2013/06 - jp morgan hc
TRANSCRIPT
J.P. Morgan European Healthcare Conference Fabrice Baschiera, General Manager, Commercial Operations,
Greater China
London, June 24, 2013
2
Forward Looking Statements
This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of
1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include
projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and
expectations with respect to future financial results, events, operations, services, product development and potential,
and statements regarding future performance. Forward-looking statements are generally identified by the words
"expects", "anticipates", "believes", "intends", "estimates", "plans" and similar expressions. Although Sanofi's
management believes that the expectations reflected in such forward-looking statements are reasonable, investors are
cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which
are difficult to predict and generally beyond the control of Sanofi, that could cause actual results and developments to
differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.
These risks and uncertainties include among other things, the uncertainties inherent in research and development,
future clinical data and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or the
EMA, regarding whether and when to approve any drug, device or biological application that may be filed for any such
product candidates as well as their decisions regarding labeling and other matters that could affect the availability or
commercial potential of such product candidates, the absence of guarantee that the product candidates if approved will
be commercially successful, the future approval and commercial success of therapeutic alternatives, the Group's ability
to benefit from external growth opportunities, trends in exchange rates and prevailing interest rates, the impact of cost
containment policies and subsequent changes thereto, the average number of shares outstanding as well as those
discussed or identified in the public filings with the SEC and the AMF made by Sanofi, including those listed under
"Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in Sanofi's annual report on Form
20-F for the year ended December 31, 2012. Other than as required by applicable law, Sanofi does not undertake any
obligation to update or revise any forward-looking information or statements.
Agenda
3
Emerging Markets at Sanofi
Sanofi – A leading presence in China
Addressing the healthcare needs in China
Focus on diabetes
Conclusion
Growth Platforms Grew by +9.9%(1) in 2012
and Constitute Long Life Assets to Drive Future Growth
4
(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 €3,897m
Diabetes Solutions €5,782m
Consumer Healthcare €3,008m
Animal Health €2,179m
Emerging Markets(2) €11,145m
Genzyme(3,4) €1,785m
2012 growth at CER
Sanofi Benefited from its Broad Geographic Presence
in Emerging Markets in 2012
31.9%
31.1%
23.9%
13.1%
5
(1)
+11.3% +10.1% +2.1% +10.2% Growth
at 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 East
Emerging 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
Sanofi Remained the #1 Healthcare Company
in 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
€11,145m
2011 2010 2009 2008 2007 2006 2005
€5,037m
Emerging 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)
Sanofi Sales in EM (m €)
China: A Growing Contributor to Sanofi’s Leadership
Position in Emerging Markets
7
€11,145m
€6,540m
8% 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 China
2012 2011 2010 2009 2008
Sanofi Sales in China(2) (m €)
€1,249m
€347m
Sanofi Sales in China(2)
2012 2011 2010 2009 2008
+38% +14%
Agenda
8
Emerging Markets at Sanofi
Sanofi – A Leading Presence in China
Addressing the healthcare needs in China
Focus on diabetes
Conclusion
9
Sanofi Is Progressively Developing its Key Growth
Platforms in China
4%
Animal Health
11%
64% CHC
7%
Breakdown of Sales in China(1) by Business
Total Sales €1,249m
Diabetes
Pharmaceuticals
72%
Vaccines
22%
6%
2007 2012
Total Sales €273m
(1) Mainland China 9
ASTRAZENECA
BAYER
PFIZER
JS.YANGZIJIANG FTY
ROCHE
SINO-SWED
JS.L.Y.G.HENGRUI
HLJ.HAERBIN PHARM.
NOVARTIS
2007(1)
1
2
3
4
5
6
7
8
9
10
Source data: IMS, ranked by sales value in local currency, RMB.
(1) IMS CHPA MAT December 2007 .
