Sanofi (SNY) Q4 2012 Earnings Report, Transcript and Summary

Good afternoon and good morning, everybody. Thank you for the savings, Sébastien. I could probably add that actually, as part of our overall cost reduction measures, reorganization of Paris-based office space will have eliminated 100,000 square meters of office space of an annual saving of EUR 50 million. So you can see that we continue to be cost conscious and focused on growing the business. As I present to you today, I'm thinking about the very first time that I did this in the name of Sanofi, which was in February of 2009. Back in 2009, we were looking forward to the patent cliff, and actually on that day, that was the very first time we, as a company, admitted there was a patent cliff and announced, really, a strategy about how we intended to deal with the patent cliff. This morning, I was on TV, and the journalist was very kind in saying, "You've never deviated a single line from that strategy." And I think that's true. It hasn't always been easy. Not everybody's believed it. But I would say today that we have successfully navigated through the patent cliff because if you look at all of the products that we lost, we have had certainly the most concentrated and deepest patent cliff of anybody in the industry, and I'll show you some numbers on that. The objective is, as we laid out 4 years ago, it wasn't just to replace the sales of those products we were going to lose. It was to put the company on a completely different path. It was meant to provide long-term sustainable growth of the business, and you can't do that if you're really only ever going to be focused on R&D and patents. So what we were looking to do were to create these growth platforms that had different barriers to competitive entry, whether it be capital investment, brands, know-how. But the idea was that, really, unless you got that long-term predictability of earnings, you were never going to get to a higher multiple. This industry has now, for at least a decade, underperformed the broader market in terms of multiples. In the last 2, 3 years, last 2 in particular, Sanofi has closed the gap to its peers on multiple. But I would say that on an average multiple of around 11x, 12x, this industry is still at a discount to the broader sector, and largely, that's around the perceived risk of R&D and the lack of long-term predictability. So what we are really looking to do with these long-life assets like Vaccines and the Consumer Health Care and Animal Health and Emerging Markets was to provide a platform of predictable long-term earnings. Now it never was meant to eliminate innovation as a core of our business. But if you are doing research and development in the context of a company that can grow long term without patents, then imagine the leverage effect that you could get if one of these products actually makes it out of R&D. And imagine actually the predictability of a business that knows that it can grow even if in a particular year, a particular product doesn't make it. And imagine the discipline that you can have in R&D if you are no longer dependent on meeting your 2014 number because a certain product has to launch. Because I can tell you, in my career, the thing that really drove me nuts the most was that we took compromises. We made compromise along the development path because we needed to hit certain expected net present value calculations on our portfolio, that we needed to have certain number of projects in every stage of development, and I think that has led to poor quality pipelines. And so the objective we have, and Elias will talk more about it, is to really be a growing company on a long-term basis and known for the science. Now we're not entirely there yet, but I think we've made a significant amount of progress. And I would submit that today, the company is stronger than it was 4 years ago. Largely because back then, we had a significant amount of our sales and an even bigger percentage of our profits that were threatened by generic entry. And today, we have probably one of the lowest exposures to generic entry of anybody in our industry. Now we all know that Plavix had a big impact on our business in May of 2012, and it's going to take a year from May 2012 for all that to wash out. 18 months ago, we told you that the impact of losing Plavix and Avapro in the U.S. was about EUR 2 billion on an after-tax basis and on a 12-month basis. That would be split roughly between '12, 2012 and 2008 -- 2013. In actual fact, because of exchange rates and a few other things, it's actually about EUR 2.1 billion. And so the effect in 2012 was EUR 1.3 billion, and it'll be EUR 800 million next year, so it's about EUR 100 million more than what we had expected. So as a result, we're going to be affected by comparisons to last year, when we still had Plavix, until the middle of the year. But once we're back into like-for-like comparatives, we expect to be able to show growth in our business on both top and bottom lines. And of course, everything that we are looking at in the business completely confirms what we thought 18 months ago. All of the businesses are performing as we had thought, and so we are completely confident in being able to meet our 2012 to 2015 objectives for sustainable growth. Now what we've done, and I think you've known, we moved from the blockbuster phase. We've just finished 4 years of extensive transformation. This -- a lot has gone on in the company that you'll never see and is completely invisible, but it certainly has included investing in the growth platforms and diversification, cost management. And I think as we stand here today, I would say we start a new chapter. I mean, really, the major impact on results is finally getting rid of the generic drag on the business and just letting the growth platforms continue to perform as they have over the last 3 years. The other aspect that is quite exciting this year is -- and most of you don't know Sanofi as a pipeline company, but if I've had any surprise over the last 12 months, it's really that the pipeline has kind of crept up on us. We have not had the attrition we've expected. We've had interesting assets, like the IL-4, suddenly come through and come through faster. I think the partnership with Regeneron, for instance, drives us at a pace that's probably faster than your typical Big Pharma pace. And as a result, I think we're actually looking at an extremely robust late-stage pipeline. You've seen the number of approvals we've had even in the past week, and of course, all of those need to be properly funded. And so I think in addition to the growth platforms, you're going to see us increasingly become a story of launching new products and having a sustainable pipeline. Now on all of this, of course, we've been able to grow our sales. We started -- 2008 was the first year I presented. We had EUR 27.5 billion in sales. I'll show in a minute that had we done nothing, we would have certainly lost EUR 5 billion because of generic entry. We're showing close to EUR 35 billion in sales, and so there's been a significant increase in sales, and of course we all know that at least part of that is through acquisition. But I will tell you that it's at least a 50-50 split between what we've acquired in growth and what we've been able to do organically through our growth platforms. If you look at what has really left us over time, it's a pretty impressive list of products, from Allegra all the way through Eloxatin. And you can really see this concentration. Sanofi, really, before 2010, had never really been faced with any significant patent expiry. And after 2012, as I'll show you later, really isn't faced with any, at least in the small molecule, patent expiry until the end of the decade. But in those critical 2 -- 3 years of 2010, '11 and '12, you saw an awful lot of business at risk. So when I look on the right side of that graph, of course, you see this, the 9 products that were really facing patent expiry and generic entry, had sales of EUR 7.6 billion roughly in 2008. EUR 5 billion has walked out the door, and so that perimeter is now EUR 2.2 billion. Of course, we all know that, that never really goes to 0, but there will be some marginal impact in 2013 of some of that business. In the meantime, the growth platforms that we just talked about have grown from EUR 11.8 billion to EUR 23.5 billion. They were 42% of sales, and they're roughly around 70% of our sales today. By 2015, as we already said 18 months ago, they'll be roughly 80% of our sales. In other words, the emerging new Sanofi is really the growth platforms, and as you'll see also later on, we were able to grow those growth platforms at close to 10%; 9.9% to be exact. Individually, Emerging Markets grew at 8.3%. We didn't achieve our double-digit target in 2012. I don't think that's for any fundamental market reason. This is principally as a result of, for example, Eastern Europe, which is growing slower. We describe Emerging Markets essentially as those countries that spend less than 5% of GDP on health care because we know that that's an underinvestment in health care. However, Eastern Europe continues to be principally affected by macroeconomic trends in Western Europe, and Hanspeter will go into more detail. You'll see that the key regions of Asia, of Latin America and Middle East, Africa continued to grow at double digits. My personal view is, and I have not changed one iota on this, I still believe that Emerging Markets is the single biggest growth lever that this industry has. Diabetes continues to perform extraordinary well at 16.7%, Vaccines at 5.7%, Consumer Health Care 9.9%. We were nowhere as a consumer health company 4 years ago, and today, I have to say I'm extremely proud of our teams in being able to say that we're the third OTC company now worldwide after J&J and Bayer. Animal Health, an extremely important business. I think we continue to drive value since the acquisition of Merck's half of the business. If you think about Frontline, 4 years ago, the patent expired. It is still a $1 billion-plus brand. And there's a very exciting pipeline. We never talk about the pipeline because in this business, you test the products in animals, and therefore, it's pretty fast for the competitors to chase you. So we tend to tell you about what's in the pipeline about 5 minutes before we launch it, as I say, largely for competitive reasons, but I think you'll see that growth accelerate in the future. New Genzyme, and I'll go into some detail later, really a success story in the past year. Innovative products at EUR 611 million grew at 10%, but we all know that, that part really has been historically a weakness of the company, and I think you're going to see that strengthen over the next couple of years. We were busy on external growth. It was one of our key pillars in strategy. EUR 23.7 billion in acquisitions. We acquired 32 companies, but of course the most notable was Genzyme; 91 in-licensing agreements; and we entered into 3 joint ventures. Genzyme really was a -- had a remarkable year. And this was a very, very delicate exercise. The biggest issue we had was how are you going to integrate an iconic biotech company. We're talking about 1 of the 4 original biotech companies ever created in the world suddenly being merged with a Big Pharma. People who work in biotech generally work there because they don't want to work for Big Pharma. Now we're going to take a French-American cultural exchange, we had a hostile bid to acquire the company. So the stars were really aligned against us in being able to integrate it. And I think one of the first tests was the ability of the Sanofi team to work with Genzyme team. We've been working day and night for 2 years to really get that production back on track. And I think the fact that they were able to work together, get Framingham approved by both the EMA and FDA within 4 days of each other in January is an extremely important event. We also then saw that Shire did not get Replagal approved in the United States. And that really allowed Genzyme to take advantage of the renewed manufacturing capacity and the open market in the United States and now also to reconquer market share in Europe. And so we close to doubled the business in Fabrazyme. All of the other business is performing well. The other, of course, is that we decided to make New Genzyme. Remember, we took the oncology, the bio surgery, the renal business, put that into Sanofi where we had the marketing muscle to do more with those businesses. New Genzyme is rare disease and multiple sclerosis, and I'll show you a little later on. But they've already launched Aubagio with success. We have Kynamro approved, and of course, Lemtrada has been filed in the E.U. and in the U.S. [Audio Gap] So this is just what I've said before. This is largely what we said. We've had -- because of some tweaks to exchange rates and some other things, it's a slightly different mix from the EUR 1.3 million and EUR 700 million. It's EUR 1.3 billion and EUR 800 million, but largely, this is a predictable event. We've seen it coming, and I think we've managed through it. Now of course, we shouldn't forget that we live in an extremely difficult environment. On the U.S. side, of course, we had health care reform from President Obama. These are mostly taxes that have impacted us. Those are expected to reach almost $500 million in 2013 for us. On the E.U. side, things are no easier, and you all know about the austerity measures in Europe. These are measures to either increase generic utilization, decrease prices or increase the difficulty of getting new medicines approved. I would say Europe is probably the most difficult region in the world for the pharmaceutical industry today and is likely to remain so for a couple of years. That's about EUR 300 million for us in the 2010, 2013 period; on an annual basis, I would add. And of course, because we are a traditionally-rooted European company, we have a fairly large tail product business that gets affected by these measures. Now this is the EPS picture, 12.8%. But if you went back to the EUR 5.59 in 2008 and you calculate the generic impact, you would have seen that we would have lost 50% of our EPS had we not employed the strategy that we did. 12.8% is clearly down. It's nothing to write home about, but it's certainly a lot better than it could have been and, I think, a credible performance given what we've faced in terms of patent expiries. Now as we look forward, I think this comes back to this notion again. I think a huge amount of progress has been made on the R&D front. I mean, 9 regulatory approvals in the last year. And certainly, we've seen a couple that are already off to a good launch start. We've got 6 new drugs and vaccines which have been submitted, so we're going to have other decisions, and Elias will tell you what's in Phase III. Well, all of these are progressing well, and as I say, we've had certainly less attrition. In terms of progression to Phase III, we've got the PCSK9 inhibitor, and Elias will talk about the big ODYSSEY study. We've got our new insulin glargine formulation. We've got the JAK2 inhibitor. We've got the Fluzone quadrivalent ID, the Synvisc-One for hip, and you've seen the Lyxilan [ph] device. Because of a recent technical glitch, it's not probably going to go into Phase III this year. For Phase III results reading out this year, we'll have the Lemtrada, and this was back in 2012. We had Lemtrada. We had Lyxumia. We had eliglustat, and we've just announced that the ENCORE study, which is the second Phase III, met its primary endpoint in efficacy. And one of the most important events, I think, was the ORIGIN study and the epidemiology study. I mean, we not only put to rest any concerns around safety, but now as we look at competitive entries, I would submit to you that there isn't a product that has a more robust safety profile and efficacy profile out there on the marketplace. So what are we going to see in 2013? Well, we've already ticked the box for ENCORE. We've got the JAK2 inhibitor. And you can see these products. I won't go into them in detail because Elias will cover the pipeline a little bit later. But you can see that actually, there's an awful lot going. What is also good for me is I've been a skeptic on R&D for many years now, but I will say that when I look at a pipeline and I say, "Do we know mechanisms of action. Do we have a robust proof of concept? Do we have a high percentage which are biologics?" and I can answer all 3 -- to all 3 of those questions a yes, that gives me a whole lot more confidence about this pipeline's ability to make it through to the marketplace. Now the dividend has been an important part of the value story of our stock, particularly as we've been going through the transforming. We wanted to make sure that investors continued to believe in our company, and so the best way that we could communicate our own confidence in the business was a steadily progressing dividend. And you've seen since 2008, we've increased steadily the payout and steadily increased the dividend regardless of, actually, the development of EPS to EUR 2.77. That's a compound annual growth rate of close to 6%, and we intend to -- we still are intending to achieve a payout ratio in 2014 with the payout of the dividend in respect of this year. One of the untold stories of the company over the last 4 years, it's not only just a question of transforming the business, of dealing with the patent cliff, we obviously had our key shareholder, for very legitimate strategic reasons, exiting the company. And they certainly did it on a sensitive way, trading every day. But nonetheless, we had 1% of the capital coming into the market every quarter, and depending on the market cap, that's anywhere from EUR 500 million to EUR 800 million every quarter, and that has meant that we've had to go around and find new shareholders. And the shareholding of the company has dramatically changed over the last 4 years. And that's why it has been extremely important for investors to believe in the long-term story of the company but also in the dividend. Because I think we've actually been able to manage this part of the cliff now equally well, and I just want to confirm that, of course, that TOTAL is no longer a shareholder of the business today. So to wrap up my part, if I look at 4 years, sales up to EUR 34.9 billion from EUR 27.6 billion. Key genericized product sales were 28.4% of sales 4 years ago. They're now 3%, probably, again, one of the lowest rates in the industry. The growth platforms, which were fledgling businesses back in 2008, now 70.4% of our business. Emerging Markets business, from EUR 6.5 billion to EUR 11.1 billion. Biologics, we've clearly been behind in biologics, and I'm very happy to see that 48%, close to half of our pipeline, is in biologics. And you may remember me setting that as a target 3 or 4 years ago. Earnings per share, clearly not up as much in sales but still up from EUR 5.59 to EUR 6.20 in 2012, and of course, the dividend, up to EUR 2.77. So with that, I will turn it over to our Chief Financial Officer, Jérôme Contamine. Jérôme?

