterogeneous Markets in Asia Fragmentation Strong heterogeneity of the market(1) of healthcare systems(2) TOP 10 players Reimbursement World: 47% Payor influence Asia Pacific & Japan: 33% Korea China: 15% China Market share of #1 Taiwan Dispensing Profit Outcome driven World: 8% margin influence medication Thailand Asia Pacific & Japan: 5% Singapore Russia Hong Kong China: 2% Malaysia India Size of a blockbuster Indonesia Philippines World: €1bn China: €100m Self pay patient influence India: €25m AffordabilitySource: (1) IMS / (2) internal analysis 23
  • 24. 50% of Worldwide Pharma Market Growth willCome from Asian Emerging Markets Growth Contributors 2008-2013 Main Countries 100% 50% of incremental market sales Korea Other Asia Pac coming from Asian Emerging 90% India Countries 80% Russia 1/3 coming from China 50% 70% China 60% China in 2013 50% €50bn #3 in 2013 (#4 in 2008) 40% 30% Russia in 2013 20% €16bn 10% Same size as the UK 0% 2008-2013Source: IMS Prognosis 24
  • 25. Our Objective is to Maximize the “Value” Market& Participate in the Growth of the “Volume” Market Aspirations Strategic levers Top 3 in Rx, leader in diabetes Distance from the core Adjacent Rx/Vx Pharma Strong leader e.g., New Core business in Vaccines Therapeutic Areas Affordability 4 Significant player in affordable care 1 3 OTC/OTx Significant player in self medication 2 Generics Shaping force in market evolution 25
  • 26. India is a Complex Marketplace Key elements Market evolution Access CAGR 2005-08 65% of population lacking access to essential medicines Tier II €5.1bn +15% Rest of Tier I “Out of pocket” market Metropolitan €4.6bn 85% of health expenditures €4.0bn +17% are private 2.1 €3.5bn 1.9 Prices 1.6 Amongst the lowest in the 1.3 world 1.6 +11% Products 1.5 1.3 Innovation 1.2 Competitive landscape 1.2 1.4 +15% 1.0 1.1 Local companies 2005 2006 2007 2008Source: IMS 26
  • 27. Tackling Value & Volume Strategy in India Market Opportunities & Challenges Sanofi-aventis in India Income growth to drive affordability, health Mumbai, 2,000 people awareness and treatment intent Pharma. Operations €141m / 11th rank Market to expand from cities to tier II Delhi, 200 people Chronic disease and life style disorders will Vaccines increase €55m / 40% MS / 1st rank Growing medical infrastructure, insurance and Manufacturing Mumbai, Ankleshwar, 500 people Health Care investment to drive hospital based treatments Brands currently under price control Development center Goa, 150 people Pricing, implementation of intellectual property rights and regulatory data protection remain CRU Mumbai, 20 people issues Our strategic objectives in India Drive growth in traditional stronghold in Tier I Expand growth avenues in Tier II through customized model Enter OTC segment through umbrella strategy with current classical brands / acquisition Attain Diabetes leadership 27
  • 28. Diabetes Epidemic is Spreading to Asia (1)Asia(1) comprises 47% of diabetes patients China and India having more diabetes patients than US/EU globally and growing at a rapid rate Prevalence rate among 274m Prevalent population (m) 2003-2007 CAGR (%) 20+ population (%) 35% ROW China 51 5.3% 5% India 44 6.4% 4% 11% EU 7% US SEA 22 7.4% 3% 47% Asia Japan 9 8.8% 1% Korea 3 7.9% 7% 2008 Diabetes population US EU AP US EU EU US AP 18 32 6% 8% 8% 2% 5% 5%(1) China, India, Japan, Korea and SEAs (Indonesia, Thailand, Philippines, Vietnam)Source: International diabetes Federation, WHO, Sanofi-Aventis internal information 28
  • 29. Asian Diabetes Market Reached ~€3bn in 2008and is Expected to Continue Growing Rapidly Market size and dynamics Sanofi-aventis Diabetes (OAD +Insulin) StrategyMarket Size Increase the diabetes diagnosis rate(€m) Align diabetes treatment rate in Asia to the western level standard 10 000 €8bn Market shaping in implementing OAD international guidelines to improve Insulin CAGR 08-16 diabetes care +14% Develop insulinization rate to the level of Western world (e.g. 37% 5 000 in Germany, 28% in US) Develop the Basal share in line with guidelines to reach the level of 60% already achieved in Korea Develop the Lantus® share further 0 differentiating the product vs. competitors 08 09 10 11 12 13 14 15 16 20 20 20 20 20 20 20 20 20 Source: Internal Analysis 29
  • 30. Strong Vaccine Performance in Asia Pacific Fastest growing region Diversified vaccines portfolio (%) High double teen digit growth over the last years Continued growth in 2008: Other €277m, +23%(1) Pneumo 3% 6% Fast growing markets: China, Malaysia, Thailand, Philippines Influenza 18% Polio/Pertu ssis/Hib Strong contribution of all 52% franchises Travel & Other Pediatric vaccines: ActHiB® , Endemic Pentaxim® 21% Strong flu season Continued presence in Travel and other endemic: Verorab® 2008 Sales % by Franchise(1) Russia included(2) All growth on a comparable basis 30
  • 31. Sustained Growth Opportunities for Vaccinesin Asia Pacific Asia Pacific is expected to outpace A fast growing vaccine market(1) any other vaccine market Large and growing populations €3.8 bn Growing disposable income and emergence of a middle class CAGR: 15% Epidemiology €2.0 bn Increasing funding Expansion of vaccination programs Sanofi pasteur reinforced leadership Strong local presence and broad 2009 2013 vaccines offering China India Korea Russia Others Leveraging pharmaceutical presence to further boost vaccines growth(1) Based on Internal analysis and forecasted consolidated internal sales 31
  • 32. Sanofi-aventis is Poised for Growthin Asia Pacific and Russia Significant opportunities exist in the region, but Asia is 1 not a “one size fits all” market Flexible business model to seize growth 2 opportunities (Volume/Value) country by country Build capabilities (development/LCM, manufacturing) 3 Buy critical mass: external growth/business development Leverage market access through partnerships and 4 integrated approach 5 Create long-term value with OTC 32
  • 33. Focus on ChinaThomas KellyVice President, Greater China 33
  • 34. Greater China: Complementary Market Dynamics Mainland China Area size: 9.6m km2 Population: 1,340m Age above 65: 8% Beijing GDP (PPP): €2,941 Bn GDP growth: +9.8% GDP per capita (PPP): $6,000 HC spend per capita: $118 Shanghai HQ Hangzhou Taipei Taiwan Shenzhen Area size: 0.4 m km2 Hong Kong Population: 23m Age above 65: 11% GDP (PPP): $739bn GDP growth: +1.9% GDP per capita (PPP): $31,900Political harmonization Complementary markets HC spend per capita: $1,082 • Improving cross-strait tension, • Mainland China market is e.g. direct charter flights less developed while Hong KongEconomic harmonization TW/HK markets are more • Talent exchanges mature Area size: 0.001m km2 • Increasing trade • Knowledge shared across Population: 7m Age above 65: 13%Healthcare exchanges markets to improve operations GDP (PPP): $308bn GDP growth: +2.8% • Clinical trial capability sharing • TW/HK private hospital entry GDP per capita (PPP): $43,800 • KOL development HC spend per capita: $1,777Source: CIA World Factbook; GDP from official statistics in China, Taiwan and Hong Kong in local currencies, converted to Euro by 2008 average currency exchange rate 34
