Sanofi (SNY) Q3 2011 Earnings Report, Transcript and Summary

Welcome to the 2011 Q3 Results Conference Call. Today, I am pleased to present Mr. Sébastien Martel. Sir, please go ahead. Sébastien Martel – Investor Relations: Thank you. Hello, everyone, and welcome to Sanofi’s conference call on our Q3 2011 results. Before we start, I must advise you that our presentation today contains forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different. These factors are detailed on our annual report on Form 20-F and in the Document of Reference. I would also like to remind you that our slides can be downloaded from our website. So our presentation today will be divided in three parts. First, Chris Viehbacher, our CEO, will share with you the key highlights for the quarter. Then Hanspeter Spek, President, Global Operations, will provide some color on the Q3 2011 business performance. And then Jerome Contamine, our CFO, will conclude with the Q3 2011 financial performance. After the presentation, we will as always host a Q&A session. Without any further ado, I will now hand the call over to Chris. Chris Viehbacher – Chief Executive Officer: Thanks, Sébastien. Good afternoon. Good morning, everybody. Good quarter here, pretty much in line with expectation. A little ahead of consensus, but certainly very consistent with the medium term guidance that we gave on the 6 of September, when we had an opportunity to go and do a deeper dive in to the medium-term outlook of the business. I think I said at that point that really the focus of the company now shifted to really execution on that, and I think we see that in this quarter. If we go the first slide on five, we talk an awful lot about the patent cliff, but I think the strategy that we have employed really in terms of both growing the business organically through the growth platforms and then also with the explicit strategy of doing mergers and acquisitions to bolt-on to those platforms and enhance the growth that we’ve been successful in actually avoiding the cliff really on sales. So even though we’re in the real middle of the cliff, you can see that really since quarter four, sales have steadily increased. Now as we all know, that’s certainly thanks to the consolidation of Genzyme. But again, I think external growth has always been an explicit part of our strategy. So nobody is pretending that’s organic. And what I think – and we’ll see that a little later on, it certainly puts us back on that trajectory of sustainable growth going forward. Earnings per share actually falling not too badly. Obviously, when you lose these big blockbusters, huge leverage goes out of the business. You’ve seen this in other business, and it’s no different for us. Nonetheless, I think, again, thanks to not only the consolidation of Genzyme, but some very tight cost management, that we are – as we transition the business away from major blockbusters able to also limit the loss on profits of the business. If we go to slide six, you can see the progress we’re making on the cliff. So a year ago, we still – even though we’d lost already a lot in 2004, the key genericized products still accounted for over €1 billion. These are down to €744 million. One of the curious things is, as kind of a new thing for me, I’ve never seen a patent cliff go back up. But that’s a little bit what we’re seeing with Eloxatin. Having written Eloxatin off, actually we’ve got a new lease on life, a limited lease on life, where Eloxatin will now stay on the U.S. market until August of 2012. This was actually a very strong performance by our legal team, not only in defending the patents, but also I think on our whole managed care organization, because we actually had to do something unprecedented. You know when a generic comes into the market, the whole official reimbursement rate for Medicare and Medicaid change. And we actually had to go back and increase that, because the generics came off the market. And as I said, there hadn’t been really been a precedent for that in this type of a disease state, and we managed to do that. So we are getting an extra amount of money, and you can see in the quarter, that’s benefited us to the tune of €245 million. Again, not part of the sustainable growth, but it is cash. Looking at slide seven, this is of course the story that you’ve been following now for a couple of years. We are clearly losing the blockbuster to generics, but the growth platforms continue to power along. Even just a year ago, they were only 58% of our sales. Now they’re 68% of our sales. Now, obviously that’s a function of loss of sales on the blockbuster, but clearly also very good double-digit growth on those growth platforms. And as I’ve said on the 6th of September, at our Investor’s seminar, these growth platforms will really represent close to 80% of the business by 2015. So when you look at those growth platforms you’re really looking at the new Sanofi. If you look on slide eight, you can see how those performed. Again, up 11% in the quarter and up almost 12% in the first nine months. All of this excludes the one-off revenue in 2010 of H1N1 vaccines, and we’ve also stripped out Genzyme sales, so that you get a sense of what’s the underlying growth of the business, before we do Genzyme. Emerging markets up 6.8%. Hanspeter will go in and show you that there is some differences in the sub-regions within emerging markets. Remember, there is 80 countries in emerging markets, and there are going to be a few hiccups in some of these markets along the way. But fundamentally, we continue to believe in the enormous opportunities of emerging markets. And we still are forecasting double-digit growth for the year, again all of that without H1N1 sales and Genzyme sales. If you add in Genzyme, those emerging markets grew by 12%, but the underlying growth rate is 6.8%. Vaccines up 19.9%. There is a technical aspect in our favor on this one. Seasonal flu vaccine sales are produced in the first part of the year and start shipping in the third quarter and fourth quarter, and a little depends just on how long it takes to make the strains. As you know, one strain changes every year in the flu vaccine. And so depending on yields and time, we are either shipping more or less in the third quarter. We shipped almost everything in the third quarter this year versus only roughly about 50% of the shipments last year. So, on a like-for-like basis, I think we see doses sold as being roughly equivalent to last year at around 70 million doses. So this clearly is the market leader in the U.S. But the value of each dose has improved a little bit in the U.S. So we’ll get some growth out of our flu franchise. But that 19.9% isn’t completely organic and isn’t going to last for the year. I might just take Animal Health while I’m at it, because there we have a technical reason going the other way. Hanspeter will go into more detail. But that is really as a result of generics which launched, which have been withdrawn from the market, but managed to put a number of products out there into the distribution chain. Very happy with the diabetes business. Growing at a very solid 12.4%. Lantus growing at pretty much 15%. So we gained market share in the United States. Interestingly, emerging markets showing 23% growth, so we are seeing increasingly that diabetes is really an issue that affects countries around the world. Consumer up 20%, largely on the back of a very successful Allegra launch, and of course, innovative products and within that obviously Multaq holding up reasonably well. On slide nine, we talked at the Investors Seminar about the fact that we had six new medicines to file with regulatory agencies, either in the U.S. or in Europe, over a nine month period. And in fact, five of those have already been completed. All of these products, Kynamro, Aubagio, Visamerin, which is the U.S. brand name, Lyxumia and Zaltrap have either been filed in the U.S. or in the EU. And I’m actually impressed with the regulatory teams because putting in this many regulatory submissions is not an easy thing. And to my mind, I’ve never see it in my career before. So people have worked very hard to get that done. We also have on the next slide, slide 10, a number of milestones coming up. So we’ve already seen on the MOBILITY trial Phase III results out. We have our new formulation of insulin glargine. We told you last 6th of September that that was in Phase I. In the meantime, we’ve had some consultations with regulatory agencies, and we believe that we can actually go straight into Phase III in the first quarter of 2012. Our PCSK-9, we look like we are certainly one of the leaders in that, if not the leader. And we would expect to go into the Phase III with that product in the second quarter of 2012. And of course, you’re going to see some other data coming along. We have our Phase II results in first line colorectal cancer. You remember the VELOUR study showed positive results in second line. The Lemtrada second Phase III study will be released before the end of the year, and we have the third Phase III study that will also – for Aubagio that will come out in Q4. And of course, we will also do the regulatory filings. If we filed in the U.S., then you see the EU dates and vice versa. So, research and development is coming along pretty well. I think we spent the last two years really focusing on development. We are state of art