(2) IMS CHPA MAT December 2009
(3) IMS CHPA MAT March 2013
Sanofi Has Moved Up to the #3 Position in China
1
2
3
4
5
6
7
8
9
10
PFIZER
ASTRAZENECA
BAYER
JS. YANGZIJIANG FTY
ROCHE
KE LUN
SHANDONG QILU FTY
JS.L.Y.G. HENGRUI
HLJ. HAERBIN PHARM.
2009(2) Q1 2013(3)
1
2
3
4
5
6
7
8
9
10
PFIZER
ASTRAZENECA
BAYER
SHANDONG QILU FTY
KE LUN
JS. YANGZIJIANG FTY
ROCHE
JS.L.Y.G. HENGRUI
NOVARTIS
10
Well Established in China with a Fully Integrated
Presence
● 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 platform
Shanghai HQ
Hong Kong
Taipei
Tianjin
Hangzhou
Beijing
Shenyang
Guangzhou
Wuhan
Chengdu
Wulumuqi
Nanjing
Shenzhen
Sanofi’s Presence in China
Regional offices
Manufacturing site Pharmaceuticals
Greater China offices
Tangshan
Manufacturing site Consumer Healthcare
Manufacturing site Animal Health (Merial)
Manufacturing site Vaccines
Nanchang
Jinan
11
Human Vaccines
Animal Health
A Large Portfolio of Flagship Brands Across our Growth
Platforms that Fits the Local Needs in China
Diabetes Solutions
12
Oncology
Other Rx
Cardiovascular
1. Cancer
2. Heart disease
3. Cerebro-vascular
diseases
4. Respiratory
System
5. Injury/Poisoning
6. Metabolic/
Endocrine
diseases
7. Digestive
system
8. CNS
9. Genitourinary
system
10. Infectious
diseases
Top 10 Causes of
Death in China(1)
(1) China’s Health Statistics Yearbook 2012, Ministry of Health (Urban population)
Consumer Healthcare
Agenda
13
Emerging Markets at Sanofi
Sanofi – A Leading Presence in China
Addressing the healthcare needs in China
Focus on diabetes
Conclusion
● >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)
Ageing population
Growing incidence of
chronic diseases
Urbanization and increasing middle
class
● ~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 market
Healthcare Reform(8)
Socio-Economic Indicators Point Towards the Continued
Strong Demand for Healthcare Solutions in China
14
(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
(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 Finance
The Healthcare Reform Activities in China Have
Created Opportunities…
Fast growing Health Care Expenditure
but still relatively low as a % of GDP(1, 2, 3)
HC expenditure as % of GDP 2011
Significant Incremental
Healthcare Investment(3)
Original plan 2,000
1,500
1,000
500
0 2009
2005 2001 1997
RMB bn
850 RMB bn
Updated report 1,134 RMB bn
Investment into COUNTY
healthcare system, both
infrastructure and insurance
1,754
2009-2011:
8.9%
11.1%
17.9%
5.2%
2,500
2011
…as well as Challenges and Sustained Pricing Pressure
Multiple rounds of price cuts by NDRC(1)
May 2007 260 drugs (excl. TCM(2)) 19%
162 anti-infective and cardiovascular drugs
21%
Nov 2010
Mar 2011
19% 176 drugs
128 drugs including hormone treatments, endocrine system and neurological disorder drugs
14% Sep 2011
Target Average %
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 List
May 2012
16
Time
53 digestive system and gastrointestinal drugs
17%
Oct 2012 95 hematology, oncology and immunology drugs
17%
Jan 2013 400 respiratory, antipyretic, analgesics and other specialty drugs
15%
Key reform trends in the healthcare
environment in China
Price management
● Ongoing pricing reform to reduce pricing levels
and to erode the price differential between off-
patent originator drugs and generics
Cost control
● Number of cost containment measurements
being piloted (e.g., Budget capping, DRGs), and
aims for nationwide expansion in 2014
Expansion of EDL(3) system
● Potential for EDL-RDL(4) tendering linkage
and/or stricter enforcement of policies that
mandate certain level of usage of EDL drugs
Provincial tender models
