2013/06 - JP Morgan HC


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2013/06 - JP Morgan HC

  1. 1. J.P. Morgan European Healthcare ConferenceFabrice Baschiera, General Manager, Commercial Operations,Greater ChinaLondon, June 24, 2013
  2. 2. 2Forward Looking StatementsThis presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of1995, as amended. Forward-looking statements are statements that are not historical facts. These statements includeprojections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions andexpectations with respect to future financial results, events, operations, services, product development and potential,and statements regarding future performance. Forward-looking statements are generally identified by the words"expects", "anticipates", "believes", "intends", "estimates", "plans" and similar expressions. Although Sanofismanagement believes that the expectations reflected in such forward-looking statements are reasonable, investors arecautioned that forward-looking information and statements are subject to various risks and uncertainties, many of whichare difficult to predict and generally beyond the control of Sanofi, that could cause actual results and developments todiffer materially from those expressed in, or implied or projected by, the forward-looking information and statements.These risks and uncertainties include among other things, the uncertainties inherent in research and development,future clinical data and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or theEMA, 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 labeling and other matters that could affect the availability orcommercial potential of such product candidates, the absence of guarantee that the product candidates if approved willbe commercially successful, the future approval and commercial success of therapeutic alternatives, the Groups abilityto benefit from external growth opportunities, trends in exchange rates and prevailing interest rates, the impact of costcontainment policies and subsequent changes thereto, the average number of shares outstanding as well as thosediscussed or identified in the public filings with the SEC and the AMF made by Sanofi, including those listed under"Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in Sanofis annual report on Form20-F for the year ended December 31, 2012. Other than as required by applicable law, Sanofi does not undertake anyobligation to update or revise any forward-looking information or statements.
  3. 3. Agenda3Emerging Markets at SanofiSanofi – A leading presence in ChinaAddressing the healthcare needs in ChinaFocus on diabetesConclusion
  4. 4. Growth Platforms Grew by +9.9%(1)in 2012and Constitute Long Life Assets to Drive Future Growth4(1) Sales of Growth Platforms were up +7.8% in 2012 with Genzyme pro forma. Genzyme products were not consolidated in Q1 2011(2) World less North America (USA, Canada), Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg,Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark), Japan, Australia and New Zealand;Emerging Markets sales were up +7.2% in 2012 with Genzyme pro forma. Genzyme products were not consolidated in Q1 2011(3) Genzyme perimeter includes Rare Diseases and Multiple Sclerosis franchises(4) Growth is at constant exchange rates and at comparable perimeter - Genzyme sales were not consolidated in Q1 2011(5) Includes new product launches which do not belong to the other Growth Platforms listed above: Multaq®, Jevtana®, Mozobil® and Zaltrap®+16.7%+5.7%+9.9%+3.1%+16.9%Other Innovative Products(4,5)€611m +10.5%+8.3%Vaccines €3,897mDiabetes Solutions €5,782mConsumer Healthcare €3,008mAnimal Health €2,179mEmerging Markets(2)€11,145mGenzyme(3,4)€1,785m2012 growth at CER