in development. We are now turning our focus really to research and really pursuing the strategy of open innovation that we’ve talked about. And you may have questions on that coming back later on. So if I take all of these factors, yes, we had the significant impact of generics in the second half. We don’t have H1N1 sales this year, which we had in the first half of 2010. We’ve seen Taxotere. And we only consolidated Genzyme from the second quarter. But I think we’ve got a strong outlook. And so with the progress of the business, the strength in the growth platforms, we continue to maintain the guidance that we’ve issued a little earlier this year at the end of the second quarter, which is that business earnings per share are expected to be 2% to 5% lower than 2010 EPS at constant exchange rates. So with that, I’ll turn it over to Hanspeter to give us a little bit more color on the operations. So Hanspeter? Hanspeter Spek – President, Global Operations: Yes. Thank you, Chris. Good morning, good afternoon to everybody. I think it’s relatively easy to comment on this quarter. Why? Because the quarter hardly brings surprise. Just to have two or three little exceptions. Overall, it is a good, reaffirming continuation what we have given as an outlook in the previous quarter, and what we could report for the previous quarter overall. If we could advance on page number 13, you see then overall, yes, the business has been growing by 10% in sales. This despite generic competition, but yes, of course, helped by the integration of Genzyme sales. As you see more in detail then from looking through the scales, you see that our growth platforms not only compensated in this quarter as last quarter, but even over-compensated the losses due to generification with €555 million increased sales toward €471 million of losses. You see that that’s a big product of Sanofi Taxotere, Lovenox, Ambien, Allegra, Xyzal, Plavix in Europe. They are all still losing sales due to generification, while Eloxatin, for reasons you are aware of, continued to grow and added on this, €839 million of sales coming then from Genzyme. Looking more into our geographical growth platforms there may be need to expand a little bit on the minus 5.4% you see on page 14 for Eastern Europe and Turkey. If we analyze those minus 5%, which may look a little bit surprising on first glance, deeper, it is important to state that a third of the effect comes out of Turkey. We have seen price decreases of significant magnitude category, 20% across the board in Turkey, to one-third. Another third comes from vaccines, which is largely a technical effect in line with what Chris chart explains about anticipated and the delayed sales of flu vaccination. And another third comes from genericization, mainly Taxotere and to a much lesser extent Aprovel and Plavix. Besides those technical effects and in respect to the vaccines one-time effect, the development also in the Eastern European countries continued to be positive on the level of the other growth platforms. You see that we continue to have a very strong two-digit growth of nearly 18% in Asia, 12% in Latin America, and still 3.4% for Africa, despite all of the political events which took place during the year. My outlook for the rest of the year for Africa, just coming back from a longer journey into Africa, is very positive. And we, overall, for the total year will reach our targets in Africa, despite all of those events. Once again, you’ll see a little focus on the so-called BRIC countries, where we were selling more than €900 million in the third quarter, with an even more accelerated growth of 20% without Genzyme and even 24% with Genzyme. Diabetes, a little bit more in detail on page 15. You’ll see that, yes, in 2010 we had reason to reassess our investments, to reallocate our means, especially but not the only into United States. And you see then that from a modest growth of only 6.7% one year ago, growth is going up to 8.8%, 13%, 14% and now nearly 15%. It is a growth which is driven of course by Lantus and Apidra, but also our oral products, depending on the geographical situation, continue to do very well. The underlying growth sectors are, as you see from the chart, SoloSTAR, which has now obtained nearly 47% or more than 47% of market share, and as already mentioned by Chris, an even stronger growth in the emerging markets with more than 23%. We are equally content with our development in CHC OTC products with a growth of more than 20% in the third quarter. The bar chart could give you the impression that all of this growth comes from Allegra, which is fortunately not true. Nevertheless, Allegra did extremely well. It’s performing above expectations for the total year 2011. We had again a very good third quarter with Allegra in the United States due to the outdoor season period. Now in the fourth quarter, we expect of course much lower sales. But the overall portfolio in CHC will be driven by all the other products, and you find some examples like Essentiale, Lactacyd, Dorflex and NoSpa, most of them in very strong two-digit growth. So yes, in fact, we are quite content with our performance in CHC, where we take more and more leading position within this segment from a worldwide basis. Then on the next page, the performance of generics, I refer to what I have said many times before. That generics at the end of day is a question of definition. So the way we present the data, you see which important part within our portfolio play generics, where about 64% of our sales come from emerging markets, which means of course, in those emerging markets, very often patent protection does not exist. And consequently, from a definition point of view, nearly everything into market is equal to generic. We do well with those products. We have a very close to 10% growth rate inside the emerging markets. Important growth factor is still and will continuously be mainly in South America. I told you during the last calls that we are expanding madly from Brazil all over South America, and we do very well. As you see we have a growth rate of 37% in this quarter, and I tend to believe that this is only the beginning, and we will continue to expand the presence all over South America. Worth mentioning also that we have launched a authorized generic of Lovenox in the United States, due to the fact that there was a short appearance of another generic coming from a competitor, as you’re probably aware. The generic had to be withdrawn by a decision of U.S. District Court. We maintain, of course, our authorized generic on the market. And once again, we are overall rather content with the performance of Lovenox inside the competitive environment now in the United States. We believe that so far, we have taken the right decisions, and we of course intend to continue to do so also with our authorized generic. This builds a nice bridge to page number 18, where you see two of our still-major products, Plavix and Lovenox. I think it’s interesting to point out that despite the generification of Plavix, Plavix is still selling €1.7 billion in consolidated sales. And you see that Plavix, for example, in Japan and in China, two markets which are quite contradictively. In Japan, we have patent protection which will last for another close to three years. In China, we never had any patent protection. Nevertheless, it seems that product is growing by close to 23% in both markets, and is on the way to become a Japanese and Chinese blockbuster. But also outside, the product still plays an important role, which is equally true for Lovenox, which has achieved sales of close to €500 million in the quarter. €360 million outside the United States, you see that the product, which never had patent status, for example, in emerging markets, continues to grow with a very solid two-digit growth rate, and represented €137 million in the quarter. On Genzyme, you have heard also the comments from Chris. We have a quarter which is growing by 6.9%. Cerezyme sales, as we have commented on at other occasions, still a limited, reduced production availability is the reason. We are content to confirm that the Fabrazyme plant continues to be on track, and we remain optimistic that the product – that the factory will go online as foreseen at the beginning of next year. The products transferred to Sanofi, Renagel and Synvisc are at the beginning of an expanded promotion inside Sanofi. We are optimistic that we will significantly increase sales. This is especially but not only true for the United States, where we have allocated considerable additional resources, and we will see how much this will contribute to increase the growth of those products, which despite a certain underinvestment inside the old Genzyme, continuously grow with 7% or even 11%. Another aspect to be commented on is the very moderate to even negative growth of Merial into third quarter. €470 million on page 20, it was minus 5% as compared to last year. This is largely a technical effect. We had generics appearing on the – in the environment of Frontline. Due to court decision, those generics had to be withdrawn. Nevertheless, we had reacted by stockpiling in the first and into second quarter, which means we had anticipated Frontline sales in the United States in the previous quarter, which led to lesser sales in the third quarter overall. We are totally confident that Merial will reach