Ladies and gentlemen, welcome to Sanofi's Second Quarter Results 2013. I now hand over to Sébastien Martel, Head, Investor Relations. Sir, please go ahead. Sébastien Martel: Thank you. Good morning, good afternoon. Hello, everyone, and welcome to our Q2 2013 Results Conference Call. 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, which may cause actual results to differ materially. Please refer to our Form 20-F on file with the SEC and also, our document reference for a description of those factors. Our presentation today will be divided in 3 parts. We'll start off with a business review of the key highlights for the quarter with Chris Viehbacher, our CEO, as well as a review of the performance in each and every growth platforms with Chris -- Peter Guenter, our newly appointed Executive Vice President, Global Commercial Operation; as well as Pascale Witz, Executive Vice President, Global Divisions and Strategy Commercial Development; and Olivier Charmeil, Executive Vice President for Sanofi Pasteur. Then Jerome Contamine, our CFO, will provide you with details of our financial performance in the second quarter. And before we take questions, Chris will wrap up the presentation. So without any further ado, let me turn the call over to Chris.

Thank you, Sébastien. Good morning, good afternoon, everybody. As you all know, Hanspeter Spek retired at the end of June from the company after 28 years with the company, and we created a new pharma organization led by Peter Guenter and Pascale Witz, who I'm happy to welcome both of those to the call. I am less happy about the results we have to present to you today, so if we start with the first slide. The title says this was a difficult quarter. I would say -- I would call this a frustrating quarter, largely because I think a lot of things are going extremely well in the company, and you'll see a number of our businesses are doing very strongly. And in particular, I'm very happy about the strong progress we're making in research and development. But there are -- there's no question that we've hit some speed bumps. We will talk about a charge that was related to our Brazil Generics business. But I don't think we can describe the whole quarter in terms of the charge to Brazil there. Clearly, some commercial underperformance in some parts of the business, and we'll come on to those. Obviously, the main element of this quarter is the key genericized products. EUR 481 million of sales down as a result of those, EUR 223 million of what we call others. This is a mixed bag of things. This is principally the typical EU tail erosion. A newer element is increased genericization of brands in Japan. Japan has not traditionally been a market where we see significant erosion quickly on Generics, but new government policies in place are calling for 30% substitution at a pharmacy level and actually now increasing to 60% means that Allegra, Myslee and Amaryl have been hit…

Yes. So thank you, Chris, and good morning, good afternoon to everybody. So evidently, this quarter in emerging markets is characterized by what you could call various dynamics. Emerging markets, as such, continue to grow their share in the overall Sanofi Group sales and account now, as you can see on the pie chart, for 1/3 of sales and close to EUR 2.7 billion sales. If you would exclude the Brazil generics issue, which Chris has described earlier, the growth in the quarter in constant exchange rates stands at 5.3%. And if you cut it down from a division perspective, we see actually some very nice performances. If you look, for example, at diabetes, where we have a growth rate of 17.5%; we have a double-digit in vaccines, 10%; we have a very impressive Genzyme growth by 40%; and finally, also, Animal Health contributed with a 11.2% growth. Now it's also fair to say on the other hand that we saw indeed weak sales of generics, evidently in Brazil, but also beyond Brazil. The Mexico generics sales were soft. And we also see more and more competition for our legacy oncology products like Taxotere and Eloxatin. If you cut it down from a geographical perspective, if you go to the right part of the slide, actually, it's good to see that many regions and countries within the regions continued to have a double-digit growth. If you take, for example, Asia, with a 9.6%; and within China, boasting 15% [ph] growth -- by the way, absorbing recent price cuts -- if you look at Africa, Middle East continues to be very close to double digit. If you go then to Eastern Europe, Russia, Turkey, like always, it's more of a mixed bag. What we see in this region is a very dynamic Russian growth, 16% growth this quarter, more than offset in actually weaknesses in Turkey. And as you know, the weaknesses in Turkey are primarily driven by price cuts due to referencing in the price basket. Finally, LatAm, excluding Brazil generics, shows a 2% growth rate. And I think it's important to go a little bit deeper into LatAm. Actually, we see very good performances in the LatAm region in many countries, except Brazil and Mexico. And as mentioned before, we have issues with generics in Brazil, but also some softness with generics in Mexico. As I mentioned, we see increased competition for the legacy oncology business in both countries. And last but not least, we also saw a soft quarter for flu in Brazil. This being said, we continue to believe that emerging markets constitutes the single biggest growth opportunity for the industry as a whole and, I think, for Sanofi in particular, given our very strong footprint in emerging markets and also our diversified portfolio. However, we also acknowledge we have had specific execution issues recently, and we are addressing these. So without further ado, I pass it over to Pascale.