  • 35. China Healthcare Funding Healthcare spending Healthcare spending by funding source(1) ~50% is out-of-pocket 18% ~50% is spent on pharmaceuticals ~80% pharmaceutical spend in hospital 49% channel 33% Government is increasing funding on Government funding Social funding healthcare Out-of-pocket ~€96bn from 2009 to 2011 Pharmaceutical spending by channel(2) ~€27bn surplus in UBMI(3) 22% ~€0.3bn on EPI(4) in 2008 39% Hospitals heavily rely on profit from drug sales to cross-subsidy its loss in 39% medical services Hospital In-patient Hospital Out-patient(1) China Healthcare Statistic Yearbook (3) UBMI = Urban Resident Medical Insurance Retail Pharmacies(2) IMS estimation based research (4) EPI = Expanded Program on Immunization 35
  • 36. Significantly Improved Funding for InsuranceCoverage and Infrastructure Building Healthcare reform Healthcare Insurance Provider System Drug provision Establish universal access to basic UEBMI Urban Hospital RDL healthcare services. €96bn over 3 years (for urban employed) (Class-II / -III hospitals) (Reimbursement list) Increased public insurance URBMI (for urban unemployed) Urban CHC (Community Healthcare) NEDL coverage (National Essential Drug Formulary RCMI Rural 3-tiered and Tendering System) 2/3 of total funding will be on "demand" (for rural population) hospital system side by increasing insurance coverage PHI Private Hospitals Aims to cover most of population by private health insurance 2011 and 100% by 2020 Focus of reform Focus on improving the coverage for rural population and urban unemployed Medical insurance population coverage(1) Already €27bn surplus in UBMI fund 100% Large-scale infrastructure building (new 80% facilities, major upgrades, hardware 60% purchase and professional trainings) 100% 90% 40% 70% 20% 26% 0% 2003 2007 2011 2020(1) MOHRSS; Press Research(2) MoH, converted from RMB by 8.81; UBMI is for urban employed population; URMI is for urban unemployed population; RCMI is for rural population; 36
  • 37. Regulatory Environment in China Intellectual Property Rights Drug Registration China revised its patent law in 1992 and made Drug registration process is highly complicated and adjustments in 1997 and 2000 to be compliant with time consuming TRIPS(1) Product registration and clinical trials not done in However, enforcement remains an ongoing parallel challenge Usually takes more than 3-4 years for imported New Pharmaceutical Administration Law falls short drugs of addressing MNCs concern for IPR Timeline often unpredictable Pricing Reimbursement For drugs on reimbursement list, retail price ceiling Basis for most medical insurances is regulated by central government based on Both national and provincial list industry average cost structure Provincial list can differ by 15% Innovative drugs and originator LOE(2) can enjoy 30-35% price premium officially. In practice, Reimbursement % and applicable indications differ premium can be much higher. below province level To be reconciled with forthcoming National Essential Drug List (NEDL)(1) TRIPS = The Agreement on Trade-Related Aspects of Intellectual Property Rights(2) LOE = Loss of Exclusivity 37
  • 38. Pharmaceutical Market in China China pharmaceutical market(3) China is already the worlds €bn Breakdown by manufacturer 25 #7 Rx market(1) Local €24bn 20 MNC #3 OTC market(2) +22% 15 #3 Vaccine market(1) 16 13 10 10 9 7 China pharmaceutical market is 5 4 6 5 growing at 22% in the past 6 0 2 2 3 3 3 4 years, well above world average 2002 2003 2004 2005 2006 2007 2008 To be #3 by 2013(4) €bn 25 Breakdown by therapeutic area Other therapeutic areas Anti-neoplast & Immuno-modulate Fragmented market with over 20 Cardiovascular Alimentary & Metabolism 8 3,000 companies 15 Systemic Anti-Infectives 6 2 MNCs account for ~25% of 5 10 4 2 3 market value in 2008 3 1 1 2 3 3 1 2 2 2 2 1 Further consolidation expected 5 1 1 1 1 1 1 2 2 6 1 4 5 3 3 4 2(1) IMS World Review 0(2) Nicholas Hall 2002 2003 2004 2005 2006 2007 2008(3) IMS China Hospital Audit(4) IMS – The opportunity in emerging markets, May 2009 38
  • 39. Sanofi-aventis: Long-term Commitment in ChinaChinas first office Chinas first holding investment Clinical Research Unit CRU expanded toby pharma MNC company in Beijing (CRU) established integrated R&D org. 82 89 94 95 96 05 08 09 Sanofis first JV Pharma JVs in Vaccine JV in Expansion of investments in Animal Health Hangzhou and Beijing Shenzhen Lantus Beijing Plant Vaccines Shenzhen Plant New Hangzhou Plant A consistently growing local presence in the largest Emerging Market 39
  • 40. Sanofi-aventis is an Undisputed Leaderin China Sanofi-aventis sales in Greater IMS Ranking in China (1) CAGR China reached €540m, up +27% # Manufacturer Market Share Growth 05-08 Ranked #3 in Greater China 1. Bayer 1.9% 33% 2. AstraZeneca 1.9% 29% #4 in China with higher growth 3. Pfizer 1.9% 24% than market and top 10 MNCs 4. sanofi-aventis 1.6% 42% 5. Yangzijiang 1.6% 8% #1 MNC in vaccines(2) 6. Roche 1.4% 19% 7. Hengrui 1.4% 27% 60% IMS Sales Growth Rates in China (1) 8. Qilu 1.3% 30% 49% 50% 9. Novartis 1.3% 14% 40% 10. Harbin 1.2% 21% 31% 29% 11. Kelun 1.1% 48% 30% 27% 25% 23% 12. GSK 1.0% 17% 20% 13. MSD 1.0% 22% 10% 14. Asia Pioneer 0.9% 19% 0% 15. Novo Nordisk 0.9% 31% 06-07 07-08 16. Ruiyang 0.9% 30% Market Top 10 MNC sanofi-aventis 17. Genertec 0.8% 34% Multinational Local 18. Luoxin 0.8% 53% 19. Lizhu 0.8% 3%(1) IMS CHPA data; Converted from RMB by 8.81(2) CIDB (Competitive Intelligence Database 2008); Perimeter: private market 20. Shuanghe 0.8% 18% 40
  • 41. Sanofi-aventis China has the Right Portfolio toAddress the Needs of Local Disease Profile Diabetes Anti-platelet ~50m prevalent population #1 MNC product Endocrine and metabolic diseases Dominant in PCI are the 5th leading cause of death(2) 3.5m ACS/stroke population by Insulin segment growing at ~35% 2013 (cerebro-vascular diseases: Fastest growing in diabetes (80%GR 2nd largest cause of death(2)) MAT Q408) Hypertension Liver care Oncology 200m prevalent population Increasing fatty liver Cancer has become the 1st Heart diseases: 3rd largest prevalence as "wealthy cause of death(2) cause of death(2) disease“- impacting 10% Growing at ~30%, one of of population the fastest growing TAs in ARB class growing at ~50% Liver-care is top-of-mind China #1 by volume in ARB(1)(1) 1. Based on IMS CHPA MAT 2008; Aprovel family(2) Chinese Ministry of Health; rates per 100 000 41