its target for 2011 on an annual basis, showing a growth rate of single digit for the full year. In line with our ongoing plans to expand the life cycle management of Frontline, we have launched in May, June in the United States, Certifect. So far, the product behaved very well, exactly in line with our expectations. Then finally on page 21, you’ll see the very strong growth of vaccines, nearly 20% in the third quarter. You see that this is largely due to early shipment of flu vaccination, especially but not only into United States. But I think it’s also worth to report that other products like Menactra, which was a little bit of a point of concern in previous quarters, is pegged to a very good growth of more than 10%. And also Pentaxim is growing to nearly 20%. So, overall, a very good third quarter for our vaccine business, and we of course have to anticipate that the fourth quarter will be not so strong, as it has been pronounced already that especially flu vaccines are early shipments. But our statistics overall a good sign because it shows clearly the confidence the market and the payers have in our vaccination, because they are ready to take it on board very early. So far from my side and I pass to Jerome for the financials. Jerome Contamine – Chief Financial Officer: Thank you, Hanspeter. So, I am moving to slide 23. You already looked at the sales we posted for the quarter. I think that one thing we are proud of is this 0%, which you feel 0% is not so good, but actually it means in the first quarter now in a while since we’ve seen that the growth platform has compensated for the impact of the genericized products. And also in this quarter, for the €30 million of sales of H1N1 that we still had in the third quarter 2010. So just organically, we managed to have the sales even. And then of course, Genzyme adds to that to lead to 10% growth on a constant exchange rate basis. You’ll see also an important negative impact this time of the exchange rate fluctuations. We all know that exchange rates on (indiscernible) currencies are quite volatile. I’ll just remind you that for third quarter 2010, the U.S. dollar against the euro was pretty high at $1.29, which maybe we have forgotten. So here, I mean on a like-for-like basis, you’ll see the impact of the U.S. dollar valuation. Of course, if you take Q4, it will be different, as the U.S. dollar against the euro in Q4 was lower, or in other term, the euro was higher against the U.S. dollar during this quarter. On slide 24, the P&L is of course impacted by the Genzyme consolidation, both in terms of sales and cost lines as well. So you’ll see that when we post an increase of 10.1% of the net sales, the business operating income is growing, and again it’s something we did not show in the previous quarters, by 2.8%. Of course, the OpEx lines are all increasing due to Genzyme consolidation. Therefore, I will make some more detailed comments line by line. So to start with, I am on slide 25 to start with the cost of sales. As expected, the shift of mix of the business on the loss of sales branded products with a very high margin is leading to so much higher cost of sales. However, the gap against last year tends also to be smaller. We are just 2.2% lower than the Q3 2010, and the bulk of that is exactly due to the generification of our key products. The 31.15% cost of sales to sales ratio that we posted for the third quarter, in line with the guidance we gave, I gave for the full year, which is to be around 31%. Precisely after three quarters we are at 30.9%. On the OpEx side, firstly R&D. So the increase of R&D spend is only due to the R&D we spent on Genzyme, which would be then €139 million precisely. So if I exclude Genzyme on a like-for-like basis, our R&D expenses are down by 0.8%. And not only that, but in fact, the pharma R&D is decreasing by around 6% along with our efforts to restructure, streamline our R&D organizations. At the same time, we’re spending more on Phase III clinical trials, both in pharma, but also in vaccines. As you know that we are in the process of handling the Phase III trial for the dengue vaccine. So all-in-all, the R&D to sales ratio is now at 13.9%, which is very similar to the one we had in Q3 last year, and so much lower than the one we had in Q1 and Q2. When you come to SG&A, here again we are very close to the level we had in Q3 2010, in terms of SG&A to sales ratio, meaning that the overall increase of the SG&A is totally due to the Genzyme consolidation. As we had the opportunity to comment already during Q2 presentation, we have not been able to yet to realize all the synergies with Genzyme, in terms of G&A expenses, in particular, and to a certain extent, in terms of certain marketing expense for oncology, for example. These synergies will come quarter-after-quarter; however, despite of this effect, which will reduce over time, the ratio of SG&A to sales is at 24.2%, which is just 0.2% above the level of last year. This is due to tight cost control and control on our SG&A expense. If I just take the perimeter outside Genzyme, so not taking into account these synergies, we have an overall decline of 2% of our SG&A. And the decline hides somewhat the shift of significant decrease of expenses in mature countries, in particular in Europe, and to a lower extent in the U.S. where we have also spend expenses behind Allegra and Lantus, while we’re increasing our SG&A on our sales and marketing in emerging markets. I’ll turn now to page 28. I mean the good thing on this page is the performance of the net financial expense. We are now computing the full impact of the debt we raised to finance Genzyme. As you can see, we post the same level of net financial expense, which shows that the average cost of debt has decreased significantly when we have raised the financing of Genzyme, put in place financing of Genzyme. And at the same time the return we get from the excess cash we have on the balance sheet has increased somewhat as compared to last year. So, it’s really a good performance as we managed to keep net financial expenses stable, despite an increase of average debt due to the Genzyme acquisition. With an effective tax rate about 27.5%, which is a guidance that we gave at Q2, we arrived to a business net income which is up 4.1%, close to €2.4 billion, and brings us to a business EPS of €1.79, which is up 1.6%. The gap of course between the increase of the business net income and the business EPS is linked to the increase of the number of outstanding shares. This is due to the dividend, which was offered to be taken in shares this year. You’ll remember that we said on 6th of September that we will start to do some opportunistic buyback in order to manage the dilution. We have started as early as July and August. And as you will see on the next slide, we have completed the first program of buyback of buy €500 million of shares, which is around 10 million shares, out of which 8 million have been purchased during Q3. So we have again generated strong free cash flow, after taking into account the CapEx, which are still clearly under control, includes now the CapEx on Fabrazyme onto the field facilities in Genzyme is being kept to around €400 million. We have a free cash flow, which is increasing by 3.3% compared to Q3 2010, despite here again the impact of genericization of some of our key high-margin products. The cost of debt has been on the gross debt 2.4%. And when you compute the net debt, you have the impact of the translation of U.S.-dollar-denominated debt into euro, when the – I mean, the exchange rate at the closure date was 1.35. So, when we had a positive impact at the end of Q2, we had negative impact at the end of Q3. And this will continue to fluctuate like that, keeping in mind, that we have financed Genzyme in U.S. dollar, because we are going to repay this debt largely through U.S. dollar-denominated cash flows. So just to summarize, I think that this quarter is totally in line with what could be expected by you or by the market or in line with our strategy. The growth platforms have posted double-digit growth for the first nine months. We suffered from a significant generic headwind, which of course was planned, for a total of more than €1.7 billion for the overall nine months. This is clearly the year where we have the highest and the strongest headwind in terms of sales. We are continuing to be on track to deliver the €2 billion cost savings objective by the end of 2011, which of course doesn’t take into account the new objectives we have set for the period 2011 to 2015, which is to save another €2 billion. We all-in-all for the first nine months have limited erosion of our business EPS of 3.5% at the constant exchange rate, if I could exclude H1N1, which make us comfortable to confirm the guidance we gave at Q2 to be between 2% and 5% lower than what we had in 2010. And once again, the transformation of the Group is ongoing, as now the growth platform together with Genzyme represents more than 68%, precisely 68.5% of our overall sales. With that, I think that I can pass the floor to Sébastien Martel for the next item, the Q&A. Sébastien Martel – Investor Relations: Thanks, Jerome. Operator, we’re now ready to open the Q&A session. I’d ask participants to limit their questions to one or two at a time, to allow as many people as possible to participate in the discussions. Back to you?