Okay. Thank you, Peter. So talking about diabetes, another growth platform, we are very pleased to see that we have a 10th consecutive quarter delivering double-digit growth. The sales being EUR 1.6 billion, up 16.2%, and this performance was mainly driven by the strong performance of Lantus, with EUR 1.4 billion, up 17.7%. To know that the SoloSTAR in the U.S. has increased from a little bit under 52% a year ago to 56% this year. You can see that actually the Lantus growth delivering double-digit growth in 3 out of the 4 regions, with both the U.S. and the emerging market being above 20%. Western Europe, given the economic context, is delivering a nice 5% growth, driven by volume. Now the thing with diabetes -- we also are very pleased with the encouraging results of the Lyxumia launch. You may recall that we got the European approval in February this year, and Germany was the first country to launch, followed by the U.K. And after 18 weeks, we saw a 10% -- we passed the bar of 10% market share, which confirms to us the value of the Lyxumia positioning as an add-on to Lantus. So we are going to continue the European rollout, the European launch rollout throughout the remainder of the year. And we are preparing also for the launch in Japan, given that we had the approval, the regulatory approval from -- in Japan in late June 2013. Now the U.S. The FDA review is ongoing, including the interim data of the ELIXA cardiovascular outcome trial, for which we expect the complete enrollment to be done by the end of the year. Now moving on to the next growth platform, Consumer Healthcare. The sales are driven by the top 4 brands: Doliprane, Allegra, Essentiale and Enterogermina, who are between high-single digit to double-digit growth, totaling EUR 729 million, which is up 1.8%. We have seen a favorable sequential trend in China following the changes that were implemented in the first quarter, both in distribution network and in the reduction of the inventory level. We are also remaining very confident with this business segment, as we are expecting to proceed with the launch of Rolaids, the recently acquired business in the U.S., in the third quarter of 2013. And you may have seen yesterday the press release on the positive recommendation from the FDA Advisory Committee to switch the Nasacort nasal spray for OTC use, and that will further expand our OTC offering. So we are very encouraged by the ability to continue to build on our Chattem's highly successful OTC launch of Allegra so far. And now I'll pass on to Olivier for the Vaccine.

Our Q2 growth for Vaccine has been impacted by phasing of flu vaccines and Menactra. It's always tricky to compare on a quarter-to-quarter the flu sale that used the phasing between Q1 and Q2 for the Southern Hemisphere flu and between Q3 and Q4 for Northern Hemisphere. So overall, we show a stable quarter in terms of sale, no? If we look to the year-to-date data, we are growing 7.2%. For this quarter, our growth has been very much driven by our pediatric front side [ph] and with the very strong growth of Pentaxim in the emerging markets, where we continue to show very strong momentum. As we previously indicated, we are forecasting a gradual or progressive recovery of Pentacel, and that will start in Q3 2013, getting firmer in Q4 this year. We continue to enjoy very strong performance with regard to Menactra, both on the public and private side. For the quarter, a very strong growth in the private segment for the quarter as well. On the public market, we see some delay due to the patterns of the purchase order from the U.S. government. Overall, Menactra is doing extremely well in the U.S., and we maintained our extremely high market share, 80%, and a strong growth also deriving from our very good performance, specifically in the Middle East. Despite a lower quarter for flu after a very, very solid performance for Q1, H1, the first half 2013 will be remembered as another record year for flu. We maintained our extremely high market share of 75%, and more than 57 million doses, growing in terms of value, more than 3%. We are very much looking forward to enter into the flu season, which already has started for us in the Northern Hemisphere. We are the first company to get the licensure, and we made the first shipments last week. We are observing solid prebooking in terms of volume. We have 7% add when compared to last year. We have a new member of the family with the Fluzone Quadrivalent, which is an important part of our flu differentiation strategy. We had indicated [indiscernible] previously after Fluzone Intradermal with the friendly syringe and needle. Fluzone High-Dose for the elderly. And so this new child is the Fluzone Quadrivalent for which we got the approval in June, and that is an important part of our differentiation strategy, and we will get the value upgrade that we have mentioned. We observed a strong price premium for Quadrivalent in excess of 50% when compared to regular doses. So overall, 7.2% for the first part over last year. And as we enter into the second half, we are expecting to stronger sales in Q4 than in Q3, reflecting the pattern of flu and also, the gradual recovery of Pentaxim. I'm now going to hand over to Merial.