Well, thank you, Chris. Good afternoon or good morning, everybody. So we go quickly through a bit more detail on the financials. So I'll start with sales. I mean, you are used to this graph, and I would say that probably we'll continue to see this graph for another 2 quarters as long as we get out of the falling back to the patent cliff. So as we know, I mean Q1, Q2, we still saw a difference in 2013 as compared to 2012. So the lesson on the -- of this graph is pretty much always the same. Well, on one hand, we've lost, over the years, EUR 1.3 billion of sales from this definite list of key genericized products. On top of that, we terminated -- it was great that we had to terminate our agreement with Teva on Copaxone, and we sold out our Dermik business in the U.S. At the same time, the growth platform has contributed for EUR 1.6 billion of extra sales, on top of which we can consider that in 2012 another quarter of Genzyme, which we did not consolidate, obviously, in 2011, which leads us to basically a slightly increasing sales all in all on a consolidated sales basis. And clearly, in 2012, in comparison to 2011, but we know that they always fluctuating, we had a very positive tailwind impact of ForEx exchange rates, in particular, because the euro was pretty weak in 2012 versus most of the other currencies, leading to this overall increase of 4.7%. Well, maybe a few more words on the currency impact. I mean, this graph is particularly here to tell you -- to give you more detail. I think that we've presented this graph in the previous quarters. Also to show there is volatility in this impact. So in fact, the bulk of the tailwind impact was visible in Q2 and Q3. Now in Q4, I mean, the comparison was not that different. In fact, we have a current rate of the U.S. dollar against the euro of $1.35 versus $1.30. In Q4, when the gap was $1.39 versus -- a bit less than $1.30 for the overall year. It's not only the U.S. dollar. We know that we are also exposed to quite a number of other currencies, which, in a way, mitigates also our risk. I mean, we are present in Japan. We are present in Brazil, and Brazil went the other way around. I mean, the Brazilian real went down last year. So I mean, this will basically go as it is. But it's clear that since the beginning of the year, we should not see such a positive impact on a like-for-like basis, even if, of course, we don't know yet what will be the final half [ph] of trade of the U.S. dollar, in particular. I'll remind you, and this has not really changed, that a variation of $0.01 of the exchange rate of the U.S. dollar versus the euro leads to 0.3% variation on the business net income. Well, as expected, Q4 has shown a low profit and a declining profit versus the same quarter of the previous year. And I can tell you today that it has been a trough quarter. So you know that we don't expect to have Q1 2013 be as low as Q4 2012 on the constant exchange rate basis. So clearly, Q4 is a trough quarter, even if clearly, Q1 and Q2, because suffering from a difficult comparator, will still be much lower than Q1 or Q2 2012. So still 2 quarters to go through the cliff, not that we are going to lose more sales but because, for comparative reasons, the base will be higher. So as expected, we have delivered EUR 8.20 per share, earnings per share for the whole year, and I think that you notice we have been very much in line with what the consensus expected. So if I look at the overall P&L for the full year, well, it's clear that you see the impact of the patent expiries and, in particular, impact of the patent expiry of Plavix. You see that, and then we come back on the next slide, on the other revenues line, which is basically royalties, but also on the contribution of the share of profit from associates for the part we use to consolidate or we can, let's say, formally still consolidating from our joint venture with BMS in the U.S. So this clearly is the big change. At the same time, we have managed our cost base in such a way that we have reached a business operating margin of 32.5%, which is somewhat higher, slightly higher than what we expected one year ago, when I gave the guidance that we should be between 31% and 32%. Okay. So now I go a bit more in detail line by line. So I'll start with this other revenue line, and you see here, and try to make as much detail as possible, you see the contribution quarter after quarter, or the declining contribution, of the royalties coming from BMS. Both on the other revenue line, this is the higher part of this slide, and on the income from associates, which is the lower part of the same slide. So as you can see, if I take the higher part, the gray part is basically disappearing. We still benefited from EUR 532 million of revenues this year, which we won't get next year, in 2013. These are, of course, before tax. And the remaining is EUR 478 million, which, unfortunately, we'll still suffer from the end of our royalty paid on Ambien [ph], which we are just now losing. So on a like-for-like basis, the Ambien [ph] impact or also royalty from Ambien [ph] will represent EUR 100 million as compared to 2012. So in other terms, we should end up with something which will fluctuate between EUR 300 million and EUR 350 million of other revenues in 2013. Second is the income from associates. Well, this was a big line in the Sanofi P&L, which is quite a bit unique for us. Well, you see that it has completely disappeared now, and we are now basically coming down to 0. Cost of sales-to-sales ratio. Well, as planned, we've seen an increase of this ratio still in 2012. This is a result of the business -- the evolution of the mix of businesses. And when it comes to Q4, the significant performance of our Vaccine business, where, as you know, the gross margin is lower than the average cost margin of the group have been even more when we are feeling more flu, which has an average gross margin which is somewhat lower than the average gross margin of the vaccine activity. This being put aside -- and there is no exceptional in the Q4, and we are in line with the guidance I gave at the beginning of the year, which was to be between 31.5% and 32%. The important news is that what we expect from 2013 is that the business mix impact won't be that significant, but on the other hand, we expect the productivity measures that we are progressively implementing into our industrial network on many aspects would lead to some improvement of the cost of sales-to-sales ratio. Although not a huge improvement, this will be progressive, but we expect that it will be an extension [ph] point, 2012 to 2013. Of course, still, we have some exchange rate impact because we are producing more on the Eurozone. So with this exception, which could lead to some marginal fluctuation on a constant exchange rate basis, we expect in 2013 an improvement of the cost of sales-to-sales ratio. R&D, continuing to be tightly managed, trying to bring down the internal costs in order to give more headroom to invest in external partnerships but also in late-stage clinical trials, which we did in 2012, obviously, and in particular, during Q4, where we had embarked into having the full recruitment of the number of Phase III studies. Which are ongoing under the ODYSSEY program, in particular, for PCSK9, but also for IL-6. Which explains largely why there is a hiccup of the overall R&D expense for the first quarter. So all in all, R&D expense for the full year have been within the guidance we gave, to be somewhere below EUR 5 billion. It's, on a constant-exchange rate basis, down by 3.6% if you compare including Genzyme for the full year 2011 and this despite the fact that we have started these large Phase III trials. For 2013, we expect to maintain our overall R&D expense within the EUR 5 billion envelope. SG&A, here again, tight control on costs in mature areas, tight control on G&A, which has been declining. I mean, if you are able to read the footnote, you would see that our G&A expense, on a ratio basis -- or has declined by 3.1%, on a ratio basis has declined as well. So we have reduced G&A, and this is really a result of Genzyme synergies on building our shared service platforms to be more efficient in our management of our IS, as well as finance or HR platforms all over the group. At the same time, we have been investing behind growth platforms, and also, we have been investing, in particular, in Q4, to build our MS, marketing -- sales and marketing team, which explains why we've seen some increase of our SG&A expense for the fourth quarter. So this being said, we will continue to generate cost reduction while continuing to invest next year, which, I think, is what is described in the next slide. So as you remember, on September 2011, we announced that we had wanted to embark into a new cost-saving program, with the objective to save EUR 2 billion by 2015. This included the synergies attributed to the integration of Genzyme, which were evaluated at the time around $700 million, i.e. around EUR 500 million. So at the end of 2012, we have achieved 60% of this cost-saving plan, i.e. around EUR 1.2 billion, and the Genzyme synergies have basically been reached, I mean, not exactly 100%, we reached a bit more than 100%, in fact, during this first half of 2013. 1/3 of these net -- gross cost savings have been reinvested into growth platforms. Now when it comes to 2013, we will continue to generate savings more than EUR 500 million, so I would say at this stage, at least EUR 500 million. But it's fair to say that because of the new launches we are working on, and we had, as you saw, as you know, we had just 3 approvals last week. We are going to invest more on new launches leading to reinvesting a significant part, let's say, of the EUR 500 million savings which we plan to reach in 2013. So we are entering into a period where, because we need to support our growth platforms and also support the launches, we are reinvesting a, let's say, significant part of the savings we generate. It remains as we will continue to generate savings in 2014 and '15 both on OpEx but also on the cost of saves through all the programs, which I mentioned already, which is leading to improving productivity of our industrial network. Okay. I will go quickly but still below the operating income line, so to start with the rest of the P&L down to the business net income. So maybe here, I'd like to make 2 comments. The first one is on financial expenses. I'd like just to remind you that in 2011, we just, I mean, accounted for the net debt as from Q2, when we acquired Genzyme, which was just 3 quarters of debt, when we had 4 quarters during 2012. On top of that, for the first quarter, we took a provision on one nonconsolidated asset we had for a minor amount. So this leads to a stabilization, let's say, of financial expenses for the year 2012, assuming the same level of debt. In terms of tax, we end with lower tax rates than what we expected. We gave at Q3 a guidance that we should be at 26%. Actually, we end at 25.5%. And there are 2 reasons for that. The first is that the development of the group leads to increased revenues and profits which are generated in countries which have a lower tax rate than the tax rate which we incur both in France, as well as in the U.S. So the fact that we are developing more in lower-tax rate countries is helping a bit more than expected our tax rate. And on top of that, we have the full effect of the agreement we had with the Japanese tax authorities which is, again, leaving a certain level of profitability in Japan and bringing back the rest in lower-tax countries. So for 2013, of course, for any question you may have, we expect to have the tax rate to be between 26.5% and 27%, so an increase. And obviously, this results from the fact that we have less revenues from royalties, which are taxed at a low tax rate but still a limited increase. One word on the new accounting rule when it comes to pension. Well, this is an IFRS rule, which has a negative impact from a P&L standpoint but not from an equity standpoint. So basically, we cannot count anymore in our P&L the expected profitability of the assets which we manage, but first we account the revenue on the strict [ph] contracts, which we are using to discount the liabilities. So the impact for 2012, and I think this has been posted on our website and you had some indication already in December, has been EUR 78 million on the BNI. In fact, it has not been included in as it's not counted in the 2012 BNI because this now will be applied as from 2013, representing EUR 0.06 per share. In 2013, it's a bit difficult to assess exactly how it will be presented. It should not be very far, probably slightly higher maybe EUR 0.08 to EUR 0.09, everything being equal. From the business net income to the IFRS net income, well, I don't think there are many comments here. But the first one is that we continue to have an amortization of intangible assets which is pretty stable at EUR 3.3 billion. The large part coming from the Aventis acquisition on the asset or the intangible, which was allocated -- the goodwill which was allocated to asset at the time. Another part is coming from the more recent acquisitions with Genzyme or Merial, and you have the detail in the press release. We have very limited impairment on intangible asset. This is mainly ombrabulin and determination of the compounds which we are developing coming from Exelixis. The fair value remeasurement of contingent consideration liabilities is the reevaluation of the CVR based on the actual market price of the CVR. And you see the impact on the restructuring costs line of the reserves we took for the French plan during Q4, which, again, you can read in details. So all that leads to an overall net attributable income to Sanofi shareholders of EUR 4,967,000,000, which is a decline of 12.8%, which is pretty close to the evolution of the business earning per share. Cash flow. We continue to generate strong cash flow despite of the loss of the revenue on the cash flow generated by Plavix since May. We generated EUR 7.3 billion of free cash flow after paying for working capital variation on capital expenditures. We have reduced and put under control our capital expenditure program. Also, some big investments are somewhat coming to an end or closer to the end, such as, for instance, the BIOLAUNCH facility in France. And I think we have got a -- we have put in place a tighter control on our working capital requirement so that, in fact, we managed to reduce the level of receivables while controlling the evolution of our inventory just by increasing inventory at Genzyme, which clearly was required. Cash returned to shareholders, in total, represented EUR 4.3 billion. This includes a dividend for EUR 3.5 billion but also share repurchases which represented EUR 800 million. So all in all, the net debt has decreased significantly by EUR 3.1 billion, showing the capacity of the group to generate cash flow and, I mean, giving us the flexibility to increase the dividend when the profit is somewhat declining. So this was clearly anticipated. And probably, we'll discuss later on this question of allocation of capital. Okay. With that, I will hand over now to Hanspeter.