(Operator Instructions) Our first question is from Mr. Tim Anderson from Sanford Bernstein. Please go ahead. Tim Anderson – Sanford Bernstein: Thank you. A couple of questions. Can you remind us what the potential benefits of your new insulin glargine formulation might be? And then second question is on emerging markets. It’s increasingly clear that not all products are insulated in emerging markets from loss of exclusivity. As you’ve shown in your Q3 sales by region by product, there’s sales declines in a handful of products, like Taxotere, Tritace, Xatral and Actonel. It seems to me what’s happened in the western world – I know you’ve mentioned Brazil in the past as a market where meaningful generic erosion happens. What are the other more important emerging market countries where you see generic erosion? And do you think this will increasingly spread to other countries?

All right, thanks, Tim. Just we’re not going to say at this point an awful lot on the new glargine formulation. It will offer different and unique PKPD profile. Once we’ve got the Phase III protocols, we’ll disclose those, once we’ve got the studies that begin to recruit. And we are going to show the Phase I results at one of the future diabetes congresses. So I think you can look towards first half of next year for more information on it. But this has become a pretty competitive space, so we prefer not to say an awful lot. Hanspeter, do you want to take on the emerging markets question?

No, what can be said evidently is that we have such effects from generification, especially now in Turkey, where a law was put in place that those products having launched since a certain number of years the patent protection had to undergo a kind of haircut price reduction of approximately 20% to 25%. Today, I see no other market. So the question is little bit speculative. Where could it happen? Where will it happen? I would say that as closer you get to Europe, as high as the risk may be. I don’t see any of those tendencies, let’s say, today in Far East or also in South America, for different reasons. I believe that there may be some indications in Eastern European markets like Poland, eventually also over time, like Russia. Tim Anderson – Sanford Bernstein: Okay, thank you.

Thank you. The next question is from Peter Verdult from Morgan Stanley. Please go ahead. Peter Verdult – Morgan Stanley: Hi, good afternoon. Pete Verdult, Morgan Stanley. Two questions. Just Chris, if I could follow up on the previous question on Lantus. I mean, just playing devil’s advocate, if you are going – if you are bypassing Phase II, would it be right to assume this is more a sort of an ultra-long-acting, once daily formulation that you’ve got it mind, rather than something that’s more longer acting for Lantus. And if you could give us any sense as to why you are confident that you can buy pass Phase II studies? Perhaps you’ve realized there’s a strong incentive to get this project in the market sooner rather than later. And then just again on emerging markets, just on Turkey, it seems to be continually surprising on the downside, not just for Sanofi but for the industry over the last few years. Is there any signs of stabilization there? And then just could you remind us as it relates to Africa, and the growth rate there. What is the size of your MENA business for Sanofi? And could you quantify some of the impact maybe from the Arab Spring? Thanks.

I mean again, I don’t really want to say an awful lot. But I think just on the part, why can we skip Phase II? Since we talked last on September 6, we’ve had regulatory interaction which gives us the confidence that we can go straight through to Phase III. I’ll just say a word about Turkey. In my personal view, Turkey is and is not an emerging market. Really what characterizes emerging markets is really low spends on healthcare, coupled with extremely high economic growth. And you know, Turkey is kind of between Middle East and Europe. In the 10 to 15 years I’ve seen Turkey, you have a couple of good years, and they come along and cut you back. There is enough growth to continue to be optimistic about the market, but I would agree with Hanspeter, that I kind of look at Turkey a little differently than I do other emerging markets. Hanspeter, do you want to just make a comment about the Middle East, North Africa business? How big is it? And what about the Arab Spring?

Our African business, including Egypt because it’s in our definition of Africa, is this year very close to €1 billion of sales. About €975 million is what we expect….

That’s all of Africa.

That’s all of Africa. Out of this, you would say that potentially half of it may have an impact on what is being called the Arab Spring. Now there, you get in a debate, was there an Arab Spring in Algeria, which is for us a very, very important market. We are by far market-leading company there. My personal opinion on Algeria is, no, there was not such a movement like let’s say in Egypt or in the neighboring countries. So in rough terms, half of our billion has a certain impact from what is called the Arab Spring. The other half is totally neutral, because it’s really the heart of Africa and especially within South Africa. Now in the Arab Spring markets, we have very controversial developments. We can say that we didn’t see any shortfall, for example, in Egypt, during the whole period, despite the fact that we are producing locally. Of course, we saw some shortfall in other markets, like for example Tunisia. Peter Verdult – Morgan Stanley: Thank you.

Thank you. The next question is from Mr. Michael Leuchten from Barclays. Please go ahead. Michael Leuchten – Barclays: Thanks. It’s Michael Leuchten from Barclays. Thanks for taking my question. Two quick ones. Just yet another one on glargine please, it looks like Lilly is now is now in Phase III with a biosimilar Lantus, so your thoughts on the timing maybe on your program? How that’s going to stack up in relative terms. And then on Jevtana, it looks like the momentum is kind of gone from the launch. Can you maybe comment on why that maybe and what you are doing there?

So, I don’t know what time line Lilly is on. It would be too early to start commenting on our own timeline. I think one thing we have said is Lilly has obviously been doing full clinical. So we don’t really see Lilly coming up with a fully substitutable biosimilar at this stage. Lilly comes into a market that’s got Lantus as market leader. There is Levemir. Degludec will get there. It’s going to be a fourth entry into the market, and we’ll see what happens. Thus far, Lantus has maintained roughly around 75% market share in the United States despite Levemir. I don’t really see anything really putting Lantus off its perch any time soon. We have got – between a new formulation, between a combination with our GLP1 and a different device – given just the sheer volumes of this market. Remember that it’s only a small portion of the market is treated with modern insulins, with – certainly with long-acting basal insulins. So I think the market is certainly big enough. I would actually suspect that you’re going to see some market expansion. I mean really because Levemir hasn’t been a phenomenal success for Novo, they haven’t really been putting all that much commercial effort behind it. You got Degludec and a few others, you’re going to have an awful lot of commercial effort going to really converting towards basals. And we’ve certainly seen this in plenty of other categories. When you actually have new entrants coming in, it helps it to accelerate the convergence process. So I wouldn’t see this is a zero-sum game in the marketplace. I think you’re going to see market growth, you’re going to see everybody get a little bit of share. But first of all, nobody has got the emerging markets presence that Sanofi does. Certainly Lilly doesn’t. And Novo is clearly strong in a few key BRIC markets, but for the most part, doesn’t have our presence either. So I think this is one of the biggest and most important markets out there. We’ve got a few number of players in it. And so I’m not too worried about it. And we’ve got plenty of innovation coming along to keep our franchise going. Do you want to just comment on Jevtana?