  • 42. Sanofi pasteur is Building a Strong Position inChina Strong 2008 performance with sales Diversified of €77m, up 25.8%(1) vaccines portfolio (%) Diversified and balanced portfolio 27% of vaccine sales in Asia Pacific Travel & #1 MNC with market share of 10% Other Endemic Polio/Pert Leadership position in flu 24% ussis/Hib 32% Market share of 23%(2) Local production platform in Menigitis Pneumo construction 15% 1% Leading multinational company with Influenza Hib pediatric vaccine 28% Market share of 28%(2) Expanded vaccine EPI program and emphasis on public disease 2008 Sales % by Franchise prevention to drive future growth(1) Internal All growth a comparable basis(2) 2008 sales based on reported FY2008 & internal 42
  • 43. Sanofi-aventis China has the Right VaccinePortfolio to Address Major Infectious Diseases Influenza Pediatric diseases #1 Flu vaccine #1 injectable Polio vaccine registered Flu vaccine market significantly under- Polio global eradication calls for the penetrated with ~2% coverage rate introduction of the Inactivated Polio Local industrial investment will put sanofi Vaccine (IPV) pasteur at the forefront of big scale pre- Safe profile of Inactivated Polio Vaccine pandemic vaccine production attracts parents Conversion from OPV (Oral) to IPV is the future trend Rabies Upcoming launches #1 vaccine from a multi-national Pentaxim®: pediatric pentavalent Leading cause of death among infectious combination vaccine by 2011 diseases in China Actacel® pediatric tetravalent combination China is the #1 Rabies vaccine market (in vaccine by 2013 value) in the world VRVg: purified Rabies vaccines by 2014 Increasing dog population Intanza®:1st Flu intra-dermic vaccine by 维尔博® 2014 43
  • 44. A Regionalization Strategy to Address LocalVariances within China Why? China land area = 9.6m km² Total 31 provinces, including 4 municipalities and 5 ethnic autonomous zones Huge disparity across regions Decentralization – close to the customers West2 North2 H XJ LJ BJ NMG How? SY Xinjiang Uygur Xinjiang Uygur TJ North1 10 regions created with regional HQ office HB SHD Regional support functions East2 NJ SH HR, Marketing/medical, Market access, Training CD WH HZ East1 Key achievements West1 South2 GZ Improved empowerment and accountability to address South1 regional differences Improved local execution and KOL engagement Healthy competition among areas Sales force field increased from 900 in 2004 to 2,100 in 2008 Covering 4,250 hospitals in over 120 cities(1)(1) Field Force based Cities 44
  • 45. An Integrated R&D Strategy in China Established in June 2005 Expand R&D facility in Execute clinical trials Shanghai Participate in many global registration studies Aims to support global and local trials in both pharmaceuticals and Establish vaccines developmentBiometrics Center Devote to study design, data management and statistical analysis in Beijing of global and local phase I-IV clinical trials Multiple collaborations signed Strategic partner Strategic partnership with the Shanghai Institutes for Biological Sciences for top academic aiming to discover breakthrough drugs for neurological diseases, diabetes, institutions and and cancer biotech companies Part of the Discovery platform set up in China by sanofi-aventis to establish productive and long-term relationships with top Chinese academic institutions This R&D expansion will allow rapid growth of clinical programs and aim to encompass all activities from drug target identification to late stage clinical trial 45
  • 46. New Industrial Investment to Better Meetthe Growing Demand of the Chinese Market Decision to manufacture Lantus® Solostar® in China €61m investment 48m units capacity for Lantus® Solostar® in China Relocation and expansion in Hangzhou €31m investment Relocating from downtown to the new development zone World-Class manufacturing base to produce vaccines in Shenzhen €90m (1st international investment for vaccine production in China) 25m doses capacity and pandemic readiness 46
  • 47. Six Key Strategic Objectives for China 1 Hypertension Leadership 2 Plavix® ACS/Stroke Leadership 3 Diabetes Integrated Solutions 4 Enter OTC / Consumer HC market 5 Enter Essential Drug Tendering 6 Turbo-charge Vaccine Business (Flu, IPV and Rabies) 47
  • 48. Conclusion China pharmaceutical market will continue its fast growth Healthcare reform creates new opportunities Sanofi-aventis is well-positioned to capture the opportunities Well-suited portfolio to address large population with chronic diseases Investing ahead of the curve to reach patients in lower tier cities Unique assets(3) to be leveraged for entry into OTC Exploring options of entry into the emerging NEDL tendering segment Comprehensive vaccine portfolio to serve both the public and private sectors and both the adult and pediatric segments(1) IMS Prognosis reinstated forecast, March 2009(2) Nicholas Hall(3) Including potential Essentiale switch to OTC, organic OTC portfolio and Symbion consumer health products 48
  • 49. Focus on RussiaPatrick AghanianGeneral Manager 49
  • 50. Sanofi-aventis has been Present in Russia for Almost 40 Years A Pharmaceutical market of €7.5bn(3) Present in Russia since 1970 Over 1,350 employees(1) St. Petersburg 2 offices in Moscow Moscow 31 sourcing plants Yekaterinburg 2008 sales of €380m, up +34.4% Volgograd Rank #2 in the market(3) Novosibirsk Vladivostok 45 clinical trials ongoing in 500 clinical centers, with more than 7,000 patients(1) Sanofi-Aventis Group in Russia is represented by Sanofi-Aventis, Sanofi Pasteur and Zentiva(2) Sanofi-Aventis Group(3) RMBC/IMS, 2008 50
  • 51. Russian Pharma Market Growth has been One of the Fastest in theWorld and Among the Top 7 EM(1) Russian pharma market structure and dynamic(3) €bn 7.5 CAGR 0.8 ONLS(4) 2000-2008 CAGR: 0.8 7N(5) GDP/cap. (PPP, $)(1) +9.9% +21.3% 1.1 Hospital 4.2 Switch effect(2) +26.5% 0.9 2.5 Retail Rx Price inflation(1) +23.3% 0.7 1.6 1.3 0.3 0.7 2.3 Retail OTC 1.2 0.6 2001 2005 2008(1) Top 7 EM= 7 pharma emerging markets: Brazil, Russia, India, China, Mexico, South Korea, Turkey(2) Switch from old low expensive drugs to more innovative and high price drugs (UBS “Q-Series®: World Pharma Model, v.1.0”, April 2009)(3) RMBC/IMS at comparable rate, CAGR 2001-008(4) The ONLS program covers 5 millions people classified as “invalids” out of a total eligible population of @15 millions 51(5) 7 diseases program cover 60,000 patients in 7 nosologies. These are: myeloleucosis, multiple sclerosis mucoviscidosis, Gauchers disease, hemophilia, oncohematology, hypophysical nanism, organ and tissue transplantation 51