Thank you, Jérôme. Good afternoon, good morning. I'm here to give you some more insight into the performance of 2012. As you have heard, 2012 has been mainly marked by the strong, by the good performance, by the performance that's expected of our growth platforms. This represents now more than 70% of our sales. You see that those growth platforms were standing in the first quarter of 2011 for EUR 4.6 billion and in the last quarter, for EUR 6 billion. They are composed of a still small but growing share of other innovative products, evidently New Genzyme, Animal Health, CHC, Vaccines, Diabetes and the Emerging Markets. What has changed also and what is a premier in our reporting for the first time, the Emerging Markets became the most important part or important piece of our business. As you see from the chart, we have achieved EUR 11.1 billion, which is a growth you have heard before already from Chris, 8.3%. And this represents 31.9% of our total business, which means the Emerging Markets have overtaken the United States and by far, also Western Europe. Remarkable also is that the share of Europe continues to decrease for reasons you understand. You see that we have a decrease of 9.3% in Western European sales, and the sales in the United States have been stable in 2012. And by the way, we expect to grow [ph] as of 2013 in the United States. How did this all happen in the Emerging Markets? You see that we always had a strong position. I have mentioned many times before, but to some extent, this is even a historical effect due to the early entry of companies like Hoechst and Roussel in those parts of the world. We had 2005, approximately EUR 5 billion sales. But nevertheless, you see very impressively over the last 7 years, those sales have increased to more than EUR 11 billion, and the growth in recent years has accelerated mainly by increased efforts in those markets by reallocation. Which means we have reduced our efforts in Europe and also, to quite some extent, in the United States and have reallocated those resources to the Emerging Markets. One highlight we have today, more pharmaceutical sales representatives in China than in the United States. During 2005, we had about 10,000, and today, it's approximately half of it. Now also, Chris had mentioned since -- why only 8.3% of growth in front of our commitment to 10%. You see from the chart on the right side that this is largely due to the definition of Emerging Markets because for historical reasons and in order to remain comparable, we continue to integrate Eastern European countries, which in their overall macroeconomic development but also in their health care development get more and more close to the Western European markets. But you see then that outside, we have a growth in Africa and Middle East of 10%. In both markets together, we achieved EUR 1 billion of sales also for the first time each. You see that in Asia, including, of course, China, we have announced a 10% growth, obtaining sales of EUR 2.8 billion, and in Latin America, a growth of 11.3% equal to EUR 3.4 billion. Now the Diabetes platform also has seen a record year in 2012. You see then once again for the last 3 years how those sales really continuously develop from quarter to quarter and from year to year. And yes, evidently, Lantus is a flagship product inside, obtaining sales of nearly EUR 5 billion in 2012. And this is a growth rate of 16.7%. And on the right side of the chart, you see that we have obtained 22% of growth in Lantus in the USA, 25% in Emerging Markets, where sales approached the EUR 1 billion mark. Western Europe, at least 5% growth in an otherwise overall flat market environment, and in the rest of the world part, 20.6%. It's not only at all Lantus. It's also Apidra, which came back to a very strong growth, and we had an excellent fourth quarter in 2012. You may remember that our people was suffering from a stock-out situation due to production problems in 2012, and the product is really very nicely back on track in 2012. You have also heard about Lyxumia. Lyxumia is, for us, a major launch. I say it's a major launch because we intend, of course, to launch the product in Europe, in Japan and in the United States with 2 different speeds. You may remember that the FDA has asked us to submit cardiovascular data, safety data. The respective study called ELIXA is underway, and it's performing exactly according to schedule. Consequently, we intend to file the product in the first quarter 2013. In Europe, very, very recently, within the last week, so to say, we have obtained the European approval, and we start launching the product as of the second quarter 2013 in the usual launch pattern. We launch first -- we have early access, which historically and classically will be Germany and the United Kingdom, and towards the end of the year, all other major countries, including France. We have also heard that we had a, as Chris called it, a glitch, a technical glitch with the device for a combined application of Lantus and Lyxumia. This, of course, is unfortunate. Nevertheless, it's part of our business. Technical problems occur. I believe that it is less severe because we have to establish anyway the product first in a single dose. Nevertheless, the product will be dosed in combination from the very, very first day because, as you see from the chart, the whole development program was built in the direction of combining Lyxumia with oral antidiabetics, and for us, more importantly, with insulin. We know that approximately 25% to 30% of all Lantus patients also get GLP-1. So it was a major aim of our development program to show that a combined dose of both molecules achieved additional effects, and according to -- and it's a clinical program we could process, and consequently, we also have obtained an adequate indication. So we will exploit, for the next years, the product solely. But of course, in a joint recommended dose together our insulin products, Lantus and to some extent also, Apidra. Another recent introduction is Zaltrap, a product which we have launched since autumn in 2013 in the United States. Zaltrap is indicated in the second and third line treatment of colon cancer. This is for Sanofi, to some extent, yes, I may call it, a historical indication. You may remember that we have been the first offering any treatment of this disease with Eloxatin. To some extent, we now come back. Also, there's a totally different way of treatment. We have also, quite recently, within the last couple of days, obtained European approval, and the rollout starts as of today in the major European countries. Now this product I carry here in my pocket because I think it's really always worth to show it to you. I understand that some of you have received a training sample from our Investor Relations. It is a product which is really new because it speaks -- it really instructs the patient how to use this product in a very traumatic situation, indication which is anaphylactic shock. It is a significant market. As you see from the chart, it is a market in the United States of roundabout EUR 1 billion, and there is a single competitor on the market, which is EpiPen from Mylan. So we have a really clearly and easily attackable target, and this has, of course, caused some reaction also from this target. As you see, the 2 inventors made it to the front page. The inventors of the product which we have licensed in, Auvi-Q, has made it to the front page of The New York Times, underlining that this product is really a breakthrough in terms of safety and convenience. We are very optimistic for this product, which is the actual innovation as outlined here from The New York Times. Merial. Merial is in a phase of stabilization. We have obtained nearly EUR 2.2 billion sales in 2012, which is a growth rate of a little bit more than 3%. We prepared a basic renovation of the portfolio of Merial, which consists, as you see from the chart, mainly of pharmaceuticals for Companion Animals, amongst Frontline, Frontline selling about EUR 775 million in 2012. We have developed, over the last 5 to 10 years, major new products in this field, the field of flea and tick, which present significant advantage in terms of convenience, outer [ph] activity and safe dosing. And we will be launching those products as of the end of 2013. So 2013 will, once again, see a performance approximately in line, perhaps a little bit accelerated, as compared to 2012. And then in 2014, we expect a significant increase of sales growth due to the various new products, which we intend to launch as of the end of 2013. Consumer Health Care, another very positive result in 2012. We have obtained more than EUR 3 billion of sales. The portfolio is growing by 9.9%, which is a good growth, I believe. The overall OTC market is growing in 2012 about 4%, 4.5%. And you see that we have obtained the third rank. I believe when we really started to concentrate on Consumer Health Care, we have been the seventh or the eighth ranking company. So we do well. We do well also by acquisition. But we can say that the major acquisition we have made in Consumer Health Care, which, of course, is Chattem, continues to do very good not only with Allegra, but we also made interesting acquisitions. You may have seen that we have acquired from J&J Rolaids, and we plan to relaunch the product, which has been absent of the American markets for production problems on the side of J&J. We intend to launch the product by the end of 2013, which will further accelerate the performance of Chattem in the United States. Now I pass it over to Olivier, who will continue with very positive figures out of 2012 for our Vaccine division. Olivier?