On Jevtana, yes, I agree that the third quarter could give the impression that the momentum is gone. I believe it’s a wrong impression nevertheless. We evidently suffer in terms of future growth in the U.S. You are of course aware that there’s a new competitor in the U.S. on the market, which is an oral agent, which is not easy for us to fight because it is being used by different physicians in different stages, in earlier stages. And also of course, the patients may prefer to get an oral agent before being treated with an intravenous agent. So we have a slowdown in the U.S., which we can only counteract in general terms through accelerated life cycle management. In countries in new approvals of Jevtana, in terms of sales in Europe and outside Europe, which we have obtained in the second quarter and in the third quarter, could not really kick into, in terms of sales. And so I’m very confident that in the fourth quarter, we will see once again growing Jevtana sales, as a effect coming out of the European launches which took place since the middle of this year.

I’ll just – to complement what Hanspeter said, I’ve just been reading some notes that clearly Jevtana is still going to get used. I mean it may get delayed a little bit because of earlier use of J&J’s product. But equally, there is still going to be people who relapse and need other therapy. So in some ways, there’s actually a movement out there in the oncology world to see how these products can be used in combination. So they are not necessarily in head-to-head competition. The marketplace is just at the moment trying to sort out exactly how these two products should be used, in what sequence, and whether simultaneously or the same – in sequence. And we treat later stage patients. I mean all of that is still being worked out by the oncologists. But I don’t think fundamentally there is anything to remark up on Jevtana’s potential. Michael Leuchten – Barclays: Thank you.

Thank you. The next question is from Mr. Graham Parry from Bank of America/Merrill Lynch. Please go ahead. Graham Parry – Bank of America/Merrill Lynch: Thanks for taking my questions, and firstly is on animal health, I was just wondering if you could clarify how long you expect the washout of generic Frontline happen? And then also what happens next in litigation, so when are you planning for potential generic launch that does hit the market? And secondly just could you give us something on pricing outlook for Europe for 2012? Having seen another quarter of changes in Europe, are you expecting anything different to what we were at the second quarter or at your business every day? And then similarly, for the emerging markets, any view on the pricing outlook for 2012? And then thirdly just on your enoxaparin generic, now that Watson’s off the market for the time being, can you actually take that authorized generic off the market, and would there be any merit in doing so?

Frankly, I didn’t understand you last question or the last part of your question.

The authorized generic of Lovenox. Could we actually – are we going to keep it on the market?

Yes. That’s an easy one. For the time being, at least, we have no intention to take it off the market. We believe it’s an interesting part of our overall strategy, that this is a market which de facto is split between, let’s make it simple, the retailer and the hospital market. And we believe it is good to have various options with different pricing. So we have not at all any intention today to discontinue the generic. On the pricing outlook in Europe and the emerging markets, I think bad news is that I don’t expect anything good in Europe. You know of course that the European situation in terms of loss-making healthcare systems is being maintained unfortunately, so we will see continued pressure on European prices. Now you may speculate, some major countries in Europe will see elections within the next 6 to 18 months. Is this a good time to make major changes? I would say probably not, but nevertheless, I believe in your models you should incorporate whatever you have in the past. I don’t see any upside. In the emerging markets, there are a number of discussions going on about an overall healthcare program. In China, I believe that this is in very, very early stages. I believe nevertheless that during 2012, we will see clearer how this may be set up, how it may be financed. I believe that there is today a serious will inside the Chinese government to make more access to overall healthcare. But for the time being, there is no clear picture how this is supposed to be financed. In all other markets, I’m not aware of any major changes, being it in Africa, being it in Middle East, or being it in South America.

Merial?

On Merial, difficult to say. We believe that we have been winning also the litigations in a very convincing way. Evidently, they have been convinced already before we litigated that we have a very strong and a very solid patent situation. So yes, of course, we will go also for damages. How long it will take to wash the market out is a little bit more difficult to say, because we are now off-season and I’m afraid we can only say precisely when the next season starts, which means as of January, February next year. And I believe that until, we will still have to face a presence of generic products in the market. Nevertheless, of course we do everything legally possible to get them off the shelf.

I mean I think if you look at what has been done on gaining damages from Apotex on Plavix, on the ability to defend eloxatin, I think we clearly are a company that clearly defends its own interest here and intellectual property rights. I think we’ll do that with Frontline. I think on the authorized generic for Lovenox, it would be fair to say, Hanspeter, really, that we can’t access the retail segment of the market. You correctly point out that this is two markets, but we really can’t access the retail market without an authorized generic. So in order to compete there, that will happen. So I’ll just add those two comments. Sébastien Martel: Next question, please.

Thank you. The next question is from Alexandra Hauber from JPMorgan. Please go ahead. Alexandra Hauber – JPMorgan: Thank you and good afternoon. I just have one – quick question on the logistics for Framingham coming on stream sometimes next year. Firstly, I just wanted to confirm that once the validation that is produced, the machine – sorry, the plant doesn’t send out but continues to produce inventory. And it would be correct to assume that you can sell all the inventories after approval. Or if that’s not right, can you let us know? And the second question on that topic I have is at which point will Allston then stop producing Fabrazyme, so that it can fully concentrate on producing Cerezyme?

So the actual – obviously this is all subject to regulatory decision-making. But at the current moment, the scenario is not a one-day approval of the site. You have to produce three validation lots, all of which have to be approved. And then your site is inspected. We’ve had some ongoing inspections of the site, as we’ve been producing validation lots. And those have gone very well. It could well be that as we complete a validation lot and the individual lot is approved by the agency, if the agency is comfortable with the overall progress of the site, the agency could actually – either the European or the FDA – could actually approve the sale of one of the validation lots before the approval is given for the overall site, given the shortage of product. So, I think we’ll be able to give you a very clear update on that with the fourth quarter results. But this is more likely to be a lot by lot. And then once you’ve done all the three lots, then the overall site is produced. Now, Allston won’t stop making Fabrazyme until, however, all three validation lots have been approved and the site has had formal approval. There are six bioreactors within Allston. In order to be able to use those bioreactors – four are being used for Cerezyme, two for Fabrazyme – in order to be able to use two of the other currently used bioreactors for Fabrazyme, in order to convert those to Cerezyme, there has to be some change in equipment, and there has to also be certain regulatory approval. So this would occur over a number of months. So, an actual increase in bioreactor capacity is unlikely to occur in 2012. However, that’s not actually where we think the gains will occur. The real gains are – Allston was originally conceived as a factory where they were only ever going to produce one product. And at one point in time, they were producing four in there, with Fabrazyme, some Myozyme and as well as Cerezyme. Obviously, today it’s down to Fabrazyme and Cerezyme. But once you come out of the bioreactors, there’s a whole purification process, and we have bottlenecks in that process. And so by moving Fabrazyme over to Framingham, we can eliminate some of those bottlenecks and therefore increase the output, even though we’re not necessarily increasing the number of bioreactors. So the bioreactors, if you like, is not really the bottleneck. But simplifying the site would dramatically help. We also are looking at a number of other items about how we can improve lot release – lot release times have doubled since the consent decree. This is normal. You’ve got Quantech in there, in this case. And so every time you have a lot release, Genzyme quality assurance has to do the lot release, and then it passes to Quantech. Generally what happens is, as you make progress in the site and confidence develops, you can start moving to doing some of these activities in parallel rather than in sequence. So I think we see as productivity really those factors of improving. And then we probably, just even with that, get back to the volume we need on Cerezyme. For us, when you look at the two products, Fabrazyme in my opinion has the biggest opportunity for regain of market share. It has five times the dose for the same price as Shire’s product, and it’s pretty clear that for many patients, there’s a real need to have the right dose. I mean, it’s a very curious thing that two products were approved on the same day, when there is a factor of one time to five in terms of how much enzyme you’re giving. I think it’s a kind of a curious artifact of regulatory history in Europe, in particular. But if you ask patients and physicians, they clearly see a difference. And so I think being able to sell more Fabrazyme clearly allows us to get back more market share. I think what we really want to do is get back to full supply of Cerezyme patients. The real opportunity in Gaucher is eliglustat. Because if you can offer a patient an oral therapy instead of having to go for twice monthly infusions with the same level of efficacy – and that of course has to be proven in the Phase III studies that are ongoing – but I think there, we see an opportunity for gaining back significant share with that product. So that’s kind of how it’s going to roll out, Alexandra. Alexandra Hauber – JPMorgan: Okay, thank you.