Right. Thank you, Olivier. So really, under the new organization from 1st of July, I have Merial reporting into me directly, really as a sign of my confidence, really, in the potential of this business. I think when you look at the fundamentals of Animal Health between urbanization of populations, as well as the need for quality food supply, the dynamics of this market, I think, are promising. What we need is obviously a portfolio of products to meet that. And that's really what's been holding the business back as you look at the quarterly sales, down 5.7%, principally driven by our Frontline franchise, largely in the United States. As you know, the patent expired for Frontline 4 years ago, and this is the only billion-dollar franchise in the entire animal health market. And it's been a major driver of the reason why Merial is significantly more profitable than most other animal health businesses. Now of course good things can't last forever, and there has been an increased amount of competition as people have been targeting this. So we have seen sales down 14% for Frontline, in part because of that generic competition, but in part also for some of the weaker season, given the unfavorable weather conditions. What we expect is a return to growth by the next flea and tick season. We have a successor product. This is a highly competitive business, and so we can't give an awful lot of detail. But I can share that we have a product that we are branding Nextguard [ph] that we believe will be available, at the latest, by the next flea and tick season, and which we believe has significant benefit over Frontline and should be able to provide a success there in terms of growth. I would note…

So thank you, Chris. Good morning, good afternoon. So it's not the easiest P&L I have to present to you this quarter for the reasons we just discussed earlier. Well, the last part of it was expected. This was clearly linked to the patent cliff impact and the gain the last quarter we see from the P&L. But some of the events that Chris described at the beginning of this call, including some softer performance of some areas, but also, the Brazilian impact, have of course, hit the P&L. Also -- and hey, I'm on Slide 23, we have seen, for the second quarter in a row, a negative impact on a comparative basis of the exchange rate. This reason is precisely why we always communicate on a constant exchange rate basis. Last year, we benefited from a nice windfall tailwind, which have contributed to a positive contribution all in all on a full year basis by EUR 1.5 billion. Instead, this year is different, and we all know the reasons. On one hand, the euro is somewhat stronger. But more importantly, the newer Japanese economic policy has led to a very significant weakening or decrease of the yen. So if I take the second quarter, the impact on the sales has been EUR 305 million versus last year, out of which half is coming from the Japanese yen. So the rest been split between the U.S. dollar minor impact by 51 and some other emerging market currencies. And on the profit basis, the impact for the second quarter has been EUR 125 million, out of which around EUR 100 million is just due to the Japanese yen. Now if I move to the next page, well, clearly, this P&L shows the impact of the loss of patent -- or…