  • 52. Russian Health Care System: A Hybrid of Freeand Reimbursed Systems Volume Market Specialty Market Retail ONLS(1) 7 Diseases(2) Hospital (RX & OTC) Share 64% 10% 11% 15% (value)(3) Prescription Doctors/Patients Doctors Doctors Doctors Dispensation Pharmacies Pharmacies Pharmacies Hospitals Pricing Free(5) Auctions Auctions EDL(4) Funding Out of pocket Federal 100% Federal 100% Tenders/Auctions(1) The ONLS program covers 5 millions people classified as “invalids” out of a total eligible population of @15 millions(2) 7N program cover 60,000 patients in 7 nosologies. These are: myeloleucosis, multiple sclerosis mucoviscidosis, Gauchers disease, hemophilia, oncohematology, hypophysical nanism, organ and tissue transplantation(3) RMBC/IMS, 2008 52(4) EDL (Essential Drug List) – registered prices – could differ from prices in ONLS(5) Except for products on EDL list 52
  • 53. The Best Performing Companies have Adaptedto the Hybrid Market StructureTop players adopted different strategic focus Market characteristics Key success factors% of total sales inState funded channels • High importance of100 hospital and • Reimbursed channel reimbursed sales access and 90 ROCHE • Extremely limited for capabilities access (e.g. 7N) • Hospital and 80 J-C + J&J • Primary prescription by specialist coverage hospital specialists with and frequency 70 retail continuation • Tender/auctions 60 NOVARTIS • Demand is less elastic management GROUP to pricing • Generic defense 50 TEVA BAYER Specialty SCHERING 40 Sanofi-Aventis market • High proportion of • High GP coverage Group 30 Optimum NYCOMED branded generics and frequency balance • Competition within and Rx • Competitive pricing 20 SERVIER BERLIN- across the classes • Medical and patient CHEMIE 10 Volume GROUP • Out-of-pocket purchases, support programs market PHARMSTANDART affordable pricing • Develop 0 • GP prescribes blockbusters 0 10 20 30 40 50 60 70 80 90 100 • Life cycle % of total sales in OTC management Mainly state funded Out-of-pocket channel • In pharmacy Mainly out-of-pocket superiority Sales balanced between state funded and out-of-pocket channels • Superior consumer 53 insightNote: Size of the bubble is proportional to the total sales in 2008Source: RMBC/IMS 53
  • 54. Sanofi-aventis Russia is a Leading Company with StrongFootprints in 4 out of 5 Market Segments… Market segments rankings - 2008 Ranking 2008 Retail Rx Retail OTC Hospital ONLS 7 Nosologies Total Servier- Sanofi-aventis Jans.-Cilag 1 PharmStandart Roche Novartis Group Egis Group + J&J Gedeon- Novartis Novo Novartis Sanofi-aventis 2 Novartis Group Richter Group Nordisk Group Group Sanofi-aventis Sanofi-aventis Jans.-Cilag Jans.-Cilag 3 AstraZeneca Octapharma Group Group + J&J + J&J Novartis Sanofi-aventis 4 Berlin-Chemie Roche Roche Bayer Group Group Novartis 5 Bayer Bayer Nycomed Bayer Servier-Egis Group % sales Market 33% 31% 14% 11% 11% 100% % sales SA Group 31% 39% 17% 13% - 100% MS SA Group 4.8 % 6.7 % 6.1 % 6.5 % - 5.2 % 54Source: RMBC/IMS 54
  • 55. …and, besides Plavix®, a Well-Establishedand Broad Portfolio with Famous and Iconic Brands • Launched in 1963, No-Spa® is now a legendary people’s brand, with close to 100% awareness NO-SPA® • Market leader with high and stable loyalty above 70% • In 2008 No-Spa won the Effie award “best marketing project for pharmaceutical brand” • Registered in 1976, Essentiale® is a legendary people’s brand ESSENTIALE® • Market leader in OTC hepato-protectors, promoted on TV • Last year sales grew by +70% • Launched in 2005, Lozap® (Losartan) is the leading ARB in the LOZAP® market • 7 out of 10 ARB patients are treated with Lozap® • The only 24-hours insulin approved exclusively for use once a LANTUS ® day • Lantus is leader in its market with 39% MS in valueSource: Sanofi-Aventis Group, Comcon, RMBC/IMS 55
  • 56. Our Aspiration is to Become a Top Performing Company by Pursuing aDiversified Strategy Sanofi-aventis strategy Different Strategic Focus of Top Players % of total sales in State funded channels 1 Local production/partnering to leverage 100 Diabetes & Oncology franchise and 90 ROCHE SA 2013 secure market access (Lantus®, Taxotere®, Eloxatin®) 80 J-C + J&J 70 2 Expand and strengthen offering in high priced specialty areas(2) 60 NOVARTIS GROUP (Plavix®, Lovenox/Clexane®, Depakine®) 50 TEVA Become the #2 prescription generic Specialty 3 40 market player by expanding Zentiva’s strong Optimum Sanofi- 30 foundations in mass market(3) balance BAYER Aventis NYCOMED SCHERING (Lozap®, Trovacard®, Coronal®) 20 SERVIER Become #1 international OTC company 10 Volume GROUP 4 market PHARMSTANDART by developing blockbusters and 0 launching VMS 0 10 20 30 40 50 60 70 80 90 100 (Essentiale®, No-Spa®, Pinosol®) % of total sales in Note: Size of the bubble is proportional to the Out-of-pocket channel total sales in 2008(1) Reimbursement = Hospital + ONLS + 7 Nosologies channels(2) Anti-coagulants, anti-thrombosis, epilepsy(3) In Cardiovascular, wild asthma, gastro-intestinal, female care and antibiotics 56Source: RMBC/IMS 56
  • 57. Sanofi-aventis is Poised to Address 35% of Disease Burden inRussia Ranking of most harmful diseases in Russia Ranking of same diseases in Western Europe Heart disease 3 times more harmful in % of disease Sanofi-aventis burden in products offer Russia than in Western Europe Russia Ischaemic 20% Plavix®, Lovenox®, Ischaemic heart disease 38 Multaq®(1), Zentiva heart disease 11 Cerebrovascular 27 14% Plavix®, Zentiva Cerebrovascular 7 disease disease Unipolar depressive Unipolar depressive disorders 11 6% disorders 13 Tuberculosis 5 2% Tuberculosis 0 Cirrhosis of the liver 5 2% Cirrhosis of the liver 3 Osteoarthritis 5 2% Osteoarthritis 3 Trachea, bronchus, Trachea, bronchus, lung cancers 4 2% lung cancers 4 ... ... Hypertensive Hypertensive heart disease 2 1% Zentiva heart disease 2 0 5 10 15 20 25 30 35 40 0 5 10 15 20 DALY (Years per thousand inhabitants) DALY (Years per thousand inhabitants) Although currently not addressed, it is inevitable that the government will implement programs to combat cardiovascular diseases(1) Launch of Multaq in 2011 57Note: Burden of disease is assessed using the disability-adjusted life year (DALY), a time-based measure that combines years of life lost due to premature mortality and years of lifelost due to time lived in states of less than full healthSource: WHO 2004, McKinsey&Company analysis 57