Thank you, Hanspeter. Good afternoon, good morning. I'm afraid I have nothing in my pocket, but I'm happy to report that Sanofi Pasteur ended 2012 on a very high note. We had a very strong fourth quarter, with our sales up 20.5%, with a strong growth coming from the Emerging Markets, where we show a very strong performance, with sales up almost 24%. For the full year, for Sanofi Pasteur, our sales have reached EUR 3.9 billion, up 5.7%. We continue to drive our profitability up due to rigorous management of our OpEx and targeted investments. Beyond our growth drivers, our profitability has gained 1 point -- 1 percentage point from 20.4% to 29.5%, getting closer to the profitability of the rest of the business. After a couple of years of very sluggish sales in Europe with our joint venture with Merck, now we are happy report that we have regained some momentum. We had a very strong fourth quarter, with a growth of 9%. And for the full year, we show a growth of 6.8%. For 2013, we get prepared now for the launch of our hexavalent vaccine, which is expected in 2013, at the end of the first half. And it will be an important growth driver for 2013. Sanofi Pasteur had another very good flu campaign in 2012. The history of flu is very different each and every year. We are the undisputed leadership on the flu market both on the mature market but also in the emerging market. In the U.S., as you know, the disease activity has been a little bit late in a sense that it came at the end of Q4 and beginning of this year. And we have continued to ship, even although for small quantities, in January. Overall, in terms of number, those -- you see the flu campaign 2012/2013 is very similar to the flu campaign in 2011/2012. We continue and we are very happy to report that our differentiation strategy works in terms of average selling price. Our average selling price have increased even in an environment that is extremely competitive on the regular doses. And of course, with our differentiation strategy, we are happy to show that on our Fluzone High-Dose, that is for the elderly, and also our Fluzone ID, we are able to get value upgrade. Looking to the future, we will be launching mid this year our Fluzone Quadrivalent, which is also important for our differentiation strategy. Fluzone Quadrivalent is under review of the FDA, and action date is June 10. Looking to the emerging countries, we are happy to report that despite a very high market share in Latin America, for example, where we have a market share about 75% and also very strong market share in other parts of the emerging countries, we are happy to report that we continue to grow 5.1%. And we see significant progress in terms of flu immunization in country like Brazil and Mexico. Looking to our growth, so Sanofi Pasteur has delivered growth in mature and emerging markets despite supply constraints. In the mature markets, we are very proud about our performance of Menactra. We continue to hold a significant market share, and we are close to 80%, and our sales, our growth by ACIP recommendation for booster dose for adolescents between 16 and 18 years of old -- of age. With regards to Japan, Japan was the country where we had almost no sales back 2 years ago, and I'm very happy to report that we had the most successful launch of a pediatric vaccine with Imovax on the Japanese market. It's not a one-off. Now IPV is a routine, part of routine immunization, and we will continue to grow our business, especially with the new combination that we will be launching. I'm happy to say also that despite the supply limitation that we faced in 2012, we are getting back on track, and we will get back on track on Pentacel end of Q1, beginning of Q2. And on TheraCys, we had to renovate the facility, and we are expecting to get back to production in September this year and to be back on the market at the end of the regular year [ph]. We are very happy with the momentum of our service provider platform, VaxServe. That allows us to leverage our portfolio and to be very close to our customers, both retail and, of course, primary care network. Looking to the performance of our Emerging Markets, 9.1%. Our franchise -- pediatric franchise is very much driving this good performance. We are very happy with our performance in China with the launch of Pentaxim, again, it's the best launch ever in the Class 2 market, the private market. And we continue to benefit from the launch of Pentaxim, as well, in Mexico. And we launched, a couple of months ago, the IPV in the private market in Brazil, and things are moving very, very smoothly. Also, good performance of Menactra, not only in the U.S. but also in the Emerging Markets, and we continue our rollout today and the product is licensed in 37 countries. And we continue -- and we will -- the product will be approved, in a couple of years, in almost 100 countries. So very strong growth of Menactra driven, this year, by Chile but also Saudi Arabia. 2013 will be an important year for our combination vaccine, Hexaxim, that will be launched in some international markets. We got the license in 2 countries of Latin America at the end of 2012, and this will represent a significant opportunity for 2013 and 2014 onwards. So overall, for Sanofi Pasteur, a strong first quarter, very solid underlying performance and this is in spite of the supply limitation we faced, and of course, a significant growth driven by the Emerging Markets. So I'm now going to hand over to Chris in his capacity as Chairman of Genzyme.

All right. A number of these points I have mentioned earlier, so I'll go quickly. But as you can see, a very strong performance of all of the products within the rare disease portfolio. Clearly, the United States, with no competitor for Fabrazyme, was a significant opportunity for the company, taking advantage of now the increased competition. I think it's very good, though, to see a strong performance of Cerezyme where the competitive situation is different. And this is where I think you start to see the importance of the Genzyme business model, the real proximity to the patient. Now we've had good news on both Phase III studies on eliglustat, and then, I think eliglustat becomes another element to add to really allow Genzyme to regain leadership in the Gaucher market. And then of course, Myozyme, growing also at double digits. So I think, in addition to the financial success, what I can tell you is that within the -- around the corridors of Genzyme, being able to fully supply the market has had a huge morale boost. And I think has been a factor that has allowed us to really successfully have Genzyme come into the Sanofi family. Now the other was a trickier proposition. We put multiple sclerosis into Genzyme, no real experience in multiple sclerosis. We actually had to build a team from scratch, which we have done. That was actually a very significant investment. And it's fair to say that Aubagio did not have a significant awareness level coming into this. However, I think when -- and when we started seeing the first data, we were encouraged by the launch. Personally, I'd like to see a little bit more than a couple of weeks of data to get excited. But here, we have 4 months of data and what you can see is, clearly, that the Aubagio launch is tracking at least as well, if not slightly better, than the Gilenya launch. 80% of MS specialists have now -- have prescribed Aubagio. 1 in 5 patients were treatment-naïve and then, obviously, the rest were switches, mostly from Copaxone and Avonex. In doing some of the initial market research, one of the key reasons is actually tolerability of treatment. So I think it augurs well because this also says that we have a team, that should be in good position to launch Lemtrada. It is obviously a huge opportunity that we have to be able to put 2 significant new medicines into an important area like MS. This is a market of some $14 billion worldwide. So with that, now to talk about the future in Research and Development, Dr. Elias Zerhouni.