Thank you. The next question is from Seamus Fernandez from Leerink Swann. Please go ahead. Seamus Fernandez – Leerink Swann: Thanks very much. Most of my questions have actually been asked. But as we think about the recovery in Genzyme and some of the competitive risks, Chris, can you just talk about what is baked into the assumptions? Competitively, we know that Shire has filed foreign approval of REPLAGAL in the United States. What are your assumptions around the prospects for competition in the U.S.? And how the sort of relative roll-out should – we should think about that in that regard? And then also we know that, I believe it’s the taliglucerase from Pfizer that we need to also pay attention to, to some degree. Again just wanted to get a sense of your thoughts around the competitive dynamics relative to the Genzyme program? Thanks.

Well, I mean, if we take the Pfizer product, I mean we’ve seen that Pfizer product already in a couple of other countries, notably Brazil. And it didn’t actually do very well. The dynamics of this marketplace are two-fold. One is the product, and two is really the level of service provided by the company. If you go out there in the marketplace and do market research, clearly Genzyme’s image has been dented by the supply shortage. There’s no question about that. But equally, all the market research I have seen says that nobody thinks of Shire in the same way they think of Genzyme and Pfizer, even less. So, I think there is an element Genzyme’s concern and care for patients. And that includes the fact that it’s the only company that has the product donation program to make sure this product is available to anybody in the world. And even during the supply shortage, it has equally allocated product that is given away for free to those patients who need it, to make sure that every patient has an equal opportunity at dosing. These are things that are hugely appreciated in these very tightly knit patient communities. If you look at the actual product profile, as I just said – I mean whether Replagal gets approved or not, I have no worries about competing against Replagal. It’s got one-fifth the enzyme for the same price. And this is one where you want the full load of enzymes on board. So I think on Fabrazyme, I have no worries about Fabrazyme’s ability to compete. I sometimes wonder why Pfizer and others are coming into the Gauchers market. We are talking about a market of 7,000 patients. There is already two companies in it. And Genzyme has an oral therapy that is probably going to make all the other guys obsolete anyway. So to me, coming in with a bunch of me-too products in rare diseases doesn’t show the same commitment as a company like Genzyme, which continues to do research in things like Niemann-Pick – is looking at other rare diseases. I mean nobody’s got the commitment to rare diseases that Genzyme does. Others are looking for market share. Genzyme I think is really committed to finding solutions for patients. And this sounds just maybe like marketing talk, but I can tell you, if you actually go out there and you meet with patient associations, as I have done, this level of commitment is extremely important. If I can liken it to areas like oncology, like HIV, where I’ve worked in the past, I wouldn’t underestimate the commitment to actually helping find solutions for patients. This is not just who’s got the sexier marketing brochure here sales leaflet. This is really around commitment to patients. And I think Genzyme gets through its manufacturing problems, and it wins out there in the marketplace, in my view. Seamus Fernandez – Leerink Swann: Thank you.

Thank you. The next question is from Steve Scala from Cowen. Please go ahead. Steve Scala – Cowen: Oh, thank you. Apologies for yet another question about insulin glargine, but will the new insulin glargine be a full NDA or a 510(k)? And what is the patent protection? And secondly, I assume you do not have the Lemtrada, the Teriflunomide, or the Zaltrap data in-house. Can you just confirm that? And could you be more specific on when we might get it between now and the end of the year? Thank you so much.

No, we don’t have anything on Aubagio and Lemtrada. And they never tell me too early, anyway, in case I spill the beans. No, that data is not available. It will be some time between now and year end. I can’t give you an exact date. Probably – Sébastien, anything? Sébastien Martel: Lemtrada is mid November.

Lemtrada is mid November, so a couple of weeks from now. Sébastien Martel: And late this year for…

And probably towards the end of the year on Aubagio. On the insulin glargine, I can tell you that we have filed patents on that, but that’s all that I can really give you. And really what regulatory filing, I actually don’t know the answer to that, so we can follow up with you on that. Steve Scala – Cowen: Thank you.

Thank you. The next question is from Eric le Berrigaud from Bryan Garnier. Please go ahead. Eric le Berrigaud – Bryan Garnier: Yes. Good afternoon. Two questions. First, in the New England Journal of Medicine a couple of days ago, it was suggested that you would had offered the FDA to sell some generics in the U.S. probably to solve part of the shortage for some oncology drugs. Could you just say a word on that and what’s the strategy behind that, if there is any? And the second, perhaps for Hanspeter to get a bit more specific about what you said about Jevtana and life cycle management. Is there about first line? Is there about any other tumor type for the drug or any combination with new oral agents? As we have also today some good Phase III data for another competitor. Thank you.

So the issue in the U.S. is that there is an extreme shortage of certain older generic injectible drugs, principally. This appears to be a result of the fact that, as the FDA is busy becoming more demanding on inspections throughout the industry, including the generic sector. We all know that you have to continuously invest in injectible manufacturing technology. This is some of the most sophisticated and demanding production in the biopharmaceutical space. And it appears that some companies are finding that the upgrades to manufacturing are not really justified, given the really low margins on some products. So a number of companies appear to have gone out of stock. I encountered this in meetings with the FDA in the U.S. I was actually surprised to learn that this isn’t really a short-term issue, this has been going on for a minimum of a year. So – and you’ve seen that the president has actually asked the FDA – it’s the first, I think, executive order that president of the United States has given the FDA in over 40 years – to actually look actively at how the FDA can facilitate others to come into the market and supply some of these products. Some of these are Sanofi products that we produce in Europe and around the world. And so we have made an offer that we could potentially – if there was a regulatory path, that we could potentially provide product. But at this stage, there’s nothing concrete to report and not clear whether the FDA will in fact provide that regulatory pathway. Eric le Berrigaud – Bryan Garnier: Not a change in terms of strategy versus generics into U.S. by any means?

No. Eric le Berrigaud – Bryan Garnier: Okay.

No, it’s really just – there are actually children who have apparently died because some of these generic drugs are not available. And so this is more of a question of how do we fulfill a public health need. Eric le Berrigaud – Bryan Garnier: Okay.