  • 58. Zentiva is Outperforming the Generics Marketin Russia Zentiva has many strengths in its current prescription Zentiva generic prescription sales in Russia portfolio • Strength in cardiovascular, most important CAGR 05-08 prescription market in Russia 50 Market 19% • Strong presence in ARBs (#1), statins (# 5), beta-blockers (# 5) 45 €m Rx products only Zentiva 35% • Cardiovascular is largest segment of 40 prescription market (16% in 2008) with 35 opportunity to increase share further 35 30 29 • Opportunities to create secondary pillars of 26 growth in other areas 25 • Growth opportunities in Female care, Asthma & 20 Allergy, Urology 15 14 • Sales of un-promoted products in Gastroenterology, antibiotics and Central 10 Nervous System could be boosted by SA 5 investments • Zentivas fast registration capabilities could be 0 leveraged to bring more products to Russia 2005 2006 2007 2008 Good basis to develop in mass market with significant investment 58Source: RMBC/IMS 58
  • 59. OTC Market is Highly Attractive and Representsa Big Opportunity for sanofi-aventis Group OTC market is growing fast representing >1/3 of total pharma market and Sanofi-aventis is is well placed to capture OTC market almost half of retail sales opportunities OTC market structure 2008, Sanofi-aventis sales structure 2008, % % • Strong and continuous growth 41% 56% OTC 32% 48% OTC supported by pharma & medical sales force and media investments 59% 44% Rx 68% 52% Rx • Growing health awareness • Self-medication fuelled by growing All Retail channels only Total Retail disposable income market only • Pharmacy competition with Rx products Top players in Retail OTC 2008, Retail OTC market, % €m Pharmstd 10.1 +18% Novartis 5.0 2013 +25% 4.6 5.2 3.4 4.0 2.9 Sanofi-Aventis* 5.0 1.8 2.3 1.2 1.4 Sandoz 4.7 2005 06 07 08 09E 10E 11E 12E 13E Berlin-Ch 4.5 Sanofi-aventis has the opportunity to become the #2 in OTC market (#1 international company) by developing different strategic axes: - Competitive media investments - In-store excellence - Launch of “sleeping beauties” - Superior consumer insight - Life cycle management - Launch of VMS (Vitamins & Mineral Supplements)Source: RMBC/IMS 59* Excludes Zentiva OTC portfolio 59
  • 60. Sanofi-aventis to Become a Top Player in the Large and FastGrowing VMS Market The Russian VMS market(1) is large and growing Sanofi-Aventis aims to significantly improve rankings in faster than total market the VMS marketIn 2008, the VMS market account for 25% of the Sanofi-Aventis aspiration to be #6 VMS player in 2013Russian OTC market and 9% of the total market VMS market* €m Sanofi-Aventis 12 6 position +27% 706 Sanofi-Aventis 4.4 494 market share, 414 2.8 343 % 2005 2006 2007 2008 2008 2013E Total Russian pharma market growth 2005-2008 = 22% Nutraceuticals portfolio will allow sanofi-aventis to catch VMS growth opportunity 60 (1) VMS market consists of OTC vitamins and minerals products (EUR 229m 2008) and food supplements (EUR 476m 2008) Source: RMBC/IMS 60
  • 61. Growing Vaccines Presence in Russia Robust 2008 performance: Sales of €30m, +93%(1) Estimated Vaccines Market Shares (2) 20% market share(2) 20% Strong contribution of Influenza vaccines, +30% vs 2007(1) 8% Leadership position in IPV Partnership with the Chumakov 2% 2% Institute for Russia National “Project Health” 68% 4.7m doses sold in 2008 Sanofi Pasteur GSK Opportunities for expansion Merck Novartis Russian Federal Market Other CIS countries(1) Growth is on a comparable basis(2) Based on reported FY2008 results and sanofi-aventis internal estimates 61
  • 62. Sanofi-aventis is Well Positioned to LeverageSpecific “Sweet Spots” of Disproportionate Growth Russian pharma market forecast (€bn) Market “Sweet spots” structure SA Group strengths Specific areas of the market will €15.6bn represent large growth opportunities: Oncology, Diabetes, Cardiovascular, ONLS Top Diabetes company with branded generics(1) 7N Insulins and OAD portfolio 1 Hospital Leading position with strong oncology and specialty 2 products portfolio €7.5bn Retail Rx High potential with an ability to play in mass market with 3 generics € 2.3bn Retail OTC Strong OTC portfolio with current and future 4 blockbusters 2003 2008 2013 Sanofi-aventis strategic initiatives 1 Local production/partnering to leverage Diabetes & Oncology franchise and secure market access 2 Expand and strengthen offering in high priced specialty areas 3 Become the #2 prescription generic player by expanding Zentiva’s strong foundations in mass market 4 Become #1 international OTC company by developing blockbusters and launching VMS 62(1) McKinsey&Company “Drugs, Oil, and Steel – The rise of Russian pharmaceutical market”, December 2008Source: RMBC/IMS, SA Russia analysis 62
  • 63. Intercontinental OverviewAntoine OrtoliSenior VP, Pharmaceutical Operations, Intercontinental 63
  • 64. Intercontinental Region: 90 Countries with aCommercial Presence in Almost All Markets €3.0bn sales in 2008 25 subsidiaries and 11 representative offices with 11,600 employees 12 manufacturing plants – 6 clinical research units Latin America Africa Middle East-Central Asia 13 affiliates –7,000 employees 10 affiliates –3,000 employees 2 affiliates –1,600 employees 2008 Sales: €1,739m, +6.6% 2008 Sales: €725m, +16.8% 2008 Sales: €556m, +8.3% Affiliates S.A.G. Representative Offices Others (agents, distributors…) 64
  • 65. A Vast Region with Solid Economic Dynamicsand a High Potential 28% of world population, young & fast growing(3) Strong GDP growth(1) 1.8bn 3.2bn 10.7% GDP growth CAGR (06-08) 27.7% 34.7% LatAm +7.5% Africa +8.1% ME +8.6% G8 +4.3% 2008 2050 2008 Many ITC economies are driven by oil reserves(2) High growth of healthcare expenditures per capita($)(4) 900 +12.5% 2006 800 +21.5% 2007 +5.0% +17.5% 700 2008 +5.8% 600 +20.2% US 2008: $7,558 50.0% 54.4% 500 EU 2008: $4,333 76.8% 400 300 +15.3% +16.8% 200 100 Oil Production Oil Reserves 0 KSA Brazil Mexico Argentina RSA Venezuela Iran Egypt Intercontinental ROW(1) The World Bank 2007 2008; and FMI(2) Energy Information Administration, 2008(3) Perspective Crédit Agricole March 09(4) Economist Intelligence Unit 2008 65
