Ladies and gentlemen, welcome to the Sanofi 2013 First Quarter Results Conference Call. I will now hand over to Mr. Sébastien Martel. Sir, please go ahead. Sébastien Martel: Thank you. Hello, everyone, and welcome to our Q1 results meeting. As always, I'd like to draw your attention to the Safe Harbor statement. I must advise you that the information presented in today's call will contain forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. I ask you to refer to our Form 20-F on file with the SEC, as well as our Document de Reference for a description of some of these factors. So on Slide 3, you see the agenda for the day. Our call today will be divided in 3 parts: Our CEO, Chris Viehbacher, will start off with a review of the key highlights for the quarter; then Hanspeter Spek will actually cover each and every growth platform; and Jérôme Contamine, our CFO, will conclude by providing details on our financial performance for the Q1 2013. So without any further ado, let me turn the call over to Chris.

Thank you, Sébastien. Good afternoon, good morning, everybody. Welcome to the first quarter of 2013. As we have been pointing out for some years now, probably the most important impact on Q1 is really what happened in 2012. We have a number of factors that are essentially still impacting us at least for the first half of the year. And remember, this is really a year of 2 halves, where we're still going to be affected by the negative comparison to 2012 where we still had Plavix. Plavix lost exclusivity on the 17th of May. In addition, we also had the loss of exclusivity of Eloxatin in August. So there is a partial impact on sales and a partial impact on profits. So if I look at the first slide, 5, I think, though, we can clearly see that the patent cliff is essentially behind us. If we look at the bar graphs, those are the remaining sales of the many blockbuster products that have driven Sanofi's growth over the years. Those are the products clearly that we have been losing since 2010. You may remember at one point in time that those sales represented well over EUR 2 billion of our business, and they are now down to EUR 259 million. What's interesting is that you can see when we compare Q1 of this year to Q4 of last year, you can see that, that hemorrhaging has stabilized, that the level of sales of those products really is not losing anymore. So when you compare Q1 2013 to Q1 2012, you can clearly see that we lost around EUR 550 million, mostly due to Eloxatin and some to Lovenox. But when you actually see more recent activity, you can see that, really, the cliff now is becoming increasingly a…

Yes. Thank you, Chris, for the nice words. I kindly ask you to go with me on Page 15, where you see the first quarter picture concerning the Emerging Markets. First of all, we have defended our market-leading position. You see that we achieved EUR 2.7 billion of sales, which represent exactly 1/3 of our total business. We had a strong growth in Diabetes, Vaccines and Genzyme. We have a lower sales performance in Generics and Oncology. If you look to the regional split, then you see nothing new in Eastern Europe, where we have a 0 growth. This was the same picture in the quarters before. But this time, Latin America was a little bit softer with only 4.7% growth. This is partially due to weak sales in our Generic division in Medley in Brazil. But the more important part, it's due to currency issues. We have a poor performance of the Brazilian real and the Venezuelan bolivar, both countries are, for us, leading markets in Latin America. Overall, we believe that we are still very well on trend. You see that in the BRIC countries, we had sales growth in the first quarter of nearly 11%. Then on the following page, you see the performance of our diabetes franchise, very strong, very, very continued growth. You see in the bar section of the chart that we really continuously add EUR 200 million of incremental sales from quarter-to-quarter. And so in the first quarter 2013, we increased it to EUR 1.5 billion, equal nearly 20%. Of course, this was driven primarily by Lantus, where we see a very, very nice increase of the SoloSTAR share in sales in the United States, where, meanwhile, we get to 57% of sales, which are being distributed in SoloSTAR. You see that we…

Thank you, Hanspeter. So I'm turning to Page 24, starting with a focus on exchange -- on currency. And...

23.