Well, thank you, Chris. I think as you've heard through the presentation, 2012 has been an extraordinarily busy year for R&D. It's probably one of the busiest years the company has known. I think it's the result of a very driven strategy, starting in 2009 when we focused on: first, reinforcing the late stage portfolio; second, transforming R&D; and third, reinventing the model for R&D over time. I think what you've seen in the past year is 9 approvals, 6 registrations. And what I would like to talk to you about is what is it that we are currently executing on and what is it that we intend to do over time. First and foremost, we thought it was very important to have a focused portfolio. And therefore, we pruned the portfolio. Currently, we have about 64 New Molecular Entities in development. But the key to the progress was to focus on areas where -- in areas where we knew we had already great investments in platforms that were destined to grow, like Vaccines, like Diabetes. In addition, we thought it was very important to build out new therapeutic areas in areas of strength that we have. For example, immunology and inflammation, with multiple sclerosis, with anti IL-6, IL-4, monoclonal antibodies. We knew, clearly, that we had to maintain our competitive position in oncology. So what you will see today is a portfolio that essentially aligns to the 7 strategy areas -- strategic areas that we decided to focus on over the period of 2012-2015 and trying to execute along those specific lines. So in multiple sclerosis, you heard about Aubagio, I'm going to tell you about Lemtrada. In diabetes, you heard about Lyxumia, I'm going to tell you about the new glargine. In oncology, we have a JAK2 inhibitor. And then I will tell you about eliglustat in rare diseases. Cardio-metabolic is an area of legacy for the company and we're trying to reinforce that franchise with PCSK9, the monoclonal antibody and otamixaban. And then in immunologies an emerging area, where we think we have, actually, strength because of our experience in vaccine, so it's experience in protein engineering and our rising experience in antibodies, through our partnerships with probably Regeneron and others. And so immunology or immunomodulation is emerging as a strong theme of our portfolio and obviously, vaccines. I would also note that, out of that portfolio, 9 out of the molecules that are coming are Biologics, clear, small molecules, again, illustrating a very strategic intent of equilibrating the R&D portfolio to have a diversity that allows sustainability over time. So with that, let me go to Lemtrada. I think it's probably one of the new medications that is going to truly change, in my opinion, the management of multiple sclerosis patients. As you know, there are effective drugs out there and the demand of the patient population now is towards quality of life and improvement in the tolerability of the treatments that they're receiving. So you'd heard about Aubagio and its launch. In Lemtrada, we filed in Europe and we filed in the U.S., we just heard the file was accepted by the FDA. And if you look at Lemtrada, the reason we think it's an important component of the amatarien [ph] in multiple sclerosis is that it does reduce significantly relapse rates against comparators, not against just placebo, and it also significantly slows the accumulation of disability over 6 months. It's a completely different mode of administration with injections at 1 year apart. So it's almost like a vaccine in many ways. The patients do not have to come back every week or every 2 weeks to get injected. And therefore, it's a really manageable drug from the standpoint of the physicians. It's manageable, also, in terms of its safety profile. Some infusion reactions, a little higher infections, but -- autoimmune events are the ones that have been mentioned but all of them can be detected and managed conventionally. So we have great hopes here. We will also hear about the regulatory decisions in the course of 2013. Again, I think that R&D has to also support existing platforms. In Diabetes, what we're trying to do with our R&D strategy is to support an integrated solutions set for the patients with Diabetes from all to GLP-1, to insulins of all different kinds. So that we can, in fact, provide this comprehensive solution. In terms of Lantus and glargine, we discovered that a new deformulation of Lantus called U-300 actually didn't -- wasn't just more concentrated but it provided us with a PK/PD profile that was much flatter than the original Lantus. So we decided to launch a development in the new glargine formulation with 2 Phase III trials, first, in patients who have -- are high-insulin-dose users and this trial's result is expected in the second quarter. Also, patients who have type 2 diabetes plus oral therapies. And we started a second set of 4 Phase III trials in the second half of 2012, insulin naïve, basal and also Japan. We started the studies there because we do believe that, that offering is going to be necessary. As Hanspeter mentioned, 30% of the patients are not at-goal in basal therapies. We need to really improve the ability for the treatment protocols that we offer to reach a greater level of compliance with HbA1c levels that are expected to reduce the number of complications later in life. So JAK2, the JAK2 inhibitor is also novel in the sense that it's a very selective JAK2 inhibitor. It has an extremely promising Phase II response rates in patients with myelofibrosis. As you see on the right-hand side, there's a dose response with over 60% reduction in one of the primary parameter that we see in spleen volume and the percent of patients with that sort of reduction is quite large, 35% reduction and 60% of patients is what I meant. And so we are on Phase III. 2 doses, 400 mg and 500 mg, and enrollment is completed. And we're expecting the headline results in the second quarter of 2013. And we have 2 Phase IIs ongoing in related conditions called polycythemia vera, and also myelofibrosis patients who were previously treated and failed therapy with ruxolitinib. So it's important to see that the strategy, if you will, is to continue to be strong in what we call liquid cancers, the leukemias and the hematologic malignancies, as well as to continue to build our portfolio in solid tumors and especially, in prostate. When you look at the eliglustat, it is an example of Genzyme researchers' best. Cerezyme is obviously a very effective therapy. So when you really look at the new way of performing R&D, the approach is to look at a systems biology approach. And in this particular case, looking not just at the missing enzyme, but looking at the enzyme upstream and downstream of the process. And in this particular case, a novel, very potent substrate inhibitor, meaning that it really acts on the enzyme above the defective enzyme and reduces the amount of ceramide that is producing Gaucher's disease, and that our [ph] therapy eliminates the challenges of infusions. We've had positive results against placebo in the first pivotal Phase III trial, ENGAGE, and we have just received the ENCORE Phase III study, which is a comparative study between eliglustat and Cerezyme, with -- and we meant the primary efficacy endpoints, I cannot tell you more because the data is being analyzed and will be published soon at a scientific meeting, with a significant and comparable changes to pain volume in those patients. In addition, as I said, we're trying to reinforce our presence in the cardio-metabolic area. And we try to do this by selecting programs within our research that would fit with our historical legacy in Plavix and other areas of cardiovascular care, Aprovel. But we have quite a bit of experience and this is why we chose PCSK9 as one of the topics of our collaboration with Regeneron in 2009, and accelerated its development. We're now, as you know, in Phase III, it's a first-in-class fully-human antibody targeting PCSK9, a novel mechanism that was discovered through genetics research. Where, in fact, we showed that loss of function of this particular enzyme, actually created a reduction in the risk of coronary disease. And a huge reduction in low density cholesterol, which is the main risk factor. So you're seeing here, for example, the effect of the drug -- dose response. And you can see a flattening of the curve, with minus 40% to minus 70% reduction in the level sustained over a period of time, with injections every 2 weeks at different doses. So when you really look at the impact of this, you have to ask yourself, "Where is the place of such a therapy in a field where statins have been quite effective?" The target populations, when you really think about it, it's about 21 million patients globally. What is it composed of? First, the patients who are first familially very susceptible to hypercholesterolemia because of genetic differences. The second are the significant number of patients who cannot tolerate statins, who have complications from statins, muscular or others, and those 2 populations make about 3 million, 4 million patients. The big population that we are targeting in our Phase III trials is the population of secondary prevention. The patient who is treated, has been followed, and who comes to the hospital with an acute coronary event. That patient is known epidemiologically to be at a very high risk of recurrence of the event and death. So these patients in secondary prevention make up almost the bulk of these patients with 12 million, 13 million patients entering into that category. And then we know that we have patients at high risk because of diabetes, for example, underlying conditions, and those will be the primary prevention target. When you look at our strategy, ODYSSEY is the name of the large Phase III programs that we have launched. There will be 22,000 patients and those involved in this particular categories, this target category that I just defined for you. And we are going to go after that in a sequential fashion. So we've already enrolled in immunotherapy in a trial, for example, we'll read out this during this year, and we're going to expand into our ability to understand the impact of this approach in terms of benefit in the patients with acute coronary syndromes. So this is an important pillar of our strategy. The second pillar that is real, that is here and now, that you can evaluate is otamixaban. Now otamixaban responds to a need which has been identified for years. And the need is the following: how do you know how to manage a patient who comes to the hospital, who has been in the ambulance, who has come to the emergency room, who has come to the intervention suite with an acute coronary event, and how do we manage that patient? The problem is the ambulance may have injected a drug, a -- I mean, heparin, for example; and the bleeding times have changed. And then you come in, and you don't know when to stop, when to start? And so we know that there is a huge demand for a very predictable IV therapy that has a very fast onset of action and a very fast fallout of the action, a decrease of the action. So that this is the onset/offset strategy that physicians have been asking. And so we believe that otamixaban, because of the strong Phase II results that showed not only improved control but a direct reduction in the complications, including death and myocardial infarction, very hard endpoints. We thought it was very important to develop this product, so we accelerated the development, it's now in Phase III study, with results expected in the second quarter of 2013. Our hope is that this will become the new standard of care from the ambulance to the emergency room, to the intervention suite, to the operating room. And so this is why we pursued and selected this particular molecule for accelerated development. Another area of franchise that we want to develop is immunomodulation. Again, we're not doing this alone. As we said, we want to enter the field of biotechnology, the new biologics. We've done this with a lot of discipline, and I think that's what we're trying to see here with the anti IL-6 receptor monoclonal antibody. And the reason, again, is that we know today that the response to existing therapies cannot be one-size-fits-all. It's not going to be homogeneous across all patients. In every intervention, we do realize that there are patients who react better to a certain type of therapy who do not -- or did not respond. In this particular case, about 1/3 of the patients do not respond to current therapies. We also knew that IL-6 had significant advantages as a sort of core molecule in the inflammatory response and that's where we decided to continue its development with 2 pivotal Phase III trials: the MOBILITY trial, which is fully enrolled; the TARGET trial, which is recruiting as we speak. And new studies to start in the first half of 2013 with really significant results observed, and already, we can tell that this is a molecule that could position itself earlier in the treatment cycle of these patients because of the response rates that we're seeing and the type of response and the sustainability of the response. Another molecule we have great hopes for because of strong and positive proof of concept data, is the IL-4R alpha monoclonal antibody. From a scientific standpoint, this is a -- it's a very interesting way of approaching multiple targets at once. If you really look at the molecular structure of the IL-4 receptor, if you allow me here, the IL-4 receptor has 2 components. It's what we call the alpha components and the beta components. The alpha component is actually also common in the IL-13 receptor. So think of 2 receptors having 1/2 of the part of the receptors being common between the 2. So the idea here was to develop a monoclonal antibody that would be against this common part of IL-13 and IL-4, and therefore, with 1 agent, we're hitting 2 targets. And because we do this, we are really able to see effects, which will be presented at medical conferences soon, with very significant proof of concept data in asthma and atopic dermatitis. Which gives us the courage to go forward, faster, as Chris said, if you know the mode of action, you have demonstrated measurable effect in human populations, that's why you should invest at risk. Because you know you know that you have a derisk molecule in this particular stage. So the Phase IIb initiation will be -- is expected at midyear. Clearly, Vaccines is a major growth platform. We focused a lot of efforts. We support the vaccine development very aggressively across global R&D. We found ways to work across the different divisions to enhance our ability to do this, the best example, obviously, dengue vaccine, which was truly an innovative vaccine launched because of the major demand worldwide due to the growth of dengue around the world and the expansion of the geographic zone of dengue from the tropical region now to the south and north, even reaching, for example, Florida. We have now cases of dengue in Boston, the patients who traveled from Florida to Boston. And it affected 220 million people, with 2 million cases of hemorrhagic fevers, and about 20,000 deaths per year. So it's a large public health demand. The dengue vaccine was quite an original vaccine, from a molecular standpoint. It was a chimeric virus. And we are reading the Phase IIb results this year, where we found that it was safe. One of the big questions we always have in dengue vaccines is whether or not a vaccine is going to actually provoke a very hemorrhagic second infection. Because as you know, in dengue, the first infection is usually well tolerated, it's the second one that really hurts the patient. So when we did this, we were happy to see that it was safe and well-tolerated, it was effective against 3 of the 4 serotypes in Thailand, it's not effective against the second serotype in Thailand. Our Phase III trials have been started and ongoing. We'll read out in 2014 both in Latin America and Asia, so it will allow us to understand what is the circulation of these serotypes and how exactly to position the vaccine relative to its markets, and the prevalence of the serotypes is something we need to define. And this year, we're going to enter Phase III with the C. difficile toxoid vaccine. And C. difficile, it's not the organism that hurts the patient, it's the toxins produced by the organism, and therefore, we're trying to develop a vaccine against the toxins which we have been able to do with a good Phase II rated results with very broad protection. So we're going to start a multinational Phase III trial in the third quarter of 2013, with Olivier Charmeil's team in Sanofi Pasteur, and we're going to target patients at high risk. This infection is growing not only in the hospital environment but also in the community environment, and so we do believe that the need is going to grow over time. So in summary, I think you know from the presentation we have 18 projects in the launch phases, hopefully, within the next 3 years. You have the list here, as I went through those, that are still in the works and Hanspeter covered the ones that are already approved. We will continue to change R&D and to really reinvent it. We do believe that the models of the past have to be different. The operating model has to be different. We cannot do this without either a new philosophy, new people and a new strategy. So we've been recruiting extensively great talent to the company. This year, we recruited 8 top scientists to come and really change the way we do science by bringing translational research very closely to the process at the bench within our company and using open innovation. In other words, the idea that we can access the best new ideas because they are not necessarily all within ourselves, and make sure that our internal research team, like the team here, can work with the external team in a very, very collaborative fashion. This is what Gary Nabel, or the new Chief Scientific Officer, who is going to help us. He's a world-class researcher, led vaccine research for years at the NIH. Andrew Plump, here, is our new Research -- deputy for our Research and Translational Medicine and many others with them. In the past 2 years, 20 of the 27 leaders of R&D at Sanofi have been new, newly appointed. So we are really going through this reinvention of the model and focusing on a very disciplined strategy. You heard that we have one of the most active portfolio, but yet, we have established cost discipline, we've stayed within our budgets by extensive reorganizations, by creating synergies, by improving the R&D cost structures. But from the strategy standpoint, we also changed our medical strategy. We just don't believe that new tools are going to be effective. And so we are focusing on very high-value projects and focusing on the selection, the quality and the execution of these projects by guiding a very rigorous prioritization of what we do or what we do not do, which is sometimes more important in driving this model of innovation, and again, enhance the value of external opportunities, have no pride of ownership. It's okay if it's not invented here, we will go wherever the best invention here and make it work for Sanofi. Thank you very much. I'll turn it back over to Chris who is going to conclude.

All right, we'll close here. I think you've seen this -- the strategy. Essentially, an integrated health care leader, we are increasing, we've got a pipeline and we're bringing those products to market. We will continue to have an acquisition strategy, but I can tell you that it's getting tougher and tougher to find good value items out there, and of course, we need to continue to adapt to our future. So let's talk to guidance. What's in the background of the guidance? Well, you already know that we have EUR 800 million of over hang from Plavix coming into this year. But essentially, when I look at the businesses, it is going to continue to perform as it has been. I mean, our growth platforms will continue to be strong and I don't see any change, any disruption in the business. We have an awful lot of launches this year. We're suddenly seeing things like the IL-6, the IL-4, or the C. difficile vaccine coming into our program, that's all very exciting for the future and we clearly want to support that, so we are going to reinvest EUR 500 million of our savings this year into the future of the company. We don't want to get into underlying growth rates. But essentially, if you look at this guidance and said, all right, let's take out Plavix of EUR 800 million, the underlying business is growing at 5% to 10% on the bottom line, and I think that just demonstrates the confidence we have in the underlying business that's going on. So taking all that into account, our 2013 business EPS is expected to be flat to 5% lower at constant exchange rates, always barring major unforeseen adverse events. So the longer term guidance, everything we still see is completely aligned with that. We do increase our operating margin in our plans. We've got EPS, therefore, growing on a leveraged basis. And we still intend to, obviously, have our dividend payout ratio, achieve the target of 50% in 2013. With that, I'd like to invite my colleagues up onto the stage here, and we'll be happy to take any questions, obviously, through webcast or here in the live audience. So come on up, folks. Sébastien Martel: We'll probably start taking questions from the room, and at some point then we'll turn over to questions we have received through webcast. Shall we go? Philippe Lanone [Operator Instructions]

Philippe Lanone from Natixis. Three questions, if I may. First one, can you make a comment on Lovenox in Europe, which is quite a big drug still for you. And we have new proposed guidelines that while they, again, restate that there is a lot households who do not close anymore their doors to substitutable generic? Number two question for Jérôme, maybe, on the R&D. If we extrapolate the trends in Q4, you have a number of drugs in Phase III now, how confident are you that you can be within the EUR 5 billion threshold if we extrapolate that Q4 trend that needs a lot of restructuring? One question, maybe more -- during the... Sébastien Martel: Philippe, maybe that's the last one. [Operator Instructions]

Yes, you're absolutely right. There is a guideline for biosimilars in Europe, Aldrich [ph] -- and you had touched on Lovenox, we have been consulted in this process. We are overall, I would not say satisfied, but nearly satisfied with the outcome. The outcome is rigid, it's stringent as far as the definition of those products is concerned, we believe that it will not be easy for everyone to overcome those hurdles. Clinical trials are needed, but they can be raced [ph] but it will not be easy to race [ph] them. So overall, we believe those guidelines are okay, and they are okay because they are safe for the patients. Independently, and I have said so over the years, I don't believe that the European market will be extremely sensitive to generics for Lovenox. The European market, for the last 20 years, has seen a multitude of low molecular weight heparins. The market situation is not at all comparable to the U.S. market. And let's not overlook that even in the U.S. market the penetration of generics has been relatively slow, very slow in special side of the hospital market where Lovenox even today controls about 50% in terms of volume.