● New price-driven tender models ‘tested’ in key
provinces (e.g., Guangdong)
1
2
4
3
The Growth of China’s Pharmaceutical Market is
Expected to be around 17% over the Next 5 Years
17
16.7%
(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 market
growth over the period 2012-2017(3)
● Broad access to insurance scheme
● Market growth is propelled by
growing “middle class”
● Market growth is also driven by
increasing demand in smaller, less
developed cities and counties
China to become the 2nd
largest
Pharmaceutical market by 2015(1)
Pharmaceutical Market in China in €bn(2)
Superior Growth in the Hospital Market Outside of
China’s Major Cities(1)
18
Pharmaceutical Market by City Tier (%)(1)
CAGR ● Public healthcare investment
focused on the county market
● Lower-tier hospital drug market is
growing faster than in the top tier
cities(2)
● Lower-tier market provides growth
opportunities for Sanofi’s broad
product portfolio
● A large untapped market potential
in 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
Tongxiang First People’s Hospital(2)
● County – Tongxiang
● Population – ~1 million
● County hospital – Built in 2010
● Number of beds – 835
● Outpatient visits in 2012 – 917,400
Modern Healthcare Infrastructure is Driving Growth in
China’s County Hospital Market
19
(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.com
China’s ~2,000 Counties(1)
Population ~900 million
Opportunity
● Huge base
● Lower affordability
● Geographically broad
Example Tongxiang County in
Zhejiang Province
E.g.: Zhejiang Province, Tongxiang County
● A dedicated team of >200 sales
representatives
● Reaching out to >300 Counties in
9 Provinces
● Covering ~1000 Hospitals
● Portfolio approach to secure sales
force efficiency and profitability
● Significant incremental sales
already in year #1
Further expansion underway
Addressing the Medical Needs in China’s Counties with a
Dedicated Primary Care Business Unit
20
Expansion into several hundreds other
counties in key provinces
Primary Care Business Unit (PCBU)
Implemented in 2011
Agenda
21
Emerging Markets at Sanofi
Sanofi – A Leading Presence in China
Addressing the healthcare needs in China
Focus on diabetes
Conclusion
The Diabetes Epidemic is Expanding in China
People with diabetes 2010 26m 21m >90m 9m
Rate of diagnosis 73% 84% 32% 53%
Expected diabetes
population growth 2010-2015 14% 7% 9% 14%
Insulinized patients 2010 5.7m 5.2m 5.8m 1.4m
Expected insulinized
patients 2015 7.6m 6.0m 10.6m 1.6m
Key Epidemiology Facts
Source: IMS data and internal patient model 22
RMB million
Insulins:
CAGR 2008-2012 at + 24.8%
MAT Mar 2013, Growth +18.3%
Sales Value of Diabetes Therapy Segments
Source data : 1.IMS CHPA MAT Dec 2012
2. IMS CHPA MAT Mar 2013
GLP-1 share 0.60%
12,000
11,000
10,000
9,000
8,000
7,000
55%
45%
2011
9,882
52%
48%
2010
8,326
54%
46%
2009
6,768
11,757
49%
51%
2012
11,295
50%
50%
2008
5,231
56%
44%
2007
3,752
59%
41%
6,000
5,000
4,000
3,000
2,000
1,000
0
MAT Mar
2013
Insulins Are the Fastest Growing Segment in China -
Representing Already More than Half of the Total Market
23
Oral Anti-Diabetics (OADs):
CAGR 2008-2012 at + 17.8%
MAT Mar 2013, Growth +10.6%
Total Market
CAGR 2008-2012 at +21.2%
MAT Mar 2013, Growth +14.6%
RMB million
Analog:
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 Class
0
1,000
2,000
3,000
4,000
5,000
6,000
43%
57%
2011
4,719
50%
50%
2010
3,833
55%
45%
2009
3,057
2012
5,625
MAT Mar
2013
59%
41%
5,881
62%
38%
2008
2,318
72%
28%
2007
1,532
81%
19%
Insulin Analogs Already Account for 59% of Total Insulin
Sales in China
24 Source data : 1.IMS CHPA MAT Dec 2012