  5. 5. Sanofi Benefited from its Broad Geographic Presencein Emerging Markets in 201231.9%31.1%23.9%13.1%5(1)+11.3% +10.1% +2.1% +10.2%Growthat CER● Double-digit sales performance in LatAm, Asia and Africa/Middle East● Eastern Europe growing at a much lower pace given lower GDP growth● €1bn sales milestone achieved in both Africa and the Middle EastEmerging Markets Sales Split (€m)(1) World less North America (USA, Canada), Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg,Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark), Japan, Australia and New Zealand
  6. 6. 6Sanofi Remained the #1 Healthcare Companyin Emerging Markets in 2012(1)(1) Year 2012; IMS MAT Q4 2012(2) World less North America (USA, Canada), Western Europe (France, Germany, UK, Italy, Spain, Greece, Cyprus, Malta, Belgium, Luxembourg,Portugal, Holland, Austria, Switzerland, Sweden, Ireland, Finland, Norway, Iceland, Denmark), Japan, Australia and New Zealand+14.3%+9.1%2012€11,145m2011201020092008200720062005€5,037mEmerging Markets Sales (€m)● Another record year in Emerging Markets(2) in 2012● Strong sales in BRIC of €3,896m up +12.0% at CER (35.0% of EM sales)
  7. 7. Sanofi Sales in EM (m €)China: A Growing Contributor to Sanofi’s LeadershipPosition in Emerging Markets7€11,145m€6,540m8% 9% 10% 12% 13%Greater China as a % of EM sales(1)Other Emerging Countries(1) Greater China: Mainland China, Hong Kong, Taiwan(2) Mainland China20122011201020092008Sanofi Sales in China(2) (m €)€1,249m€347mSanofi Sales in China(2)20122011201020092008+38%+14%
  8. 8. Agenda8Emerging Markets at SanofiSanofi – A Leading Presence in ChinaAddressing the healthcare needs in ChinaFocus on diabetesConclusion
  9. 9. 9Sanofi Is Progressively Developing its Key GrowthPlatforms in China4%Animal Health11%64%CHC7%Breakdown of Sales in China(1)by BusinessTotal Sales €1,249mDiabetesPharmaceuticals72%Vaccines22%6%2007 2012Total Sales €273m(1) Mainland China9
  11. 11. Well Established in China with a Fully IntegratedPresence● Present since 1982● In 2013, 11 regional offices with~7,000 employees in Greater China● Of which >4,000 sales force● Network of 6 manufacturing sites● Regional R&D platformShanghai HQHong KongTaipeiTianjinHangzhouBeijingShenyangGuangzhouWuhanChengduWulumuqiNanjingShenzhenSanofi’s Presence in ChinaRegional officesManufacturing site PharmaceuticalsGreater China officesTangshanManufacturing site Consumer HealthcareManufacturing site Animal Health (Merial)Manufacturing site VaccinesNanchangJinan11
  12. 12. Human VaccinesAnimal HealthA Large Portfolio of Flagship Brands Across our GrowthPlatforms that Fits the Local Needs in ChinaDiabetes Solutions12OncologyOther RxCardiovascular1. Cancer2. Heart disease3. Cerebro-vasculardiseases4. RespiratorySystem5. Injury/Poisoning6. Metabolic/Endocrinediseases7. Digestivesystem8. CNS9. Genitourinarysystem10.InfectiousdiseasesTop 10 Causes ofDeath in China(1)(1) China’s Health Statistics Yearbook 2012, Ministry of Health (Urban population)Consumer Healthcare
  13. 13. Agenda13Emerging Markets at SanofiSanofi – A Leading Presence in ChinaAddressing the healthcare needs in ChinaFocus on diabetesConclusion
  14. 14. ● >90 million diabetic patients(1)● ~200 million hypertension patients(2)● Cause of death by non-communicable diseases total to 83%(3)● ~ 9% of population >65 years old in 2011(4)● People age ≥60 expected to rise to ~25% of total population by 2030(5)● 800 million people expected to be part of urban population in 2020(6)● ~45% of total population with annual household income >$10K in 2015(7)AgeingpopulationGrowingincidence ofchronic diseasesUrbanization andincreasing middleclass● ~95% of population covered by public health insurance system● Objective of universal healthcare coverage by 2020● 5,000 township clinics and 2,000 county hospitals built for the rural marketHealthcareReform(8)Socio-Economic