All right. Thanks, Jerome. Just to wrap up, again, I started off saying we've had now a transition in management. I talked about Peter's appointment and Pascale's. We have actually also recruited a new head of our Merial business, who is Carsten Hellmann, and he will be joining the executive committee. And I've also invited David Meeker to join the executive committee, largely as a recognition of the need to really bring this patient orientation to the broader Sanofi culture. So we've got, I think, a new phase, where we want to get back to growth, get past the patent cliff. And we've got a strengthened team now to go do that. So just to really conclude, obviously, first half really impacted by the remainder of the patent cliff, a Brazil cleanup and some commercial underperformance that we are addressing that I believe is well underway. Growth platform, still, if you take out the one-off effect of Brazil, grew at 7.7%. That's a robust growth and -- but needs to do better. We would expect to return to growth in the second half 2013. I think the pipeline is doing extremely well. So with that, I'll turn it over to questions. Fundamentally, I think the business is on track. Nothing has changed from the story that we have been going on up till now. We have hit a few speed bumps as I said, but fundamentally, we are on track for where we want to be in the medium term. Sébastien Martel: Thanks, Chris. Operator, we're now ready to take questions. [Operator Instructions]

[Operator Instructions] We have a first question from Keyur Parekh from Goldman Sachs.

I have 2 questions, if I may, please. First, Chris, just if you can provide some degree of kind of incremental detail on what actually happened in Brazil? And if I look at the revenue for the quarter, you booked a negative EUR 173 million. I'm just trying to get a sense for what the actual -- kind of my math suggests you didn't book any sales this quarter in Brazil. So what should we think of as a run rate for the Generics business for the second half of this year? And then secondly, just if I can get a sense from you on how you see the positioning for U300. Do you think that's going to be an opportunity for you to move patients who are taking the double-dose Lantus today? Or do you see it as largely kind of a new patient opportunity?

I mean, on Brazil, when we say inappropriate, that means you know you -- that essentially, people were trying to make sales, flatter sales, by having sales out and sales out into the trade channels. And we just found that -- and we've -- this is not something that's new in our industry. So we found that out and have had to clean that up. You're absolutely right about the sales this year. Essentially, from the beginning of the year, a lot of trade stock was out there. So we weren't selling that much in. And so a lot of this is really writing off a lot of the stuff that has been circulated into the marketplace. But if you're looking at this. Medley sales, about 14 million, 15 million units a month. If you look at IMS sales, they have continued to perform well through that process. We're going to have to progressively get back because things have been pretty disturbed out there in the marketplace. We certainly believe that we've done everything to clean up the situation as we have now. Now we've got reps going back out there again and taking orders, and so we'll give you an update in the third quarter about how things look. In terms of the U300, for us, this is a next-generation insulin. This isn't for a subsegment of the population. We know that there tends to be in all insulin products somewhat of an under-dosing because even though hypoglycemia -- glycemic events are rare, they still can sometimes have an impact on caution on dosing. So we believe that all insulin patients will benefit from the U300. And so we would be actively seeking to switch Lantus patients, as well as other analog patients to U300. This is a brand-new product that we believe will be for all patients.

We have a question from Tim Anderson from Bernstein. Tim Anderson - Sanford C. Bernstein & Co., LLC., Research Division: Obviously, it was a weak quarter and guidance was lower, and I'm just kind of wondering how this all happens at once, where the mid-point of earnings drops by a full 6%, and it does seem to coincide with the departure of Hanspeter. Can we kind of assume that this is a quarter where you're intentionally throwing in all sources of weakness at the same time to wipe the slate clean? And can you confidently say that the outlook gets better from here? I noticed that on your prior 2015 guidance that you gave some time ago, those elements were not reiterated. And if I look at something like your emerging markets guidance of double digits for 4 quarters now, you've been about 6% or 7%, including this quarter, if you exclude Brazil. So I'm just wondering about all the other elements of long-term guidance.