2. IMS CHPA MAT Mar 2013
Basal Drives Growth of the Insulin Market in China
25
China 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 2012
2009(3)
Basal
Short Acting
Premix
+60.4% +57.8%
+27.9%
+33.7% +27.3% +16.4%
Sanofi Has Moved Up the Ranks and is the Fastest
Growing MNC in the Chinese Diabetes Market(1)
(1) IMS CHPA 2007; MAT Mar 2013
RK CORP MS%
1
NOVO
NORDISK 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%
1
NOVO
NORDISK 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 Unit
created in China in 2009
● Growth of Sanofi’s diabetes
franchise outpacing market
● +48%, 2008-2013 CAGR
● Launch of new products are
expected to further boost growth in
the coming years
● Ambition to become the leading
diabetes player in China
Companies in the Chinese Diabetes Market
Ranked by Market Share(1)
26
● Lantus® launched in China in 2004
● SoloStar® launched in 2009
● Reached 16.7% of total insulin market in China
in Q1 2013(2)
● Reimbursed in China's largest markets
● Shanghai (December 2010)
● Beijing (July 2011)
● Lantus® drives the paradigm shift in the
Chinese insulin market
● Shift from Premix to Basal
● Basal regimen included in Chinese
diabetes treatment guidelines
● Leading insulin in several big cities(3),
ahead of Novo Nordisk
● Low average daily dosing per patient
● ‘Biosimilar’ to Lantus® competing on the
market since 2005
27
Paradigm 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, Guiyang
2012
2011 2010
2009
Lantus Sales in China(1) (m RMB)
33.2%
Expanding our Lantus® Options in China
● SoloSTAR® disposable pen
● Convenience option
● Lantus® available in China only in
SoloStar® until 2013
● Lantus® SoloSTAR® pen assembly
at Sanofi’s facility in Beijing
● Inaugurated in May 2012
● ClikSTAR® re-usable pen for
Lantus® cartridges
● Durable solution
● Differentiated price
● Registration approval in Q4 2012
● Launched in March 2013
Easy-to-use, Accurate and Affordable
28
AllStar™, the next step to further improve access to innovative, affordable devices
● Despite generic
competition, Amaryl® is
driving the growth of the
entire OAD(1) market in
China
● In March 2013, Amaryl®
has reached 6.8% of the
market share of the total
OAD market in China,
growing at 23.1%(2)
● Amaryl® is expected to
remain an important
growth driver in our
diabetes portfolio in China
Amaryl® is Gaining Market Share in Value and Volume
against Generics in the Oral Anti-Diabetic Market
29
Amaryl® Value Share in Glimepiride
Amaryl® Volume Share in Glimepiride
(1) OAD – Oral Anti-Diabetic
(2) IMS CHPA MAT March 2013
Generic
Amaryl®
Agenda
30
Emerging Markets at Sanofi
Sanofi – A Leading Presence in China
Addressing the healthcare needs in China
Focus on diabetes
Conclusion
Strategic Pillars for Sanofi’s Continued Leadership in the
Healthcare Market in China
Extend the Perimeter
Medicine Leadership
and Innovation
Expand the Offering
Example: Diabetes
In China’s Counties
In Consumer
Healthcare (CHC)
● Innovative products
● Primary Care BU dedicated to cover counties
● Established CHC business through two transactions
● Planned new product launches
1
2
3
DPP-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)
Sanofi Is Poised to Sustain Significant Growth
in China
32
● Solid historical presence and fully-integrated structure
● Well-suited and broad portfolio to address China’s healthcare
needs (Rx, CHC, Vaccines, Diabetes, Animal Health, Genzyme)
● Significant investments in local production facilities serving all
Growth 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 the
entire 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