Philippe, I will give you -- if I understood your issue [ph], if you look at the fourth quarter of 2011 where we had the ratio of 15.2% to sales in terms of R&D expense, you would have told me even, "How on earth can you get to 14%?" And we did. So in other terms, I mean, this will be a combination of further pulling back of the optimization which has been put in place in 2012, and of course, I mean, there are things which are increasing. Not only PCSK9, but also Fluzone [ph], if I look at the overall Phase III expenses for -- from many years compared to the previous year, some have been on the roll already, so the cost will be somewhat lower. So there are things that go up and down, and I mean, I can just confirm what I said that we will stay within the EUR 5 billion envelope.

Vincent Meunier from Exane BNP Paribas. I have 2 questions, please. The first one is on your guidance for the long-term and especially in Emerging Markets, in the current context of 8% growth at constant exchange rate in '12 and also, in the current context of, let's say, uncertainties in a lot of countries everywhere, is it fair to continue to assume a double-digit growth in that part of the world even if, as you say, this is the single largest opportunity for the pharma industry, but maybe, high single-digit is better than double-digit? The second question is on the biosimilars of insulins you are launching, so you are talking about 2 Phase I projects. Can we have more details on that? Are you talking about human or analog insulin, long-acting, short-acting, maybe your biosimilar of nouveau rated [ph]?

Hanspeter can talk some more about the Emerging Markets. I think we are barely scratching the surface yet on really achieving penetration into these markets. People get a little concerned about seeing maybe the Chinese economy slowing down, but it actually doesn't have an impact on the creation of middle classes. We grew double-digit in our key areas last year, and so you can count Eastern Europe in or out. I actually think, over time, Eastern Europe will come back because it is clearly under-investing. These are much more -- there's 80 countries in the Emerging Markets, you've got multiple layers of wholesalers and it's never going to be as smooth as what you all have been used to seeing in Europe and in the U.S. But from a potential point of view, and given our product profile, I'm not prepared to cede on our target on that yet. In terms of the biosimilars, we don't really want to say an awful lot because of competitive reasons. They are not biosimilars of our own molecules, obviously, since we've had that question come up. So you can pretty much figure out what they might be. You want to add anything on the Emerging Markets? Jo Walton - Crédit Suisse AG, Research Division: Jo Walton from Credit Suisse. A couple of questions please. 18 months ago or so, when you were talking about your long-term guidance, there was a view that 2012 would be the trough year. It doesn't seem that that's the case now. Would it be fair to say that Genzyme has perhaps done better in 2012 than you had originally expected, so you haven't got the incremental benefit to come through in '13 to offset what was always, clearly, going to be the second half of Plavix and Avapro. And if you could just tell us a little bit more about why '13 isn't going to be the start of your growth period? Because that's what you were originally hoping for. Secondly, can you also talk a bit about what you're going to do with the cash going forward? A lot of companies tell us that they just can't make big acquisitions because they don't have any particular advantage and they're just massive bidding wars that you just can't make the sums add up. But clearly, investors are very worried about one or other is the big few companies going through a deal. So I wonder if you can just tell us where you think you can best spend your money going forward? And finally, a very quick R&D related question. Now that we have Quadrivalent, the flu vaccine, do you think that the relevant authorities are going to mandate 4 different strains to put into those vaccines, so that the 3 of you who have the 4 strains this year will actually gain market share because, at least, one of the major suppliers hasn't got the 4-strain vaccine, and is it going to slow down the manufacturing? I always understand that the issue is that you've got to make all 4 strains and put them together, so if you're making 4 strains rather than 3, perhaps, it just slows things down. So perhaps you could tell us what the real advantage of 4 strains in a vaccine will be?

So 2012, trough year, 18 months ago. First, a guidance of flat-to-down minus 5 doesn't actually preclude 2012 from being a trough year. So let's have a look at the end of 2013 as to where we get to. The second is, in my experience, the worst thing you have is when you've got a flat anywhere in your guidance. Because it only requires a little bit of -- here and there of things like tax rates, of a slight shift in 2012 to 2013 of Plavix that starts to make some of those things that you said 18 months ago, a little less precise. If I look above the operating profit line, I don't see anything that's changed. And when you, so let's say, you take out that EUR 800 million if you want to get into the underlying growth story, I mean, you can see that, that business is growing to 5% to 10%. So we have continued confidence in the underlying fundamentals of the business. Now the tax rate was unexpectedly lower last year, and we did have a settlement with BMS on Plavix, and that shifted a little bit. But as I say, the guidance doesn't exclude 2012 from being a trough year. But fundamentally, as I look at the business and I'm not really looking at it any differently than I did 18 months ago, with the exception that, actually, we have a whole lot more in R&D, 18 months ago IL-4 was not on my radar screen. The C. difficile was not on our radar screen. The ability to actually move as quickly as we did on PCSK9 into Phase III, I mean -- remember, we only opted into this with Regeneron in March of 2009, and here we are 3 years later in a major Phase III program. So -- but actually, those are good news items and a lot more robust than I could have even hoped for. So what to do with the cash? First is we are generating, just to make round numbers, roughly around EUR 10 billion in cash, you've got around EUR 3.5 billion, possibly going up to EUR 4 billion going into the dividend. By the time we get to the 50% payout, there's about EUR 1.5 billion that goes to capital expenditure to keep the company operating and keep quality in our factories. I think it's pretty easy to say we'll continue to do EUR 1 billion to EUR 2 billion in bolt-on transactions. And our objective is to have, over time, roughly EUR 10 billion in net debt. Now we're already below the EUR 10 billion at the end of this year, and so we're either going to have to find transactions that can add value, and I've consistently said my preference is to continue to invest in the business. Equally, I would say that if you look at our track record over the last 4 years, the acquisitions that we have done have generated value. I would agree with you that it is becoming increasingly difficult. When we did Genzyme, it was a unique opportunity, but unfortunately, the Biotech Index has risen 82% since we did Genzyme. So there's not too many more Genzymes out there. We do find value in non-BRIC emerging countries. The BRICs have become much more competitive, but we are one of the few companies that's present in non-BRIC. But you can't spend that much money. I can't go spend EUR 10 billion even if I want to, in non-BRIC. So I think it's a question that you're going to look at over the course of the year. How you use your capital is a strategic question that you explore with the board. But we're not about to go do anything that doesn't add up to high value. Remember, half of our equity compensation is based on a return on investment metric, and that pretty much precludes you from doing what some of our colleagues have done in the industry. So our job is not to accumulate cash, our job is to invest in the business, but it's our job to invest in the business that benefits Sanofi shareholders, not someone else's shareholders. And I think you can also judge us on the deals that we haven't done, maybe, over the last year. With that, I'll turn it to Olivier on the Quadrivalent vaccine.

So predicting the right trend is always a very difficult exercise, and it starts in February and we have seen years where, at the end of the season, the strain had circulated and had changed. So it's a little bit premature to say what ACIP recommendations are going to be. What we could say that, in the last couple of years, there has been some mismatch especially for strain A and B. So to have 2 strain Bs will offer a better protection. In terms of manufacturing, it's not going have a significant impact. The way we view the impact in terms of manufacturing is on the fact that, of course, it will be able to put pressure on capacity, which means that at the end of the day, to manufacture 4 strain, of course, you need to have an installed capacity that is a little bit larger than for 3 strains, which means that we are expecting less price pressure for the whole market, in the Quadrivalent market than a Trivalent market. Sébastien Martel: We'll move to second row, Michael, Richard, one after the other.

It's Mike Leuchten from Barclays. If I can just go back to the Emerging Markets, the slowdown really seems to be in the run [ph] EM business, which is not your growth platforms. And if I look at it full-year, that business was broadly flat and then down 3% in Q4. Can you help me understand how much of that is structural as to temporary i.e. how much of that was just some sort of price pressure in 2012 that may annualize in 2013, and hence, you'll see a natural acceleration? Or how much of that is really structural?

Well, overall, we have seen in the marketplace in the demand an acceleration. And in the fourth quarter, if I take as an example off China, IMF, which has to be handled with very much of care because it's only selective for the market, but nevertheless, has seen a strong rebound in the last 2 or 3 months of the year. So I'm talking about demand. What we have seen and what has weakened our performance in Emerging Markets in the last quarter from a structural point of view was OTC Consumer Health Care. We have faced difficulties in China and in Brazil. In Brazil for Medley, and in China, mainly for one of the brands which is a multivitamin brand. The reason for the slowdown in the first quarter were quite different from market-to-market. You could say in both markets we had both channel issues. But then intrinsically, of very different origin. We have a problem in Brazil which is specific for one chain of a pharmacy chain, which is accelerated by a local problem, this VAT. There was a significant change in VAT in the state of São Paulo which, unfortunately, is a major market for Medley so far. So we have to actuate in a structural way which means we have to dislocate our resources and to -- and get to markets. Versus VAT problem which is a problem for the consumer, for the customer, not for us, that does not exist. In China, we have a situation where second- and third-tier distributors have severe financial problems, as they have lost most of the margin and so the distribution system, to some extent, collapsed. Which we also have to address from a structural point of view, which means we are today, in a reselection of our customers. We work with different customers respectively we will drastically reduce the number of partners. All of this should lead to a reacceleration of our performance in CHC during the second half of 2013. Beyond that, I see no structural change. I fully underline what Chris said before in Emerging Markets, this trend will continue. Some of the markets where we place, as I see -- if I look to markets like Indonesia or Vietnam, as they are just at the beginning of the real growth period.