  • 66. Pharma Market Growth, Booming since 1995, isStrongly Correlated with an Accelerating GDP Growth Latin America Africa(1) Middle East(2) Pharma market x 3 Pharma market x 4.5 Pharma market x 3.5 GDP x 2.5 GDP x 3.0 GDP x 2.5 500 500 500 400 400 400 300 300 300 200 200 200 100 100 100 Argentina Iraq war crisis 0 0 0 1995 2000 2005 2008 2010 1995 2000 2005 2010 2008 1995 2000 2005 2008 2010(1) Includes Egypt, Nigeria and South Africa(2) Includes Saudi Arabia, Israel and IranNote: Pharma market = Market demand for Drugs and Medicines Index (100 = 1995) Pharma market Nominal GDPSources: EIU; BCG analysis 66
  • 67. Sanofi-aventis is the Leader of the ITC MarketGrowing Twice as Fast as the World Market in the last 3 Years SA Retail MS Market Size 08 Market Growth ITC Countries SA Ranking (1) in % (1) in €bn (2) CAGR 06-08 in %(2) Latin America #1 7.7% €35.2 +12.4% Brazil #1 11.9% €14.7 +10.2% Mexico #1 7.6% €8 .7 +7.2% Venezuela #3 5.5% €3.8 +35.9% Africa #1 10.8% €7.8 +10.9% Algeria #1 17.5% €1.4 +1.8% Morocco #1 10.5% €0.8 +12.6% South Africa #3 7.7% €1.7 +14.7% Middle East #5 5.1% €5.7 +9.1% Intercontinental #1 6.6% €48.8 +11.7% World Market - - €565.6 +5.6%(1) IMS March 09 in MAT(2) IMS Prognosis 2009 67
  • 68. A Wide and Well Balanced Product PortfolioTop 7 represent 34% of sales –– 85% of portfolio actively promoted 19% Regional Strategic 8% 16% Other Base Business Profenid® 36% Core Products 20% 22% OTC 15% 7% Generic % of ITC sales CAGR 06-08 (sales) 68
  • 69. 4 Key Strategic Pillars Leading to Double-DigitOrganic Growth Over the Last 3 Years Strong Core Products Successful launches in Public Market Adapted Marketing mix Performance OTC & Base Business Penetration Average growth rate Numerous and Focus on this Point of sales focus > 20% over the last varied launches dynamic segment (>20% of field force 3 years (>350 in 07/08) to (25% of total market dedicated to POS in Good sales sustain growth & growing of +13% 2008) resistance to Development of in 2008) generification threat local OTC brands in Investigation of (<15% of sales still key markets Sanofi-aventis alternative channels protected): performance (20% CAGR of sales & growing Exposed Protected CAGR (06-08) (06-08) of +24% in 2008): Active calls to Aprovel® +21% +32% Total OTC +15% Dedicated team, physicians Lantus® +35% +41% Lactacyd® +43% competitive prices Taxotere® +13% +8% Profenid® +20% and high quality DTC Clexane® +11% +30% Maalox® +10% 69
  • 70. In the Short to Medium Term, we will Focus on4 Strategic Axes to Strengthen our Leadership Objectives Strategic levers Acquisitions & In-licensing agreements 1. Maximize the Rx Core Distance from the core Attack sustainable #1 in Rx, business opportunities in leader in diabetes existing & new TAs Max Core New Rx 2. Win in Generics Leader in 1 Achieve local leadership Affordability generics positions in target markets 3 Category leader 3. Strengthen OTC OTC Rapidly expand presence in OTC 2 in OTC segments Strong player in Generics OTx 4. Serve the Next Billion affordable care 4 New business models to reach low-income segments 70
  • 71. The “Next Billion Consumer” represents anImportant Growth Opportunity for sanofi-aventis % of Health Percent of population by household expenditure income bracket (US$/year) “Next Billion” Strong segment potential: 43% of income / 39% of healthcare Upper and expenditure middle classes Untapped customer segment, 58% Over $3,000 21% traditionally not served by (390m) multinationals Opportunity to build-up a new & 22% $2,000-$3,000 13% innovative business model (240m) Emerging middle Sanofi-aventis key assets: class ("Next billion Adapted products portfolio (~ 40% 17% $1,000-$2,000 30% consumers") of WHO Essential Medicines list) (550m) Capitalization on Medley & Kendrick experiences of this segment 37% Very low Strong local manufacturing 3% Up to $1,000 capabilities (12 plants) (690m) income segments On-going pilot programs (Brazil, Mexico and Egypt)Note: use of WRI available countries (27) to calculate NBC segments through extrapolations in different zones and overall ITCSources: World Resource Institute; EIU; UN human development report; BCG analysis 71
  • 72. External Growth will Help Boost our SalesTargeting Generics/OTC Acquisitions and In-licensing Deals Attractive acquisition opportunities in Generics and OTC Sanofi-aventis is in well positioned to take advantage of the momentum Market growth is driven by generics and will further uptake OTC segment is attractive both in term of sales Overall market leader in ITC region with top (US$8bn(1)) and profitability positions in Brazil, Mexico and Africa Both Generics and OTC are fragmented segments dominated by local players Generic and OTC synergizing with existing Economic crisis is affecting potential target business platform financials and equity value A first line partner with strong marketing, sales Attractive in-licensing opportunities in Rx and regulatory capabilities in the region Several mid-size Pharma companies (mainly Achievement of recent successful acquisitions European and Japanese based) willing to penetrate emerging markets through in Latin America partnerships/alliances Biotech companies with products in late-stage development looking for partnerships in emerging countries (1) Nicolas Hall estimate (2007) 72
  • 73. Three Recent Strategic Deals Illustrate Willingnessand Ability to Activate the External Growth Lever April-09 March-09 May-09 OTC brands 2008 sales: ~€153m 2008 sales: ~€26m 2008 sales: ~€10m #1 generic company in #3 generic company in Top position in OTC Brazil Mexico segment in Argentina Portfolio of 127 generic Portfolio of > 50 active 18 established OTC products ingredients brands Reinforce our positions in OTC within ITC strategic countries External growth Focus Create strong generics presence in Africa and Middle East Target regional players in Middle East and African zones 73
  • 74. The Vaccines Market in Latin America is aboutto Reach €1bn in 2009 High demographic potential Sanofi pasteur sales in Latin America Birth cohort of ~10m and aging population (€m) 250 Public market characterized by universal immunization programs Chile & Others 70% of total market value 200 Very high coverage rate Argentina Tenders – national or PAHO(1) 150 Colombia Preference for national production 100 CANAC Private market limited to the high-income class Brazil 5-10% of the population 50 Mostly innovative products, Mexico not available in public programs 0 Sanofi pasteur market leader in 2008 2008 Strong presence and leadership since late 80´s through local subsidiaries(1) Pan American Health Organization 74