On Jevtana, in principle, we look in all three directions, but with priority of course to first line and second priority to other indications. No decision has been taken so far. Eric le Berrigaud – Bryan Garnier: Thank you.

Thank you. The next question is from Vincent Meunier from Exane BNP Paribas. Please go ahead. Vincent Meunier – Exane BNP Paribas: Good afternoon. Thank you for taking my questions. The first one is on pharma R&D. So three quarters below 15%. Is a level of 14% of sales sustainable? The question – the next one is on bolt-on acquisitions. Can you give us an update on your agenda? And also given the success of Allegra in the U.S., do you have any intention to further increase the size of your consumer healthcare division there? And the last one is with regards to healthcare reforms. You gave some comments regarding the situation in Europe, other countries. But can you be – can you give us your view regarding the supercommittee in the U.S., what do you expect from that, in terms of timing and potential impact? Thank you.

Right. So as R&D percentage of sales, yes, we can go lower than 14%. And yes, it’s sustainable. We are still spending €5 billion at the end of the day. I personally don’t think that R&D and sales have anything to do with one another. I think it’s a fundamental question of how much infrastructure in research you want to maintain, and then how much investment you want to put into individual projects. So your infrastructure piece is an element which is an ongoing expense. But the actual investment in projects, we tend to look at as a capital expenditure budget, an investment budget, rather than an ongoing revenue expense. There, I think our first objective is to say, well, how do we use the money that we’re spending now better? Because I can tell you that when you look out in the marketplace, how much you spend on R&D and how successful you are just simply don’t correlate. I think the last two years, we have spent significant time making sure we have a state-of-the-art development capability, and I think we’re there. The fact that we made a lot out of how many products we killed, out of the time when we did the stress test on our portfolio. But one of the most important aspects of that is what did we keep? Because in keeping a fewer number of projects, we’re able to focus on those and accelerate some of those. And that’s why I think we’re in the position of being able to launch as many products as we are in 2015. Of course, not all those came out of Sanofi’s development. But I think we’ve got a lot more focus around it. You take an Aubagio. I mean an Aubagio was lost in the shuffle within the pipeline in 2008. When we cleared out the portfolio, we could suddenly say, all right, here’s a really interesting drug in MS. Now quite honestly, between us, that Aubagio should have been on the market three years ago. The patent goes in 2014. We think we’ve got some new patents, and of course, you’ve got data exclusivity. But it sort of shows that this was kind of a neglected asset for a number of years. And so I think these are the types of things that we’ve been doing in development, really accelerating the timelines and focusing on quality assets. Get the right decision-making at the various entry gates to development. So now we’re also turning our attention to research, as I said earlier. And here again, when you look at, first of all, where are most new drugs discovered? Well, you’re going to find that most new drugs are not discovered in the labs of big pharma companies. Two is, when you look at, well, where are the environments where these new drugs get discovered? You find that physical contact and interaction matters, proximity to other actors within a research and development ecosystem. So proximity to teaching hospitals, to universities, to academic research centers is an area, obviously these are clusters, but this proximity of contact is a focus. Now when you look at the average big pharma company, you’ll see that we have spread our research facilities all over the place. We have sites that aren’t specialized in specific therapeutic domains. So even though you might have a research center, what you find is that to manage a project, you have to interface with three or four other sites. Kind of one of the jokes in our company is that our most important research facility is the airport, because that’s where most of our research people are at any one time. And so part of this is saying, well, why are we going against the current on this? And as a result, we’re really trying to focus on four different hubs. We said we’re going to put – are going to focus our North American research activities in Cambridge, which is pretty well recognized worldwide as one of the best places in the world to do research. But equally, we will do most of our development in New Jersey, given both the cost structure as well as the availability of talent in that area. But Cambridge is essentially one research hub. France will be a second research hub, Frankfurt a third, and China essentially a fourth hub. And these are all with the idea of co-locating people, putting them in the right ecosystem, and therefore examining what’s not in those hubs, and finding out what’s the best solution for those other sites. And I really can’t say an awful lot more about that, because as you well know, in Europe, we want to go through the proper consultation process. And so while we’ve announced we will close our research facility in Bridgewater, New Jersey, I really can’t give much comment about the other facilities in Europe because we want to respect the process. But I think you’re going to find that broadly R&D expenditures will at best stay flat, possibly decline further, depending on what the projects are. But certainly as a percentage of sales, I would expect to see a declining percentage of sales. Remember, we have become a more diversified company, and so businesses like CHC and businesses like generics and some of the brands we have in emerging markets, we don’t need to spend an awful lot of research and development – certainly not the double-digit percentage of sales – to keep those businesses going. So personally, I think there is a lot that we can do by using our money more intelligently. On the research side, doing the open innovation and external collaboration model and really keeping our fixed cost infrastructure to a minimum.

Well, on the question on CHC, and related to it, bolt-on acquisitions, we work on bolt-on acquisitions as we speak. We work on acquisitions from a geographical point of view, where we feel that we should become stronger, evidently South America, Africa and Far East. We work in our growth platforms evidently in CHC. And within, yes, of course, we would be eager to make another operation in the U.S. I’m a little bit less optimistic on the U.S. because the drugs have less opportunity for doing good sales figures in the U.S. than in other parts of the world. And yes, we have done really an outstandingly good deal with Chattem, and I’m afraid this will be not – first of all, it will be not considered probably as a bolt-on. And second, it’s not easy to be repeated. So far on this question – since we had a question on the super committee in the U.S., do you want to take it?

So the super committee actually has to deliver its report – I believe its November 23. If the committee does not reach a decision, you may remember that part of the agreement that was reached at the end of July to increase the debt ceiling in the U.S. said that there had to be the creation of this super committee. If they didn’t reach at least €1.2 trillion of savings over 10 years, then there is a model where there are going to be some automatic decreases in budgets across the board. I think it depends on which one it is, but for instance, for Medicare, if I remember, it’s about 4%. So the question is going to be, first of all, do the members of this special committee on deficit reduction actually achieve an agreement or not, because if they don’t, you get the automatic cuts. If they do, then there’s a question of what’s in it. Obviously, there are two things which concern the pharmaceutical industry. One are dual eligible rebates for Part D patients. And the second is actually looking at the ASP for Part B medicines, where there has been some proposal to examine the 6% mark-up that gets charged on that. The Part B mark-up of 6% would really affect physicians, mostly, but – and would only indirectly affect pharmaceutical companies, in that this would likely have a significant impact on access to Part B medicines. Because at some point, physicians will say this is just not worth the cost of doing this. And so particularly in some rural areas, you might find that the patients are just not able to access those medicines. On Part D dual eligibles, I think at the moment, there is not the political support for imposing those rebates in Congress, largely because Part D is working. Part D is under the original forecast. This is probably one of the few government programs ever approved that is actually coming under budget. Two is that the Republicans, I think, see this as a very good model for healthcare. It is government sponsored and privately delivered. If you impose these rebates, you are essentially getting rid of the private delivery aspect. And the third is I think independent studies have shown that if these things were to be imposed, this would again come on top of an industry already under pressure from generics, an industry which has already contributed significantly to the first round of healthcare reform. And it’s estimated that approximately 150,000 to 200,000 jobs would be lost if these dual eligible rebates were to be imposed. So I can’t really tell you. I would suspect that some time between now – all of these proposals have to be scored by the Congressional Budget Office. That takes time. They are obviously doing these things on a sequential basis. Some of the proposals are being scored as we speak. But I would suspect somewhere in that last week before the U.S. Thanksgiving, that we’ll see what’s in these proposals, whether the group comes to an agreement or not, and what measures, if they do come to agreement, affect the pharmaceutical industry. But we’re all very active on that subject. Vincent Meunier – Exane BNP Paribas: Thank you very much.