I think your question was around the growth in the nongrowth platforms so just to complement what Hanspeter said, there was a withdrawal of a product in Mexico, for example, which is a one-off. And in these price reductions in China, the Oncology piece, which is not included in the growth markets, there was an impact on Taxotere and Eloxatin. So the Taxotere and Eloxatin clearly carries forward in China, but the withdrawal of the products is essentially a one-off. But I think, fundamentally, there is no real difference. Sébastien Martel: We'll go to Richard on the second row. Richard Vosser - JP Morgan Chase & Co, Research Division: Richard Vosser from JPMorgan. Two questions please. Just thinking about the cost savings that won't be realized in '13, through '14 and '15. Presumably, with the pipeline coming through and new launches, those will be reinvested as well. And then, just thinking about that underlying growth, the 5% to 10%, what do you need from sort of M&A to come through the pipelines, to come through, to maintain the growth at that sort of level, or even accelerate it from the bottom line? And then, just one question on diabetes. Just thinking about Lyxumia as it comes to the market, have you managed to gain any insight into the cardiovascular profile of Lyxumia from the data you've submitted from ELIXA to the FDA? Clearly, the confidence interval should be relatively below 1.8, how should we think about that maybe impacting the launch of Lyxumia and the sales of that?

Jerome, maybe, you could take the cost saving question; and Elias, the Lyxumia question?

You're right, Richard, that as we said, and we're going to invest a large part of our cash in 2013. Well, it doesn't mean that we will do exactly the same in the coming year, there is a sort of a bolus effect in 2013 if you think about all the launches which, I mean, we all know which are just starting, or being prepared for, like Lemtrada. And we have a sort of seasonal [ph] effect, and today, we are clearly investing more than we will generate and save in 2013. Which, by the way, one of the reasons why you need to keep this in a range in terms of guidance because you don't know exactly what's the exact timing and what will be the pick up of, let's say, Lyxumia in Germany or whatever. So there is a certain degree of uncertainty, but as long as you are going into the next year, I mean, hopefully, I mean, you will get more save while you have no reasons to build up another sales team points in the support for Aubagio. So leverage effect will also automatically come from these launches in 2014. So we don't really consider that, yes, we're going to continue to generate savings in the next year -- next years. This will be, firstly, on the industrial side because as we know, I mean, each measure you take on industrial takes a bit of time to be implemented and to be feasible into the P&L. Also because it goes firstly into the inventory before going into to the P&L. But second, there is a leverage effect which really comes all the time just as a reason of increasing phase on the new launches, which means that, I mean, the success of these new launches is, by far, the most important thing when it comes to the evolution of profitability of all, let's say, taking of attention when it comes to the evolution of our performance in the 2 years to come.

Yes, and of course, sales of new products are notoriously difficult to forecast. I think it's fair to say, in 2013, launch costs exceed the sales of those same products by about a 2:1 ratio.

In terms of the cardiovascular risk for Lyxumia, as you know, in the E.U. we could file. In the West the FDA requested to have the ELIXA study recruited significantly to be able to file. So we filed in December. And they have to do an independent study which is blinded to us, of the risk ratio and then, determine acceptance of the filing, not what you were expecting in the first quarter, as Hanspeter described. And this is an independent study that has to be done on an interim basis by the third party.

So part of your question was what do we need to do in M&A to make the 5%? And the answer is, I don't think we have to do anything. If you go back to 2012, we've got a EUR 23.5 billion business called the Growth Platforms that grew at 10%. I mean, if you got that sized business growing at double-digits, it's quite a momentum that you've got going. And it, really, when you look at our sales forecast, actually nothing really has to happen in terms of sales growth, the main reason that sales go up is not because the Growth Platforms are growing any faster, it's just that every year, we have less dilutive effect of the stuff that's come off patent. So in some ways, just waiting actually causes the sales to go up. We don't have to buy anything, we don't have to launch any new products to get there, it's just a mathematical effect of that. The only wobble factor in there is how much does the -- do austerity programs cost us. But we've already baked into our numbers an assumption that the austerity measures have an ongoing impact on our business. Sébastien Martel: We're going to take a question from Switzerland, on the third row, with Odile.

Just coming back to the flu vaccine. I mean, we know that since 2009, there has been a recommendation for universal coverage, but still your flu vaccine has been downsized to some -- in 2012, we know that there is maybe a delayed effect that, that could recover in the fourth quarter. But we have seen that with, also, a competitive company, with flu sales being definitely down. So you guys have deemed in 2011 for U.S. flu vaccine to grow by double-digit number going forward, is this guidance still relatable? Or maybe a bit too bullish? And then, on eliglustat, I mean, it has definitely the advantage of being an oral formulation to overcome the challenge of infusing patients and then, that is typically what also are rising in the childhood. So this year, actually enrolled patients, are children in this study, or do you plan to do so in your 2 -- to study with some children and family, I don't know if you can maybe talk about the differentiating factor of your JAK2 inhibitor versus in market check out [ph] before it comes out. Sébastien Martel: Olivier, do you want to speak to the vaccine first?

Over 2 last years, we have seen very low disease activity on flu. You have seen that, especially in the U.S. but also in Europe in the last couple of months, the disease activity has increased significantly. So it's obvious that after 2 years, after the funding, with relatively low activity, we have not observed a significant increase of the vaccination rate. We have seen that since the beginning of December, and this is one of the reasons how we have been able to ship until the last couple of days. The significant increase in terms of vaccination. To get back to, more precisely, to your question, what we are anticipating and we continue, and there is no reason to change the guidelines, what we are anticipating is, as we move forward we will be able to do better than the market with our differentiated forms. And we are very happy with our performance with the Fluzone High-Dose for the elderly people, that is growing more than 65%. We have invested very significantly on our Flu ID, small needle device for -- that is more friendlier for the people that are reluctant to get their shot each and every year, and of course, we're anticipating to get a price premium when Quadrivalent form will be launched. In the long run, we are also anticipating, and this is an important part of our strategy, when we finally get the efficacy data for the Fluzone High-Dose, this is going to be an important boost to our flu franchise in the U.S. Sébastien Martel: Elias, do you want to cover eliglustat and JAK2?

So for eliglustat, obviously, when you design a trial, the first trial is designed against placebo. And because of the ethical issues, do you opt for the treatment in children. With the established treatment versus a placebo, we obviously cannot. So you limit the exposure of children in the first trial. In the second trial, I don't have the exact numbers, and as I said, the ENCORE trial just came out, we've just had the top line efficacy endpoint. I don't the specifics within that trial, so I'll be happy to share them with you as I discover them, as they are analyzed as we speak. On the JAK2, the differentiation, it's a more selective JAK2 inhibitor. Our hope is that the very, the key factor of differentiation is whether or not you reduce fibrosis. Because myelofibrosis, basically, the outcome is driven by the growth of fibrosis over time. And if you can stop or reduce that, you will have a significant change in the outcome, we hope. Now in terms of the existing competitor, the target is about the same. The selectivity is the only difference at this point. But the question is fibrosis and we are looking at that in a different way. Sébastien Martel: Go ahead, Eric. Eric Le Berrigaud - Bryan Garnier & Co Ltd, Research Division: Two set of questions. First, to put 2013 in the context of your midterm guidance. First, in your revenue, last year revenue was flat and midterm guidance is above 5%, where do you see 2013 in this journey, as you try to achieve progressive trends somewhere in between? Or is it already achievable to think about 5%, and to see how much that is for '14 and '15. Second on core EPS, same kind of questions, midterm is above the 5%. This year it's between 0% and minus 5%, which suggests double digits for the next couple of years to reach at least 6%. Is it granted or under which conditions do you think double digit will be achievable in terms of extended growth, share buybacks or whatsoever. And the second question relates to GLP-1, should weekly GLP-1 become standard in monotherapy with semaglutide [ph] dulaglutide [ph] albiglutide [ph] on top of Bydureon. How do you plan to address this point with the existing agreement with Zealand [ph]?

Yes, on the midterm guidance, so I'm trying to do some math with you, Eric. So we start from 2012. In 2012, you're right, I mean, we've been basically flat on a constant cycle, slightly increasing on the cost of sales basis. Now if I look at 2013, we are still going to lose -- well, I mean, you can do the calculation by yourself. So EUR 1 billion, EUR 1.2 billion to EUR 1.3 billion of sales from these key products which have got to be precise [ph] 2012 obviously, mainly and firstly, Eloxatin. And of course, we have to beat that by Growth Platforms, and by how much, I mean, it's a bit early to say. The only thing I can say is that, I mean, that one reason to consider is the Growth Platform should grow at the same pace as last year plus the analysis [ph] we had before. We have basically no new launch contribution last year, we just had EUR 7 million of sales booked for Aubagio. So we think about that, and then you'll see there is some additions which could come from that. Now if I go into 2014 and 2015, obviously, the negative element coming from the loss of revenues, coming from the generic side of products will be much, much lower. So still, as Chris said earlier, I mean, the uncertainty remains around the impact of cost-containment measures, as an example. We know now for instance that in Europe year-over-year whatever happens, I mean, it's in the range of EUR 3 million so far for us. And then, I mean, of course it's a bit hard to predict more in detail, but it just gives you that -- I mean, still, in 2013, and this would be mainly in the first half of 2013. So the change in the curve was really -- or the inflection point, will be really in the second half because the sales up [ph], we still see, from the topline to some point, the impact of -- full impact of Eloxatin and a bit of Taxotere as well as CoAprovel in Europe, and then you will start to see that fading away, quarter-after-quarter. On the earnings per share, well, I mean, along with what we said before, we are not counting on acquisition to meet the guidance. I mean, we said already one year ago that we'll try to stress-test this guidance to a set of number or events, in particular, in terms of a pricing trend, on evolution in European countries, in particular. So far, so good. I mean, in other terms, I mean, we still feel that we can meet these guidance without any acquisitions or new specific share buyback beyond buying back share in order to compensate for the dilution turn arising from exercise of stock options. Sébastien Martel: Maybe we can take a couple of questions from the Web. I have -- I'm sorry. Did I -- was there an additional one question?

Yes. I don't know if you're referring to the commercial agreement or the research agreement. I don't know what part of the agreement you're concerned about for GLP-1.

It looks like you don't have a weekly GLP-1. So how should you address the standard of care moving to weekly GLP-1 if all products in Phase III/regulatory phase succeed?

Right. So basically, I think that there is a panoply of needs that needs to be fulfilled. We do believe that when -- if you have -- as we've obtained with Lyxumia, [Audio Gap] indication Lantus, plus Lyxumia being approved, and you have to give the Lantus injection on a daily basis. There's no once-a-week insulin. So I think there should be -- there's still going to continue to be, because of the side effect potentials and so on, a significant demand for daily GLP-1, Lantus or -- in terms of the once-a-week, we're looking at several options there and not ready to comment.

But I think it's also fair to say let's see if it becomes standard of care. We've seen 2 already fail. And my experience, when you got 2 failures in a class, I wouldn't bet on the third one. Sébastien Martel: So Chris, maybe a couple of questions from the U.S. There's one from Steve Scala at Cowen. Basically, he's asking what type of potential do we foresee for Aubagio, where is the business coming from, what are the main products from where we see it switches and, basically, what kind of percentage of the opportunity has already realized. Obviously, it's still very early days.