Sorry, Page 23. So -- well, 23, I mean, you had also the description. But first of all, we see still an impact on the genericized products competition, which we still see over the next quarter. But as Chris alluded to at the beginning of this call, we are coming to an end. We have the contribution of our key products which are legacy products are now -- getting now in the range of 250 million per quarter, it's basically stabilizing. So clearly, still over the quarter this important impact which won't be visible as from 2013. Second, we also have the impact still in Q1 of the termination or the end of our agreement -- the marketing agreement for Copaxone with Teva in Europe. On the other hand, the growth platforms has contributed for a positive contribution of EUR 464 million. And to my point, we had this quarter a negative impact from the ForEx of EUR 212 million, which brings me to the next page, 24. Well, as you know, we are exposed to a variety of currencies, not the least the U.S. dollar. And the more diversified we are, we are exposed to various currency. And although the year 2012, quarter-after-quarter, we had a positive impact on like-to-like basis of the currency impact, mainly driven by a weaker euro. In the first quarter of 2013, and we are not unique in that respect, the whole industry has been facing that and probably not only our industry. We have faced the impact, in particular, of the decrease of the Japanese yen as a result of the newer monetary policy led by the Japanese authorities. So clearly, this has impacted our sales by EUR 113 million, which is more than half of the overall negative contribution of ForEx impact…

We have a first question from Mark Dainty from Citigroup.

Just 2 quick questions. Firstly, just one brief one for Jerome. Could you just tell us what proportion of SG&A, or however you'd like to give us the number, is actually just G&A costs? And then just one question on the biosimilar insulin. I don't know if you've confirmed yet exactly which molecules you're doing. But will it -- is it just the premix segment you're looking at or will you also be looking at a pure rapid-acting analog as well?

Do you want me to take the G&A first?

Well, we never disclose our actual G&A expenses partly also because depending upon the way we organize, there is some variation of the absolute amount. But you could say that out of the 26%, this is roughly 6% of the total 26%. So yes, 6% of sales, which is going to be [ph] G&A.

In terms of the biosimilar, we've confirmed that both molecules have entered into Phase I, as expected, but we haven't confirmed the identity of the molecules, Mark.

We have a next question from Vincent Meunier from Exane BNP Paribas.

Two questions, please. The first is on Lantus. The performance is, again, better than expected despite the price gap [ph] notably in China. Can you please tell us what is currently the pricing environment in the U.S., as well as in emerging markets? And is it feasible for you to further increase the prices there? The second question is on the Consumer Health Care. We understand that the situation in China will be not very easy to solve. What is really going there? And what can you do to recover dynamic growth there?

So perhaps I'll let's start with Consumer Health Care. The issue is distribution. You have a not very -- how should I say, not very transparent situation of distributors in China. You may say that there are about 5 or 6 levels of distributors. And it is not easy to really control where the product is and which level of the distribution channel gets access to which margin. So we are in the process of cleaning this up. We do so mainly in limiting the number of distributors, which means we will discontinue to supply the product to a significant number of distributors to gain better control about our products and their availability and the way the margins are being shared between the different levels of distribution between us and the final customer.

I think it's fair to say that the -- actually, to the extent they're reliable, underlying IMS growth would suggest that the underlying growth is there, and we believe we've got inventory levels down to 30 days. But as Hanspeter said, it's taken a while to bring this out. We think we had that down to 30 days at the end of March. We've also put in place a system of actually monitoring inventory at the very end stage, which is in the pharmacy. So we know how much we put in at this front, and we know how much comes out in the end. You still won't know what's there at every level, but you can start to better understand the flow of goods out there into the marketplace. This is not an uncommon issue in China and has been faced by a number of FMCG companies, as well as OTC companies at different times.

Now on the performance of Lantus mainly in the U.S., we believe that we are doing pretty well. As you know, it's a mixture of volume growth with price increases. I believe that from both ends, are equals of more or less 20% is a very, very good benchmark. Nevertheless, we will continue to strive for more. Perhaps to anticipate a question, the last price increase for Lantus was 7.9% in October 2012.

And in Emerging Markets, can you also tell us what are the trends and the expectations?

Well, the trend is totally identical in the Emerging Markets. Growth of Lantus is equally 19% as in the United States. There, of course, there is hardly any price increase in the figure. So it is nearly 200% of volume growth. And the question there is, of course, access. But once again, a 20% growth on already a very significant level, for me, is a pretty good benchmark. Once again, we try to do more, but I see that 20% on a continued basis is quite positive.