Thank you. The next question is from Luisa Hector from Credit Suisse. Please go ahead. Luisa Hector – Credit Suisse: Thank you. Can I just check on Multaq? What has the physician reaction been after the label change in Europe? And when do you expect to hear back from the FDA?

On the first part, in Europe, we clearly have seen a reduction in new patients. We have seen nearly nothing on existing patients. We see now in Europe a very, very careful comeback of new patients, but it is definitely too early to call this a trend. In the U.S., overall the reaction has been – to the ongoing label discussions has been more moderate than in Europe, which definitely has to do that we had a different – if you want to say a more restrictive label in the USA than in Europe. So let’s say the shock was therefore stronger in Europe than in the U.S. On the second part, it is very difficult to predict when we will have agreed with the FDA on a label, but I would say this should be a more a question of weeks than months, as there is a very constructive conversation going on. And I believe that from there, this should be settled within weeks.

Thank you. The next question is from Mark Beards from Goldman Sachs. Please go ahead. Mark Beards – Goldman Sachs: Hi. Thank you for taking my questions. Firstly on Fabrazyme, is there any update on the civil suit that’s occurring in the U.S.? And secondly the Genzyme-specific operating margins, how did they change in the quarter versus Q2? And then finally any update on the Lantus (indiscernible) pen device?

So on the civil suit, there is no new news. I mean the reality is that there is not really enough lot of objectives to doing this. It’s not like anybody can suddenly make a plant and produce Fabrazyme in any less than five years. So our objective is really to get back to full production of Fabrazyme as quickly as possible. And that’s really related to the Framingham facility, and there I think the company is making very good progress. Jerome, any comment on the margins?

Stronger margin of Fabrazyme for Q3 was very similar to the one of Q2, whether you speak about the gross margin or of the net margin. Of course, the more you go, the more difficult it will be to follow the – let’s say the old Genzyme, as we call it internally, because part of the businesses will be transferred out – being transferred now to our pharma organization, when the remaining will be with the new Genzyme, which will cope with both the orphan disease, but also the MS business. So – but for the time being, if I take Genzyme as it was, I mean we stay in Q3 and Q2 exactly at the same level of margins. Clearly we see some cost associated to the consent decree, which we had planned from the beginning, in the gross margin for both Cerezyme and Fabrazyme. But we see as well that the leverage we could benefit of by the increase of sales will be quite significant, if you were just to compare the profitability, i.e. the net operating margin in 2010 versus what we have now in 2011.

On the combined device of (indiscernible) and Lantus, basically nothing new. I’ll remind you that these work and we have a combined device, which will contain both products, which means both products will be injected together. We believe that we have an interesting concept because it will allow countries to alter concepts to individualize the insulin dose, which we feel is an imperative, given the mode of action of insulin. We feel it would be not adequate to put it in a fixed dose and making then titration very complex. (indiscernible) with this device, given our large background in developing and producing devices in-house, we advance very well. And we are very optimistic that we will run to Phase III clinical trials with the combination as foreseen, starting very early in 2013 approximately in let’s say 15 months or latest 18 months from today.

Okay, maybe one last question, operator.

The last question is from Damien Conover from Morningstar. Please go ahead. Damien Conover – Morningstar: Great. Thanks for taking the question. I just want to follow-up on emerging markets margins. I think historically you’ve talked about margins being in the mid-40% range, excluding R&D and central administrative costs. Just with the current pricing cuts in certain markets, obviously offset by volume gains in most of the other markets, can you talk about the outlook there for margins going forward? And then secondly, just a question on Merial, just wanted to get your thoughts on when you think there would be a reentry of generics? And how the brand name of Frontline might be able to mitigate some of those generic launches, given it’s a little bit more of a brand-sensitive market? Thanks.

Jerome speaking. I can take the question on the margin in emerging markets. On the 6th of September seminar, we gave guidance for our overall emerging market business for pharma, with a 40% operating margin before R&D. As you mentioned yourself, I mean the fact that we are able to amortize our infrastructure and on growing volumes, I mean even in Turkey, I mean we see volumes continue to grow, helps very much – anyway to maintain at least the margin that we contemplate by now in emerging market. And if I look forward, I mean, I see the more we do, the more we should be able to somewhat leverage our P&L. Of course, we’re also investing into newer products and new era. I mean we are finding some to invest in CHC in China. So clearly I mean this will somewhat depress the margin, but on the other hand, we will continue to improve the margin on the rest of the Chinese business. So in short, we don’t really see – I don’t see any reason to consider that the margins should not at least stay at the level which we gave on September 6 seminar, and probably continue to improve slightly over time.

Well, finally on Frontline, I think there are number of elements as an answer. First of all, we have proven that we have a very strong, very effective legal defense line. Second, I believe it’s important to remind that the penetration of generics in this field has nothing to do with the penetration in human pharmaceuticals because those products are much more dependent on a strong trademark. And since trademark is of course driven mainly by public advertising, which we do intensively with Frontline, behind we have a very, very complete program of life cycle management. The first step we have accomplished. We have launched (indiscernible) in the U.S., and we will be doing so at the beginning of 2012 in Europe. And then we work on new compounds, which will become available in 2013/2014 period in Europe and in the U.S. as true successors to Frontline. And those compounds will be not just old wine in new barrel, so to say. No, it will be a really new product with significant advantages over the market-leading product, which evidently by far is Frontline. And we progress with those products very well, and are very confident to make them available in about two years from today. Chris Viehbacher – Chief Executive Officer: All right. Well, I think that wraps it up. So again, just to summarize, I think we had a good quarter. Obviously again, even before we take into account Genzyme, I think the fact that the growth platforms could offset the significant erosion from generic competition is a positive sign in the progress of the company. 2011 was always going to be the bottom of the trough on sales, and obviously when we consolidate Genzyme, we’re actually growing back our sales line again. We’ve got costs under tight control. I think the research and development pipeline is looking good. We’ve got some new initiatives to really now expand upon our research model, in terms of open innovation and changing the configuration of our research network. And just given the strong underlying business performance, we feel totally confident in being able to maintain our guidance for the rest of the year. Business is in good shape, and I think we’re making excellent progress on integrating Genzyme. I was in Boston last week and was able to get the full update on the progress that’s being made on production. We appointed a new CEO of the new Genzyme with David Meeker, and I think David has been exercising strong leadership throughout an integration period. Huge passion for rare diseases, and I think is a demonstration of the continuity in the Genzyme approach that has made it successful in this area in the past. So, as I say, I think business is in good shape and progressing well. And look forward to talking to you all with the Q4 results early in 2012. Thanks very much, everybody.

This does conclude our conference call. Thank you all very much for attending.