Right, Tim. Well, first, no, it's -- this isn't anything that's related to Hanspeter's retirement. Hanspeter is a very effective guy, but I don't think he can really influence the weather in North America for the springtime. So I think we have to say look, there are a number of things that have come together. You rightly point out, I think we are underperforming in emerging markets, and I think we are underperforming the markets. If I track IMS sales since the last 4 quarters, we have been under. And I think the real issue is we have been through the wars the last 4 years. We have been busy restructuring and buying other businesses and integrating and, in some ways, almost like crisis management. Now suddenly, the skies have cleared. You're getting everybody, now let's get back to growth. And I think the last 4 years have been too much of trying to manage the top and the bottom line through -- really through operating expense movements. And so I'm not so sure that we've got the right levels of investment. I don't think we need to see anything change in terms of the overall fundamental shape of the P&L. But I think this is getting all hands on deck and really getting back to growth and moving beyond the phase that we've been through. I mean, we've been through a heck of a lot of change, and it -- this is a big organization. It takes a while for everybody to get through. So if I look at it, I don't see anything fundamentally wrong. We see an awful lot of our businesses, by the way, doing extremely well. I mean, Diabetes continues to do well, the Genzyme business is doing phenomenally well. You look at a lot…

Yes. I mean, I don't see any reason why we change it. I mean, obviously, we are not doing the double digits on emerging markets. I personally don't see a reason to withdraw. We are not doing it, and we have to do it, but I don't see anything outside the company that would suggest that, that's not possible. And as I look at the various parts of the business that are able to do it, then we're just going to have to -- we can't trip ourselves up in Latin America, as we've done. There are going to be some areas that are softer, like Eastern Europe and Turkey. So maybe we're not doing as much as we should be doing on emerging markets. We're doing probably better on Diabetes. But broadly, I would say fundamentally, I don't see any real change in the outlook of the company.

We have a question from Richard Vosser from JPMorgan. Richard Vosser - JP Morgan Chase & Co, Research Division: Richard Vosser from JPMorgan. If I could just touch on the guidance going forward, when I look at the underlying growth of the business at the moment, where I'm about, to my calculation, about 1% in the quarter or maybe slightly higher than that, given that level of growth and a sort of a 4% sales growth last year on an underlying basis when you strip out all the generics and all the FX hits, could you give us a bit more of the road map how you can get towards that 5% growth? Because at the moment, the diabetes care is well, but you have some issues in terms of tail products declining. Just an idea of a road map of how you can get there would be useful. And then just a second question for Jerome. Just -- I think the last quarter, there were some commentary on the operating margin progression year-on-year, where I think you stated the margins would be flat year-on-year, constant currency. Obviously, there's the Brazil impact, but how do you see that quarter on -- one quarter on? And if you could give us some idea there on a constant currency basis, that would be useful.

So let's take the growth platforms, let's look at diabetes. I mean, I think diabetes is growing about 16%, 17% versus our high-single digits. We're clearly easily surpassing that. Personally, I don't see anything that really is slowing that down. Clearly, the delay of degludec in the U.S. only helps us, plus we've got the launch rollout. We've only launched Lyxumia really in Germany and the U.K. Now we have the rollout in Japan, the rest of Europe, and are expecting an FDA decision towards the end of the year. Vaccines at 7.2% is in line with where our mid-term guidance is. We are actually able to sell everything we can make. Here, again, we have an issue with the Pentacel manufacturing at our facility in Toronto. Our belief is that we will progressively come back to supply on Pentacel through the rest of the year. But you've got a number of new products that are launching in here with the Quadrivalent, and we've got the Flu ID. We've got the High-Dose Flu, and you just heard Olivier that we're actually starting to be able to premium price these products in a commoditized market like flu. And I think as we start to look at dengue coming next year, if we get the same results out of Phase III that we did out of the Phase IIb, we've got ourselves a robust dengue vaccine. We should be able to produce by certainly the 2015 time frame, we should be able to be producing 100 million doses of that. This is a major -- not only public health issue, but I think a commercial opportunity. We've got the -- this affects half the world's population. There's no treatment for it. It fills hospitals, and we're talking about countries like Brazil and…

We have a question from Mark Clark from Deutsche Bank.