We have a next question from Richard Vosser from JPMorgan. Richard Vosser - JP Morgan Chase & Co, Research Division: Richard Vosser from JPMorgan. Two questions, please. The first question on the Lantus-Lyxu combination. I just wondered if you could explain the overall rationale with going with the fixed ratio. Specifically, thinking about the biological rationale as well, given Lyxumia is a short-acting GLP-1, is there a risk that you get too much GLP-1 activity when you change the dosing and titrate up the insulin? And linked to that, just a couple of points. When can you go into Phase III with this product? And on the Fix-Flex device, we heard obviously the last quarter a software problem. I'm just wondering how that's developed into a more -- what seems more insurmountable problem. If you could give some color there, that would be great. And then secondly, just on looking ahead into 2014. President Obama looked at the dual eligibles in his budget, just wondering whether you've had a chance to think about what the potential impact might be on Sanofi there.

Well, let me start with the dual eligibles. I still sit on the board of pharma and so stay close to the situation in the U.S. I've been also on the pharma board for a number of years, and dual eligibles has been on the table every single year since Part D was introduced in 2005, I think it was. And one can never be complacent about it. But the arguments in favor of dual eligibles are essentially that this is one of the few government programs ever introduced that is actually under cost, in terms of its actual versus predictive cost. And the second is that this is a government-sponsored but privately delivered plan. If you were to introduce dual eligible rebates, you are essentially introducing price controls into this market. And you will undermine the whole premise of government-sponsored but privately delivered. And so most people in Europe -- I mean U.S., would believe that this is not a program one should mess with because it's actually working. And it's because of this public-private operation that it's believed to work. And that has always been why there's been a refusal to go down that path. Now could the political calculus change? I mean, obviously, this is an area where the industry is vigilant. I believe that the CBO has scored these savings in excess of $100 billion over a 10-year period. So for the industry, it would be roughly of the order of $10 billion per year. Looking at the devices, as I said earlier, I mean, 2 things happen. I mean, one, on the Fix-Flex, this is an extremely sophisticated device. It involves software, it also involves a so-called hub where you're going to mix these 2 products. In consulting with all of the -- some of…

We have a next question from Peter Verdult from Morgan Stanley.

It's Peter Verdult here, Morgan Stanley. Chris, I've got 3 questions but you're probably not going to answer the first one. I'm taking the U300 late-breaker for ADA, the positive signal, is there anything incremental you're willing to say at this point of time or do we have to just be patient and wait until June? I'll start with that one to see whether you'll answer anything, or just any insights.

No, I think you are going to have to be patient. But what we are going to do is we'll have a dedicated Investor Relations call at ADA to give everybody -- it's on June 24. And so we'll be able to give everybody a lot more detail about that. But obviously, because of ADA, we don't particularly want to give any more information to diminish the impact at ADA.

Fine. All right, then. Then the 2 quick questions are as follows. When we look at your other prescription pharma, it's a big black box and you've EUR 5 billion of revenues. And then we've seen some of the U.S. and European peers, I think move to the side of these revenues into sort of an established products group, optionality for the future, allowing the underlying growth of the business to become more visible. Is that something for consideration at Sanofi? And then the second question you get every quarter, but we keep seeing net debt falling. Just wanted to know now, cash deployment, uses of cash, it seems there's a big bridge between EUR 7 billion and EUR 10 billion for bolt-ons to fill. So I just wanted to get your update of course there.

So we're now talking about essentially tail products. Now, really, I think the business that one would be most concerned about, are tail products in Europe. Because you got the other in emerging markets, but other is a whole range of products. And some -- all of them are essentially growing in volume, but some of them may be affected by pricing movements here and there but, certainly, we would consider part of the core business of emerging markets. You are quite right to point out the tail products in Europe, which is -- last count was around 3...

EUR 1 billion.