Indicators Point Towards the ContinuedStrong Demand for Healthcare Solutions in China14(1) International Diabetes Foundation, Yang et al,,2010(2) Ministry of Health; Yearly report on Cardiovascular Disease in China, 2007(3) WHO, 2009(4) National Bureau of Statistics in China, 2012(5) ‘China 2030’; The World Bank and the Development Research Center of the State Council, P.R. China, 2012(6) China National Population and Family Planning Commission, China population development report, 2011(7) China 12th Five Year Plan; internal analysis(8) Plan of Reform of Medical and Healthcare system 2009-2011; Ministry of Health
  15. 15. 15(1) Health care expenditure reflects the total expenditure on medical and health care services, which includes government expenditure,social expenditure and individual out-of-pocket expenditure.(2) WHO : ‘Total expenditure on health as % of Gross National Product’ (GDP); 2011: U.S. = 17.9%; Germany = 11.1%; Brazil = 8.9%(3) Source: China National Bureau of Statistics, Ministry of FinanceThe Healthcare Reform Activities in China HaveCreated Opportunities…Fast growing Health Care Expenditurebut still relatively low as a % of GDP(1, 2, 3)HC expenditure as % of GDP 2011Significant IncrementalHealthcare Investment(3)Original plan2,0001,5001,00050002009200520011997RMB bn850 RMB bnUpdated report 1,134 RMB bnInvestment into COUNTYhealthcare system, bothinfrastructure and insurance1,7542009-2011:8.9%11.1%17.9%5.2%2,5002011
  16. 16. …as well as Challenges and Sustained Pricing PressureMultiple rounds of price cuts by NDRC(1)May 2007 260 drugs (excl. TCM(2))  19%162 anti-infective andcardiovascular drugs 21%Nov 2010Mar 2011 19%176 drugs128 drugs includinghormone treatments,endocrine system andneurological disorderdrugs 14%Sep 2011TargetAverage %of price cut(1) China National Bureau of Statistics, Ministry of Finance, NDRC – National Development and Reform Commission, internal analysis(2) TCM - Traditional Chinese Medicines(3) EDL – Essential Drug List(4) RDL – Reimbursement Drug ListMay 201216Time53 digestive system andgastrointestinal drugs 17%Oct 2012 95 hematology, oncologyand immunology drugs 17%Jan 2013 400 respiratory,antipyretic, analgesicsand other specialty drugs 15%Key reform trends in the healthcareenvironment in ChinaPrice management● Ongoing pricing reform to reduce pricing levelsand to erode the price differential between off-patent originator drugs and genericsCost control● Number of cost containment measurementsbeing piloted (e.g., Budget capping, DRGs), andaims for nationwide expansion in 2014Expansion of EDL(3) system● Potential for EDL-RDL(4) tendering linkageand/or stricter enforcement of policies thatmandate certain level of usage of EDL drugsProvincial tender models● New price-driven tender models ‘tested’ in keyprovinces (e.g., Guangdong)1243
  17. 17. The Growth of China’s Pharmaceutical Market isExpected to be around 17% over the Next 5 Years1716.7%(1) IMS Health, Market Prognosis, April 2011. Rankings in CER(2) IMS Health, Market Prognosis China 2013 – 2017 – Exchange rate 1 EUR = 8 RMB(3) IMS Health, MAT Qtr. IV with forecasts 2013-2017● China forecasted to represent ~40%of worldwide Pharmaceutical marketgrowth over the period 2012-2017(3)● Broad access to insurance scheme● Market growth is propelled bygrowing “middle class”● Market growth is also driven byincreasing demand in smaller, lessdeveloped cities and countiesChina to become the 2ndlargestPharmaceutical market by 2015(1)Pharmaceutical Market in China in €bn(2)