When I look at this, what's interesting is I've spent a fair amount of time with neurologists just as a conservative prescribing audience. I mean, this is the -- these are the people that went to Fabry withdrawal and reintroduction. You're talking about patients who are diagnosed young in their life, often in their mid-30s, for example, many women, people who are going to be on medication for many decades. And, therefore, there's an awful lot of discussion with the patient that goes on. There are questions around safety, there's question about efficacy, there's a question about convenience. And so for me, the #1 factor is how quickly do physicians become comfortable with the tolerability profile of Aubagio. We know that Aubagio has at least the same efficacy as best-in-class interferon on Rebif. So there's no reason why anybody is going to go through injections if they can take an oral therapy once they become comfortable with the safety profile. What is interesting, I think, is the fact that, actually, this is a metabolite of leflunomide that actually helps us because the risk of suddenly a side effect coming out, as has been seen in others, is dramatically reduced because this is a molecule that has a known history. And I think the fact that one of the main reasons for switching is tolerability, is actually an extremely important sign. A lot of the products are coming from the #2 -- the 2 main products that we're drawing from are Copaxone and Avonex. I look at this tracking Gilenya that says that, actually, we're not really taking any product -- we're not taking any patients from Gilenya. So then the question in my mind is, what happens when BG-12 comes along? Well, we'll have to wait and see what the profile is, and there's some speculation on that. But my personal view is, when I look at the Aubagio launches, I'd be very worried if I were selling interferon today. Because I think there is a faster acceptance than I might have expected of oral therapy here, and that says to me that people are getting comfortable with this. So I think what you're going to first of all do is say, I think the oral segment becomes an extremely important segment. You got a $14 billion market here. You don't need 50% market share to make Aubagio a big product. And I think the fact that it's tracking Gilenya can certainly help on where we think the product could go. It's certainly -- we're extremely satisfied with this. And as I say, the #1 factor for me is that I think this product is really -- it's just getting acceptance on the part of the prescribing community in terms of its profile. Sébastien Martel: There's a quick question for Jerome from Tim Anderson at Sanford Bernstein, where Tim is asking, how do you see tax evolve with the loss of royalties on Plavix and Avapro, not just for 2013 but beyond that tax rate?

Okay. So first, I just gave the -- I mean, what we expect what was on '13, which is -- I can just repeat it between 26.5 and 27. Going forward, it's clear that we'll still see -- into the short term because, of course, in the long term, it may tend to gain. But we'll still see basically a disappearance of the royalties taxable at low tax income based on the French tax law. But on the other half, on the royalty evolution of -- I mean, of location of our phase and then our profit is moving towards regions which have an average tax rate which is lower than, I mean, both the normal French tax rate but also the U.S. tax rate. So if I go to that -- all that together, look at what we can do to manage that, I mean, we are still heading to an increase. But, I mean, I am, toward this increase, to be certainly below 30% and probably somewhere between 29% and 30%. Sébastien Martel: Are there any other questions in the room? Yes, we can go back to Philippe, and then I have a couple more also from the web.

One question on R&D again on Diabetes because some of your competition as Novo Nordisk is now developing new generation, at least in Phase I, there's the once-a-week injectable and oral insulin. When we look at your Phase I pipeline, this does seem to be any long term related to Lantus today. So do you have something looking for the long-term view on diabetes?

If I heard your question correctly, you're talking about what is our strategy beyond what we have today, right, and what's coming up. And so when you really look at our strategy for Diabetes, the 2 sections, one is obviously controlling hyperglycemia in a better way, in a greater percentage of patients. It's something that you have to do, and integrating care around that need is continuing to be our goal. With existing products or enhancement of existing products, like U300 basically for certain patients, we really cannot be at goal that easily. So we're going to continue that class of work. Second, if you talked about the GLP-1 or oral antidiabetics, we are definitely entering that. You may not see it in the published portfolio, but it's clearly something we need to be stronger at. And we are certainly starting that. As you know, we recruited some new heads of research, and we are definitely looking into that. In addition to that, I do believe that there will be a significant demand for peptides with -- CLIP peptides, with additional actions that will be of great benefit eventually. This is the direction that we are also taking internally. So I think that the expectations that you're pointing out to is that, pretty soon, you're going to see some of the emerging portfolio that currently is not published. But we are definitely working into that sort of multipronged approach to diabetes, that integrates vertically between all of the components we currently have and adds what I call the pre-hyperglycemia, the post-hyperglycemia issues that you deal with, including better cell preservation. Sébastien Martel: There's another question from Graham Parry at Bank of America Merrill Lynch. Jerome, about the cost-saving plans, you talked about 60% being achieved by the end of 2012. Also, about the fact that about 1/3 of that was reinvested in growth platforms, you announced an additional EUR 500 million for 2013. Graham is asking, by 2015, how much of the EUR 2 billion savings plan could fall to the bottom line, basically? Or what will be the...

I think we have 2 questions. And the question is, how much at the end of the day are we going to save by 2015? And if we just prolong the trend, you could say maybe we are going to save a bit more than the EUR 2 billion, a bit early to really be affirmative in that respect. The second question is how much we are going to reinvest. So, I mean, this is where we can be pretty clear when it comes to 2013. And, I mean, depending upon opportunities in terms of which new launches also, I mean, it's a bit more uncertain in the coming year. So it will be a net increase of the cost savings beyond 2013, in 2014, 2015. How much exactly? Well, it's a bit early to say. But I can say that, well, the EUR 2 billion is really something we will obviously achieve. And, well, I'm not really in the position to give a higher number today, but I think -- I mean, obviously, it will be on the high side. Sébastien Martel: Okay. Jo? Jo Walton - Crédit Suisse AG, Research Division: Jo Walton, Crédit Suisse. I've got 2 general and 1 specific question. The specific question first. Your attitude to getting involved with diabetes testing, you've talked about making as broad a possible offering in diabetes, and it was an area that you could go into. I wonder if you could update us on your thoughts there. And 2 general questions. You've talked about your R&D pipeline and how you've had more success than you might have expected, lower attrition. Do you think that we're going to see that generally across the industry? But the quality of knowledge when you put things into Phase III means that you have a better chance of success at the end or is that matched in an opposite direction by the increasing novelty of the pipeline so that investors probably won't see a marked difference? Sitting on this side of the fence, we're only seeing about a 60% success industry-wide in the Phase III, and that just still isn't good enough. So I'm interested in your thoughts there. And the other general question is about launch trajectories and particularly given the different way that you're promoting drugs now. So you point to having half as many sales reps in the U.S. now as you had a few years ago. Well, lots of the industry is like that, and lots of the industry is like that because they've had almost nothing to launch. So if we are moving back to a period with more launches, are we going to see you're going to need to put more sales reps in the U.S.? If you -- and just generally. And do you think we should be expecting generally slower ramp-ups because of all the extra problems that you have of getting access around the world?

All right. First, in terms of the diabetes testing -- and Hanspeter can talk maybe a little bit specifically about the business. But in general, the idea that we have behind that is not actually just to go and compete against J&J or Roche or whomever. But our view is that there is a growing tendency, not so much in Europe but elsewhere around integrated care, where people are actually starting to look at having those who supply care be reimbursed on the basis of outcomes and not simply on the basis of volume uptake. So increasingly, people just don't want to buy a pill or pay for a doctor visit or pay for a hospital visit. But there is increasingly some element of, well, what did you actually achieve in terms of outcomes. I mean, in diabetes, for example, how many people actually got to their A1c goal? Accountable care, organizations are driving down that path, but you're also seeing some of these being incorporated into some emerging markets. And the real -- if you're going to get into that, you have to actually understand what's happening to a patient between the touch point to the health care system. Because the way the health care system works today is you go in, you have a prescription, you walk out of that and then you don't see a physician for maybe 3 to 6 months. Well, we all know that outcomes are going to be based on a whole lot of other factors, including whether the prescription ever got filled, whether the person is paying attention to nutrition activity. And mobile phones are having a dramatic impact, and you're seeing a whole host of characters actually getting into this because this is something that we all have with us. I'm impressed that not too many people are actually looking at their BlackBerry even as we speak, but generally, most people's BlackBerrys or iPhone or whatever devices that you carry is not very far away. And suddenly, you have an opportunity to communicate with a patient that we've never had before. So for us, this diabetes testing was, in a sense, getting us prepared for some of this, and you're certainly seeing a lot of moves to marry digital technology with therapeutics. So we've dipped our toe in the water, we've certainly made mistakes in this area and learned what we don't know about software development. But equally, I think what we have learned has provided us with insights as to where this could go. How fast it goes, we'll have to wait and see. But everywhere I go, there are signs that this is actually accelerating. I used to think this was kind of a 2015 and beyond theme. I actually think this will come a lot faster than that. So if you like there's a strategic element to this and not just a business segment. But you might just want to add on the actual tactical piece.

On the diabetes piece, I have really nothing to add. We have learned and we continue to learn. And I believe that, therefore, we are a little bit further advanced than others. But I have not the slightest doubt that this integrated model for diabetes, as for other chronic diseases, is absolutely to come. And the question is only time and who finds the fastest right doors to go into it, and learn the lessons that we had to learn. To give you a little anecdote, we have been totally hit by the fact that the latest iPhone, does no more fit into our IBGStar device, which is a way of marketing of the iPhone inventors. So we had to learn this the hard way, and the next time, we know it. I would like to say something on the field reps question. This is true that the number of field reps has diminished also because of lesser opportunity to launch, but I think the major reason was that the decision model on prescribing has dramatically changed in the traditional markets like United States and Europe. And coming from this, talking about our own headcount, I believe, yes, there may be little increases depending on will PCSK9 be a product for a GP or not. But overall, I'm convinced we will never go back to the 10,000 we had in the U.S. because the decision-making on prescription has totally changed. It moved upstairs, it went into treatment guidelines and lists coming from the health care providers. On the other end of the geographical scope, I never believe that we will have 10,000 reps in China either because of the said decision-making, and also the way information is being handled is not the same as it has been in the '80s and '90s in the United States. But the fact is, we have today more in Japan -- in China than in the U.S.

Elias, do you want to talk about the attrition question? Does this get offset by novelty? How do you see that developing?

So as we mentioned, I think our portfolio is pretty amazing in the sense that attrition has not occurred to a significant degree. But I think if you look at general trends in the industry, I think, first of all, look at the FDA approvals last year, this year, they are up. So clearly, the base hasn't changed, and therefore, there is more approvals. So you can tell that there's something happening. The second, Biologics has an inherently higher rate of success, lower rate of attrition. And as you change your portfolio more towards Biologics, you have a lower attrition by nature because they have an intrinsically lower rate than small molecules. The reason being that with the biologics, you need to understand the biology, you need to understand the target. And typically, with an antibody or replacement enzyme, it's very specific, and therefore, you don't really have a lot of off-target effects. And, therefore, you have a lower attrition rate both on efficacy and success rates. I think the other point is I think that the selection process is changing and -- inside of R&D. In other words, in the past, there was many short-term goals. Any target that comes up from the literature is a good one to go after, you have the tools, you go after the target. Today, it's an inverted process. We are adopting the translational strategy, which I had been advocating for a long time, which is the goal not just from bench to bedside, not from bedside to bench, understand the disease biology in humans before you make a choice to go into a large expensive Phase III. So I think you're going to see a redistribution of the attrition rates. Hopefully, more attrition early, less attrition late. Sébastien Martel: Okay. So with that, I think, Chris, I will just ask you to just wrap up the call and conclude.

Yes. Well, thanks, everybody, for being here. Thanks -- thank you, all, for your patience on the webcast. I could tell you personally, I am very happy to have 2012 behind us. This is the first time in 17 years that I can look forward, and I don't see a patent cliff anywhere. I think we've also been able to surprisingly build an R&D pipeline of a degree of robustness. So as we look out to the medium term of the business, we continue to have the confidence that Sanofi gets back to growth in the second half of the year and beyond. So thank you very much for your support over the years, particularly during the tricky patches in this business, and we look forward to your support going forward. Thanks very much. Sébastien Martel: So just for those of you who would like to have a trainer of the Auvi-Q device, we'll be distributing some just as you exit here. I know some of you have some already, so -- and we obviously invite you for a drink.