Yes, it's about EUR 1 billion per quarter. So roughly around EUR 4 billion is -- and that is declining. And that has actually been declining a little faster of late, really starting in 2012, largely because austerity programs in Europe are really starting to drive cost moves and, in particular, in generic utilization. Nonetheless, I think the -- if you look at Q1, the loss on that business is pretty much in line with the guidance that we've given increasingly, which is around EUR 300 million per year loss on this erosion. So that hasn't accelerated, and it's no different than what we've been expecting, and it's certainly what we've expected in our budget and our guidance. That having been said, it is clearly dilutive to growth. And so we are looking at options about what we might do. Now I can tell you that I've been looking at tail products for decades, and there are no particularly easy answers on this. Nonetheless, I think there are a number of moves that one could potentially make. And if we can find a way that enhances shareholder value on that, then we'll do so. But so yes, we're open to it, but haven't found really quite yet exactly how to do this in a shareholder enhancing way. And on the net debt, well, I'll just say first, don't forget that Jerome is about to write a big check for about EUR 3.5 billion for the dividend. So that will get us back to over EUR 10 billion in net debt. So I think the -- what we've said in the past still holds. I think we'll be looking at principally about EUR 1.5 billion in capital expenditure really to keep the business turning over. There's about EUR 3.5 billion goes…

We have the next question from Tim Anderson from Sanford Bernstein. Tim Anderson - Sanford C. Bernstein & Co., LLC., Research Division: A couple of different questions. Can you remind us when you think the first biosimilar Lantus will launch in developed markets? And last year, at some point, you mentioned how you thought biosimilars would take next to no share in the insulin market for different reasons. Can we presume you've changed your mind on the potential rate of penetration by virtue of the fact that you now have your own biosimilar in this area? Lilly previously said they think about 50% of the market could go to biosimilars. And then a separate question for Hanspeter, a general one on emerging markets. Is there any positive pricing power in emerging markets, or is this like most markets outside the U.S. where at best pricing holds flat and more often, it drifts lower over time?

So biosimilars, remember, the world is a big place. And there's a number of ways that you can play biosimilars. For us, I think the idea of a biosimilar is really to start looking at: is there an interest in having a complete portfolio of insulin products. So in other words, is this a biosimilar or is this a -- what is essentially a "me too," but in an area where we can use our commercial muscle to actually gain a part of the market. Because when you actually look at the volume of insulin use there's quite an interesting marketplace to be had there. But it would be more of a competition in terms of market share than price. What market share they have? I mean, I think it remains to be seen. Again, I used the example in the past when you look at the flu vaccine, you've got 5 manufacturers of flu vaccine in the United States. So -- and you can pretty much argue that there are biosimilars to each other in some ways. And yet from 2002 to 2012, you saw the price of a flu shot go from $2 to $10. So I'm not so sure that -- I'm not so sure anybody can really tell you today how this is going to work. This is going to depend a little bit about what the whole pricing and everything else environment is in that period. I think it's going to depend from market to market. But I think there could be an opportunity from a commercial point of view in having a broader portfolio. We'll make that call before we go into Phase III with these compounds. What I can tell you is that developing a biosimilar costs as much as almost a whole…

You probably have to ask Lilly. I think they've -- you got -- I mean, Lantus patent expiry in the U.S. is February of 2015. Hanspeter, do you want to take Tim's question on pricing?

On your question concerning price in emerging markets, yes, there is some upside from price. It is small, and it varies from market to markets. We have markets where we have no positive impact at all. In others, we do. In some markets, we are indirectly protected against inflation because we get price increases for our products to be imported. There is also some flexibility for price increases for Consumer Health Care, which we don't have, for example, for the U.S. and also very limited in Europe. I would say in very rough terms, if our Emerging Market business grows by 10%, then 1% to 2%, 2% really maximum, comes from price and the rest is volume.

We have your next question from Eric Le Berrigaud from Bryan Garnier. Eric Le Berrigaud - Bryan Garnier & Co Ltd, Research Division: Three quick questions, please. First, last year, you guided towards a 32% operating margin and you achieved 32.5%. Do you think you can maintain this level in 2013, or what would be your best guess or best range? Second question, about the other income and expense line, it was EUR 30 million in Q1 despite a EUR 40 million loss on bolivar. Did you have any other one-offs this quarter, or is it fair to assume that your underlying net contribution from this line would be around EUR 70 million per quarter? And lastly, on currencies. You provide a sensitivity and analysis for U.S. dollar against euro, but not for other currencies. Given the currencies that are impacting you this year, would it be fair to assume that a 1% impact on top line would translate into roughly same percentage point impact on core EPS?

Okay, Jerome?