  18. 18. Superior Growth in the Hospital Market Outside ofChina’s Major Cities(1)18Pharmaceutical Market by City Tier (%)(1)CAGR● Public healthcare investmentfocused on the county market● Lower-tier hospital drug market isgrowing faster than in the top tiercities(2)● Lower-tier market provides growthopportunities for Sanofi’s broadproduct portfolio● A large untapped market potentialin the ‘Rest of China’(1) IMS Health, Market Prognosis China 2013-2017, excluding class J, K and V(2) City tier is based on IMS internal metric system; Tier 1: Beijing, Shanghai, Guangzhou; Tier 2: Chengdu, Shenyang, Chongqing, Xian, Tianjin,Nanjing, Hangzhou, Shenzhen, Jinan, Zhengzhou, Wuhan; Tier 3: Changzhou, Ningbo, Urumqi, Taiyuan, Harbin, Dalian, Qingdao; 3 Regions:Pearl River Delta, Fuxiaquan, Suxi
  19. 19. Tongxiang First People’s Hospital(2)● County – Tongxiang● Population – ~1 million● County hospital – Built in 2010● Number of beds – 835● Outpatient visits in 2012 – 917,400Modern Healthcare Infrastructure is Driving Growth inChina’s County Hospital Market19(1) Defined as county-level cities or counties; including 32 provinces, autonomous regions and municipalities, excluding Hong Kong, Macao, and Taiwan(2) Tongxiang First People’s hospital website; www.txdyyy.comChina’s ~2,000 Counties(1)Population ~900 millionOpportunity● Huge base● Lower affordability● Geographically broadExampleTongxiang County inZhejiang ProvinceE.g.: Zhejiang Province, Tongxiang County
  20. 20. ● A dedicated team of >200 salesrepresentatives● Reaching out to >300 Counties in9 Provinces● Covering ~1000 Hospitals● Portfolio approach to secure salesforce efficiency and profitability● Significant incremental salesalready in year #1 Further expansion underwayAddressing the Medical Needs in China’s Counties with aDedicated Primary Care Business Unit20Expansion into several hundreds othercounties in key provincesPrimary Care Business Unit (PCBU)Implemented in 2011
  21. 21. Agenda21Emerging Markets at SanofiSanofi – A Leading Presence in ChinaAddressing the healthcare needs in ChinaFocus on diabetesConclusion
  22. 22. The Diabetes Epidemic is Expanding in ChinaPeople with diabetes 2010 26m 21m >90m 9mRate of diagnosis 73% 84% 32% 53%Expected diabetespopulation growth 2010-201514% 7% 9% 14%Insulinized patients 2010 5.7m 5.2m 5.8m 1.4mExpected insulinizedpatients 20157.6m 6.0m 10.6m 1.6mKey Epidemiology FactsSource: IMS data and internal patient model22
  23. 23. RMB millionInsulins:CAGR 2008-2012 at + 24.8%MAT Mar 2013, Growth +18.3%Sales Value of Diabetes Therapy SegmentsSource data : 1.IMS CHPA MAT Dec 20122. IMS CHPA MAT Mar 2013GLP-1 share 0.60%12,00011,00010,0009,0008,0007,00055%45%20119,88252%48%20108,32654%46%20096,76811,75749%51%201211,29550%50%20085,23156%44%20073,75259%41%6,0005,0004,0003,0002,0001,0000MAT Mar2013Insulins Are the Fastest Growing Segment in China -Representing Already More than Half of the Total Market23Oral Anti-Diabetics (OADs):CAGR 2008-2012 at + 17.8%MAT Mar 2013, Growth +10.6%Total MarketCAGR 2008-2012 at +21.2%MAT Mar 2013, Growth +14.6%
  24. 24. RMB millionAnalog:CAGR 2008-2012 at + 48.7%MAT Mar 2013 GR at +33.5%Human:CAGR 2008-2012 at + 9.6%MAT Mar 2013 GR at +1.6%Sales Value of Insulin Class01,0002,0003,0004,0005,0006,00043%57%20114,71950%50%20103,83355%45%20093,05720125,625MAT Mar201359%41%5,88162%38%20082,31872%28%20071,53281%19%Insulin Analogs Already Account for 59% of Total InsulinSales in China24Source data : 1.IMS CHPA MAT Dec 20122. IMS CHPA MAT Mar 2013
  25. 25. Basal Drives Growth of the Insulin Market in China25China Insulin Market Breakdown by Type of Insulin(1) (Value)2007(2) 2012(4)(1) Market share in % and growth rates vs. prior year(2) IMS CHPA Dec 2007(3) IMS CHPA Dec 2009(4) IMS CHPA Dec 20122009(3)BasalShort ActingPremix+60.4%+57.8%+27.9%+33.7% +27.3% +16.4%