  • 75. Conclusion Broad and heterogeneous region with solid economic trends in spite of a variable geo-political stability Leading position (market share of 6.6%) in a dynamic pharma market growing twice as fast as the world market Growth strategy based on 4 axes: maximize the Rx core, win in generics, strengthen OTC and serve the “Next Billion” Organic growth and geographical presence enhanced by active business development (Medley, Kendrick, Gramon) 75
  • 76. Focus on BrazilHeraldo MarcheziniGeneral Manager 76
  • 77. Brazilian Indicators Show Limited Vulnerabilityto Economic Crisis Large country with significant growth Public debt / GDP ratio evolution(2) potential 60 Brazil 10th largest economy worldwide(1) % 50 Population close to 200m(1) Public debt and inflation under control 40 Public debt / GDP ratio under 40% 30 in 2008(2) 20 Inflation below 5%(1) Limited impact of the financial crisis: 10 No deep recession in 2009: assessment 0 of IMF(1) and Brazilian Central Bank 1994 1996 1998 2000 2002 2004 2006 2008 between -1% and 0% Recovery forecasted in 2010(1) 2005 2006 2007 2008 2009e 2010e Population 184 187 189 192 194 197 (in m) GDP growth 3.2% 4.0% 5.4% 5.1% -1.3% 2.2% (in %)(1) IMF World Economic Outlook Database, April 2009(2) Source: IMF, April 2009 77
  • 78. Emergence of a Large Middle Class in Brazil 15% Brazilian population is ageing, with 10% greater exposure to age and lifestyle- 5% 0% linked diseases: 1940 1950 1960 1970 1980 1991 1995 2000 2005 2010 2015 2020 Proportion of elderly people to double % of people >60 in 2020 vs. 1980 Source: IBGE, January 2008 Diabetes is the 4th cause of death(1) Split of socio-economic classes and income growth over 2002-2007 Emergence of a large middle class in 40% Brazil with willingness to use 35% pharmaceutical products: 30% C & B social classes have taken the 25% most important part of national 20% income increase of the last 5 years 15% Social programs set by President Lula 10% have also helped 5% 0% A B C D E Share of total population Share of the total income growth for 2002-2007 period Source: Data Popular, June 2008 A: more than 3,200 USD/month, B: between 1,600 and 3,200 USD, C: between(1) IMS – The opportunity in emerging markets, May 2009 640 e 1,600 USD, D: between 320 e 640 USD, E: less than 320 USD 78
  • 79. The Brazilian Market Is Largely Out of Pocket 80% of the pharmaceutical spend in Total pharmaceutical spend by payer(4) Brazil is out of pocket(1,2) 20% of the population has healthcare 100% coverage (stagnant evolution)(3) 90% Federal government, states and cities 80% spend at hospital level and via 70% “Farmacia popular” 60% 50% Market characteristics remain 40% challenging 30% Intellectual property protection 20% 10% Strict price controls even on OTC 0% products . UK ly ia G e a in n da l Ca ia y y ina Fra a e U.S o azi r ke pa an re nc It a xic ss Ind na Sp Ch Ko Br Ja rm Ru Tu Me Pharmacy substitution S. % Public % Other private % Out of pocket(1) IMS Market Prognosis 2009-2013, Latin America Brazil(2) IMS Finding Direction in Times of Change, March 2009(3) ANS – National Health Agency September 2008(4) IMS – The opportunity in emerging markets, May 2009 79
  • 80. The Emerging Market Opportunity in Brazil Large market with significant growth A Fast Growing Market with Generics potential Gaining Market Share Rapidly(4) 9th largest pharma market globally(1) €8.8 bn Pharma market still growing at 14% double-digit rate despite of economic crisis(2) €5.8 bn Importance of private sector 35% 8% Private sector accounts for the vast majority of the total market 30% Expansion of pharmacy chains and supermarkets Market growth driven by generics and 51% 62% volume Generics account for €1.3bn and market is up +17% in volume(4) MAT 2005 MAT 2009 Broadening access to affordable Generics (Non-branded generics) medicine "Similares" (Branded generics) Branded products(1) IMS(2) IMS PMB YTD April 2009(3) IMS PMB Apr-09(4) IMS MAT April 09 80
  • 81. The Increasing Power of Local Companies Local companies gained significant Market share evolution market share over the last 5 years over the last 5 years Top-5 multinational companies lost 20% 18.9% around 5% market share to the Top-3 local players in 5 years 16.2% Sanofi-aventis: only multinational firm 15% 13.6% in the Top-5 in Brazil, even prior to 12.5% Medley acquisition The importance of the “Similares” 10% segment in Brazil 7.3% 6.2% Very limited presence of multinational 5.6% 5% companies 3.1% Specific business model: Low-cost development (regulatory 0% standards inferior to generics) MAT MAT MAT MAT MAT MAT 2004 2005 2006 2007 2008 2009 Low-cost promotion (massive detailing with up to 10 products by call) Top-5 Multinationals Top-3 Locals Low-cost distribution (no important S-A Medley discount in comparison with generics)Source: IMS PMB Apr-09 81
  • 82. Sanofi-aventis in Brazil: A Strong Local Presence The market leader in Brazil Sales of €601m in 2008 Market share of 6.2%(1) A local manufacturer > 90% of products manufactured locally Suzano factory, State of São Paulo Manufacturing capacity of over 200m units/year A tailored approach to the Brazilian market Customized promotion to specialists and payers for high-price drugs Broad promotion to GPs and consumers for low-price classical Headquarters in the City of São Paulo products and OTCSource: IMS MAT April 09 82
  • 83. Sanofi-aventis in Brazil: A « Domestic » Profilewith a Diversified Portfolio Sanofi-aventis offers a broad portfolio… >50 brands actively promoted Top 7 products represent 39% of sales Each of the top 30 products represent >1% of sales in Brazil More than 150 products and >500 presentations manufactured … very similar to local companies Patented drugs account for less than 3% of total sales Growth coming mostly from launches of line extensions New portfolio of generics with 60 products launched since 2007 83
  • 84. Sanofi-aventis in Brazil: Becoming a PreferredPartner for Pharmacies An innovative approach to target pharmacies launched in Brazil two years ago Conexão allows pharmacy detailing, order taking and direct negotiation with pharmacists More than three-fold increase in sales force ~13,000 POS dedicated to pharmacies > 75% DEMAND Change of approach: from merchandising to order ~290 SALES FORCE taking Conexão extended coverage of pharmacies from 5,000 to 13,000 (>75% of volume) ~3,800 big chains pharmacies but >40% of volume ~9,200 small to medium chains and large independent pharmacies and 35% of volume Project encompasses the entire Sanofi-Aventis portfolio in Brazil, not just OTC Volumes in pharmacies included in Conexão grew close to three times faster 84