Okay, so, Eric, thank you for this question. So on the operating margin, I think that we gave an overall guidance for the period 2012 to 2015, which is that we'll see this operating margin increasing progressively, and I can just confirm that. Now when it comes to 2013, there is such dependency precisely upon the exchange rate, upon how much we invest behind new products and so on. We have already the guidance on the business income, I would not add something on the operating margin. Even if clearly, I mean, I would be disappointed if we not create something, which was very similar at least to what we had in 2012. On the other elements -- I mean, the other operating income, yes, last year, if you recall, we had a positive one-off during the first quarter, which was a settlement on an existing -- old liquidation on one product. I mean, this line goes back and forth. So there is some elements which are basically recurring, which are the income we get from third parties. Typically the revenues we get for instance, from Warner Chilcott on the ACTONEL agreement. And then you have plus and minuses on basically -- about this quarter there was nothing specific but the exchange rate impact, more the devaluation impact of the bolivar, which I mentioned already. So I will not give you more on that, I mean, just to say that if you exclude this impact, you could say that this is a recurring element. Unless it is one-off, which could be for instance a legal one-off, which I don't know about at this stage, which could be either positive or negative by the way. On your third question, yes, this is currency. Well, I think that if we just give…

We have your next question from Steve Scala Cowen and Company.

I have 2 questions. First is when the 2013 EPS guidance was first issued, is it more likely now that the lower end of the range will be achieved, or is it just as likely that the high end may be achieved now as when the guidance was first issued? That's the first question. The second question is all the companies that market DPP-4s have been asked why the DPP-4 market has slowed but none have added much clarity. I wonder whether you have any impartial observations about the DPP-4 slowdown? Is it temporary, or is it a permanent shift towards other therapies in your opinion?

So Steve, I'm afraid I can't give you any micro guidance. All we said is we're reiterating it, if I start staying "within that," then it's kind of a change in guidance. I think you got one quarter under your belt. I personally have never really looked at doing anything on guidance after one quarter. If we can give any kind of narrowing of it, we'll try to do it at the second quarter. In terms of the DPP-4s, the guys who sell them probably know the best, we don't have a DPP-4. I can only speculate. We certainly haven't seen anything in the diabetes, on the insulin end of things. That would suggest there's something upfront. There's certainly been an awful lot of noise around the FDA. You've seen perhaps some higher competition. But I can really only speculate. I'm not really expert enough and I don't whether any of my colleagues have heard anything, no, they're all shaking their heads. So the downstream in insulin has certainly remained robust. That's all we can say.

We have your next question from Philippe Lanone from Natixis.

One remaining question, maybe on Brazil because we have another quarter of flattish sales, and you have been telling us what the reasons are, VAT change in São Paulo and among others. My question refers to -- could you tell us what are the actions you are taking to really make the business growing again and what -- when will we see that business growing again as fast as the market? And maybe another question on the new formulation, I understand you're saving most of the data for the ADA. But maybe could you clarify if you have decided to file with a full package, waiting for early 2014, or you will file already with the 2 first EDITION Phase IIIs?

Perhaps I'll go ahead, with Brazil. First of all, once again, a little bit like in China, we tried to concentrate better in the execution. Second, we dislocate -- I think I have said in the earlier calls that we have a very strong foothold in the larger São Paulo region, where we were hit by those VAT tax issues. So we dislocate the business now more to the central of Brazil and to the north of Brazil, which takes some time for evident reasons. We have to recruit, we have to make up new territories and so on and so forth. So we therefore said we believe that we will see a turn in the trend only towards the end of the second quarter, but definitely, set in the second half of 2013.

Yes, I think the interesting thing is these growth platforms have become bigger. And so I think some things like distribution, which were more driven by pharma, have now become more driven by CHC and generics because of their size. And I think it's fair to say that we didn't always have the same measures in place to really track all of this. And those have now been put in place because of their size. But it always takes you 4 quarters essentially to roll through once you have it. So these are issues that really we've inherited from 2012. And you'll get into a like-for-like period by the second half on both issues. Concerning the new insulin glargine formulation, again, I think I'll just defer to what -- we'll be able to tell you more at the ADA. I think, as I say, this new glargine formulation takes on an increased interest given the changed market circumstances. And so I think the communication around this will be extremely important, and we prefer to have a dedicated session in June for you.