  26. 26. Sanofi Has Moved Up the Ranks and is the FastestGrowing MNC in the Chinese Diabetes Market(1)(1) IMS CHPA 2007; MAT Mar 2013RK CORP MS%1NOVONORDISK 34.1%2 BHC 16.8%3 ELI LILLY 5.7%4 SERVIER 4.2%5 BMS 3.9%6 GSK 3.7%7 SANOFI 3.5%RK CORP MS%1NOVONORDISK 34.0%2 BHC 13.6%3 SANOFI 10.5%4 ELI LILLY 6.8%5 BMS 4.2%6 HUADONG 3.3%7 SERVIER 2.4%2007 Q1 2013● Sanofi Diabetes Business Unitcreated in China in 2009● Growth of Sanofi’s diabetesfranchise outpacing market● +48%, 2008-2013 CAGR● Launch of new products areexpected to further boost growth inthe coming years● Ambition to become the leadingdiabetes player in ChinaCompanies in the Chinese Diabetes MarketRanked by Market Share(1)26
  27. 27. ● Lantus® launched in China in 2004● SoloStar® launched in 2009● Reached 16.7% of total insulin market in Chinain Q1 2013(2)● Reimbursed in Chinas largest markets● Shanghai (December 2010)● Beijing (July 2011)● Lantus® drives the paradigm shift in theChinese insulin market● Shift from Premix to Basal● Basal regimen included in Chinesediabetes treatment guidelines● Leading insulin in several big cities(3),ahead of Novo Nordisk● Low average daily dosing per patient● ‘Biosimilar’ to Lantus® competing on themarket since 200527Paradigm Shift Drives Strong Sales Evolution of Lantus®in China(1) IMS MAT 12/2009 – 12/2012(2) IMS CHPA March 2013(3) IMS CHPA MAT 03/13; Cities where Lantus is the #1 insulin include Guangzhou, Suxi, Nanjing, Chengdu, Xi’an, Dalian, Shenzhen, Changsha, Shijiazhuang, Guiyang2012201120102009Lantus Sales in China(1) (m RMB)33.2%
  28. 28. Expanding our Lantus® Options in China● SoloSTAR® disposable pen● Convenience option● Lantus® available in China only inSoloStar® until 2013● Lantus® SoloSTAR® pen assemblyat Sanofi’s facility in Beijing● Inaugurated in May 2012● ClikSTAR® re-usable pen forLantus® cartridges● Durable solution● Differentiated price● Registration approval in Q4 2012● Launched in March 2013Easy-to-use, Accurate and Affordable28AllStar™, the next step to further improve access to innovative, affordable devices
  29. 29. ● Despite genericcompetition, Amaryl® isdriving the growth of theentire OAD(1) market inChina● In March 2013, Amaryl®has reached 6.8% of themarket share of the totalOAD market in China,growing at 23.1%(2)● Amaryl® is expected toremain an importantgrowth driver in ourdiabetes portfolio in ChinaAmaryl® is Gaining Market Share in Value and Volumeagainst Generics in the Oral Anti-Diabetic Market29Amaryl® Value Share in GlimepirideAmaryl® Volume Share in Glimepiride(1) OAD – Oral Anti-Diabetic(2) IMS CHPA MAT March 2013GenericAmaryl®
  30. 30. Agenda30Emerging Markets at SanofiSanofi – A Leading Presence in ChinaAddressing the healthcare needs in ChinaFocus on diabetesConclusion
  31. 31. Strategic Pillars for Sanofi’s Continued Leadership in theHealthcare Market in ChinaExtend the PerimeterMedicine Leadershipand InnovationExpand the OfferingExample: DiabetesIn China’s CountiesIn ConsumerHealthcare (CHC)● Innovative products● Primary Care BU dedicated to cover counties● Established CHC business through two transactions● Planned new product launches123DPP-4/Alogliptin(2)(1) Lyxumia® is in-licensed from Zealand Pharma(2) Takeda and Sanofi signed a co-promotion agreement to expand reach of diabetes treatment Alogliptin in China 31(1)
  32. 32. Sanofi Is Poised to Sustain Significant Growthin China32● Solid historical presence and fully-integrated structure● Well-suited and broad portfolio to address China’s healthcareneeds (Rx, CHC, Vaccines, Diabetes, Animal Health, Genzyme)● Significant investments in local production facilities serving allGrowth Platforms and accelerated investment in R&D● Increasing access to new market segments at the county level● Growing position in Diabetes by maximizing the value of theentire portfolio● Industry lead in talent attraction, development and retention“We no longer look at China as an emerging market.We view it as a core market.” Sanofi CEO Christopher A. Viehbacher
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