  • 85. Sanofi-aventis in Brazil:An Established Leader in OTC Sanofi-Aventis leads the OTC market in Brazil with 9.7% market share(1) OTC represent more than 30% of pharma sales Brazil is our 2nd largest country in terms of OTC sales after France Broad portfolio with more than 15 products Leveraging multiple promotional channels TV, physician detailing, presence in pharmacy (through Conexão), presence in supermarkets via cosmetic products 85
  • 86. A Unique Opportunity to be #1 in Generics Brazils generics market is very Medley acquisition - A perfect strategic fit concentrated (80% of the market dominated by four players) 1% 6% 1 4% 12% Medley: #1 generics player in Brazil 15% A very good production capacity, an 43% excellent portfolio and sales team 38% A positive image amongst physicians 82% & patients, especially low-middle class 12% 83% thanks to institutional campaigns 35% A new growth platform for sanofi-aventis: 41% Allows for launches of “Similares” 9% 14% through portfolio replication 3% Increases industrial capacity and offer sanofi-aventis Medley Combined Market expansion opportunities in Latin America Patented Branded Drugs Keeping two entities to avoid business Non-patented Branded Drugs rupture and complex integration Branded Generics Non-branded Generics With Medley, sanofi-aventis becomes the undisputed #1 pharmaceuticals company in Brazil with a total market share of 12%(1) Pending acquisition subject to certain conditions precedent and expected to occur in the 2nd quarter of 2009 86
  • 87. Solid Double-Digit Market Share in Brazil Sanofi-aventis has a significant Sanofi-aventis leadership position lead over peers 14% 12% 12% Sanofi-Aventis is ranked #1 in each market segment: 10% 8% Branded Rx drugs 8% 6% Generics 6% 6% OTC 4% 4% 4% 4% 3% Vaccines 3% 3% 2% Continues to grow with the market 0% SANOFI-AVENTIS MERCK SHARP PFIZER BAYER EUROFARMA MARQUES NOVARTIS ACHE GSK EMS CASTRO DOHMESource: IMS PMB May-09 (MAT) 87
  • 88. #1 Vaccines Company in Brazil Sales of €47m in 2008 Flu leadership position Future Growth Drivers Flu vaccines: 75% of sales in Brazil Life cycle management of Flu 23m doses sold in 2008 agreement and private market Local partnership with Butantan expansion Introduction of vaccines into the public and institutional Rabies agreement with the federal markets (i.e. IPV and Pneumo) government through expansion of local partnership agreements Delivered Yellow Fever for outbreak control Introduction of new innovative vaccines Increased private and institutional Acceleration of Dengue vaccine immunization rates for Flu and Hep A introduction into public sector(1) Net Sales at constant exchange rate 88
  • 89. A Bright Future for sanofi-aventis in Brazil Market with impressive growth Brazilian pharmaceutical market to potential overtake Canada and the UK Pharma market expected to grow 2003 Rank 2013 Rank more than 50% by 2013(1) United States United States Brazil to become pharmaceutical 8th Japan Japan market in the world Germany China France Germany Improvement in market conditions Italy France The Brazilian subsidiary has become United Kingdom Spain a key affiliate for Sanofi-Aventis Spain Italy Canada Brazil Among the top-5 affiliates as of 2010 China Canada #2 in terms of generic sales Brazil United Kingdom A platform for development of new products in Latin America Source: IMS – The opportunity in emerging markets, May 2009 89
  • 90. ConclusionChris ViehbacherChief Executive Officer 90
  • 91. The Most Attractive Areas for Growth arein Emerging Markets Growth in Emerging Markets is Emerging Markets Sales Forecasts(1) expected to continue at a US$bn 300 CAGR: +12.3% 24% double-digit rate reaching close to $280bn in 2013 67 China will be the most significant contributor to 200 14% growth over 2008-2013 25 212 Traditional Markets sales 247 218 forecasts are expected to grow at 100 173 194 a CAGR of +1.7% over the same 151 period reaching $630bn in 2013 0 2008 2009 2010 2011 2012 2013 Emerging Markets China contribution(1) Source: IMS market prognosis 2009-2013 91
  • 92. Many Opportunities Allow for Sustainable DoubleDigit Market Growth, Despite the Economic Crisis Short to Mid Term Opportunities 2/3 of the worlds population without Short to Mid Term Challenges access to Healthcare Aging population Economic crisis Rising middle class whose buying Higher regulatory barriers power increases Free price control progressively Health needs unmet in many areas disappearing Development of pathologies linked to Worsening protectionism trend in consumer society (diabetes, HTA,…) several countries Strong development of the public health sector Emergence of health financing systems 92
  • 93. Sanofi-aventis has Unique Competenciesin Emerging Markets The largest presence in Sales in Top 5 Emerging Countries in 2008 Emerging Markets among peers Significant sales and strong (€m) 700 growth in key countries 600 The ability to deliver affordable medicines (mature Rx brands, 500 OTC, branded generics) 400 The leadership position in 300 601 vaccines 562 540 443 200 380 A "domestic" profile with strong local commercial presence and 100 manufacturing capabilities 0 (1) Brazil Mexico China Turkey Russia(1) Greater China: China, Hong-Kong, Taiwan 93
  • 94. Our Business Model in Emerging Markets isCommercially Viable and Sustainable 2008 Operating margin excluding central administrative and R&D costs Emerging Markets 44% Eastern Europe 47% Latin America 45% Asia Pacific 43% Africa & Middle East 40%(1) Internal analysis - 2008 94
  • 95. Sanofi-aventis is Committed to Actas a Socially Responsible Company 80% of the global population has no Deep rooted commitment access to appropriate healthcare of sanofi-aventis Sanofi-aventis is committed to an active role in Access to Medicines in Emerging Markets Ongoing programs in 6 principal areas: Malaria, Sleeping Sickness, “Access-to-Medicines” programs Tuberculosis, Leishmaniasis, Epilepsy and Vaccines (polio, measles, mumps, rubella) Product donations and adapted tier pricing and distribution strategies Partnerships with public & private national, international organizations 95
  • 96. Emerging Markets Will Remain a StrategicPriority for the Foreseeable Future With the recent acquisitions of Sales Target in Emerging Markets Zentiva, Medley and Kendrick, our production in Emerging €m Markets will expand to support the 14 000 anticipated growth 12 000 64% of our volumes will be sold in Emerging Markets in 2009 10 000 x2 Only 55% will be produced in 8 000 those countries in 2009 6 000 Our objective is to double sales 4 000 in Emerging Markets from 2008 6,540 to 2013 2 000 Organic growth 0 2008 2013 Acquisitions 96
  • 97. Q&A Session 97