We have a final question from Seamus Fernandez from Leerink Swann.

So just a couple of quick questions. First off, Chris, as we think about the sort of transition of the Lantus franchise to the 2 new formulations, how much of the franchise do you think can actually be ultimately accounted for by the Lyxumia plus Lantus combination and the new U300 formulation? And then separately, as we think about the emerging markets, Eastern Europe, Russia and Turkey were a bit weak. Can you just update us on what the trends were in those markets?

Seamus, so I'll start with U300. Again, we'll tell you a lot more. But I think our vision is, is that this is a next-generation insulin. So this is not a line extension, this is not for a particular niche of patients. This is a new long-acting insulin with a different profile, and we think our ambition will be to position that as such. So really, the same market as Lantus. And that's why this is -- there's an interesting opportunity for us here. On the emerging markets, I mean, we talked about Eastern Europe. I think Russia and Turkey were your questions, right?

Yes.

And so, Hanspeter?

In Turkey, we have a negative trend due to price increases in the basis -- decreases, excuse me, I mean, in fact, we saw 2 or 3 decreases over the last 24 months. In Russia, it's the opposite. Our Russian sales are doing very well. We have at the first quarter a growth of 11.5%.

And Eastern Europe?

And Eastern Europe is on a slightly negative trend, I would say. Of course, it depends a little bit on definition what is really Eastern Europe. I would say the trend is minus 1%, minus 2%.

Yes, I mean, we've had the conversation whether Eastern Europe really is an emerging market given the ties to Western Europe. But my personal view is I don't really like changing definitions of anything once we've established them. So we've left them in emerging markets, but I think the macroeconomic trends are such that -- the economic growth has clearly come down. When you look at a market like Poland, where I was in December, this had been one of the strongest performing economies in the EU. But it clearly exports an awful lot into Western Europe. And given the slowdown in the economy in Western Europe, this is now slowing the exports out of Eastern Europe and slowing those economies down. So I don't think we're going to see Eastern Europe as a growth area in emerging markets for some time. I think that's just -- that's not going to come about until the Western European economy gets better, and I don't think I know of any expert that believes that's going to happen anytime soon.

And forgive me just for asking the relative percentages, but do you envision a scenario where Russia actually then starts to really kind of overcome the drags in Turkey and Eastern Europe?

I mean, Russia is EUR 1 billion business. So this is an important market for us. This is certainly much bigger than Turkey. At least, twice the size of Turkey, isn't?

Yes.

So this is going to be -- there's going to be ups and downs in all of this. You're going to have Arab Springs, you're going to have price decreases here and there. I think the objective is, is that the portfolio of these businesses can grow. But that's why we've never really been able to say [Audio Gap] don't expect the same rate of growth quarter-to-quarter because you're going to have these one-off events. I still say that having, again, been on the ground there and I look at the emerging middle classes that over time, this is still the biggest growth lever this industry has in terms of -- certainly in terms of volume. And we're going to see, I think, 2 major growth opportunities emerge. One in new product sales in the U.S. because I continue to believe that the U.S. is a market that will value innovation. And we also have, then, emerging markets. So those are for us -- and when you look at Sanofi, I think that's going to play out. We are the leading company in emerging markets, and I think we're well positioned to grab whatever growth is there. But I also think that the launch of new products creates a significant growth opportunity. So that's, I think, how things are going to shape up. Sébastien Martel: Thanks, Chris. Well, maybe before closing, I would simply like to confirm that we will indeed host an IR conference call on Monday, June 24, during the ADA Congress. We'll go over the results of EDITION I. Also we'll share the top line of EDITION II. We will take advantage of that IR call to provide you with more details on the timelines for Phase III start of our Lantus/Lyxumia fixed-dose combination. And we should be able to send a save-the-date shortly. Just on a personal note, I'd like to also thank warmly Hanspeter for the contribution he's done to Investor Relations, at least, ever since I joined Sanofi. It's been a pleasure working with him. And with that, I'd like to thank you all for your participation, and wish everybody a good day.

Thank you. Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.