I went on an investor trip to São Paulo in April, and we had a presentation from Sanofi management there, who I expect has now left. But the picture that was given there was really quite an optimistic one about turning around the Generics business even with the tax changes, et cetera. And also, there was a graphic put up that showed the Generics business was only 12% of LatAm sales. So I wonder if you could just sort of talk us a little bit more through what your understanding was of the issues here. Is this all a spillover impact from the tax changes in São Paulo, or is there something that goes beyond this? In which case, is there a possibility it also could impact on things like the diabetes franchise in Brazil and some of those other areas that are potentially larger in the mix than Generics?

No, I mean, Mark, if you were there in Brazil, I'm sure they took you through all the complexities of Brazil, that there is a different value-added tax rate in every single state, that patients are essentially paying cash, and so paying the value-added. And there's been quite a complex distribution system set up. I mean, we have 9 distribution centers in Brazil, as an example. Because the idea is to try to move products between these different states, so that you can reduce the impact of this value-added tax, and therefore, the price to the end consumer. And obviously, in the Generics business, we're talking about a price-sensitive part of the market. When São Paulo last year suddenly increased its tax, this put this whole distribution scheme into a disarray. And I think that's really what caused management last year saying, "Well, we're going to come up short," and essentially started, not only providing incentives to the trade to take on more stock, but effectively starting a price war and inadvertently doing that, which became a spiral. And so I mean, by the time April came along, they were certainly way over optimistic and had gotten in too deep on this whole issue. You're right, from a Latin American point of view, it's not that much. For the moment, our belief is that this only applies, and all that we have found only applies really to the Generics business. If I look at the rest of Latin America -- and the pharma business continues to do very well in Brazil. The -- our Mexican business in generics is off for a different reasons. This is just a competitive situation. But the rest of Latin America, outside of Brazil and Mexico, continues to grow robustly. So I think the fundamentals of Latin America are there. This tax change, I think, just put this whole system in place to help manage pricing to consumers. And we know when you got products going through 9 different distribution channels, the time it actually takes to get to an end customer meant that it became more difficult for anyone really to track exactly what was going on in the marketplace. I think there was an element of just simply poor management on that. So that's why I decided to change management. We believe that this was all just management error and of a scale that really should have been caught earlier.

We have a question from Graham Parry from Bank of America Merrill Lynch.

So just staying with Medley, you refer to there being underlying volume growth still there. Clearly, it's less than the reported growth that we've been seeing. But could you give us a feel for what you believe the Brazilian underlying generics business is actually growing at, at the moment? Secondly, on the latest Chinese investigations, the comments on the wires, that you have been contacted by the authorities. Could you give us a bit more detail about the level of that contact, which departments or government agencies have made contact? And have they actually officially started any form of investigation into practices by Sanofi in China? And then thirdly, you're pointing to a slow Lemtrada launch. Is that also because of the high expected price of the very large upfront cost, given that you're given lots of the therapy for a 2-year treatment paradigm upfront or are you looking at ways to spread that cost potentially?

So Graham, I think on the Brazilian Generics business, I would guide from -- for lower monthly sales than we saw last year. So we're unlikely to get back quickly to the roughly EUR 360 million that we did last year. So last year, you were talking about EUR 30 million a month. I think, just given the pricing issues that occurred as part of this whole thing to try to appease the tax distribution and get more inventory absorbed, it's going to take us a while to build back to that level. So I think -- and certainly, as we come out of this, I don't think you're going to really see much in terms of sales in the third quarter from Medley, and it will be more in the fourth quarter. So we'll be able to give you a little better guidance on that in the fourth quarter. But in general, you can start with that and take your favorite discount off that in terms of some element of price. That is probably going to take at least 12 to 18 months to reverse, I would guess. So -- but we'll give you more guidance on that in the third quarter results. China, we have 11 regional offices in China, and these are largely outposts. They have marketing and salespeople, some medical, some market access people. And one of those offices was contacted by the so-called authority on administration on consumer -- what is it called, again? The administration for industry and commerce, and this is in the Shenyang regional office. They visited on July 29, and we don't really know what the purpose of that visit was. People come in on one of these things and they just want to look at some documents, and they walk…

If I can just follow up quickly on China. Are you performing your own internal audit? And would there be any point where you would be able to share the results of that kind of audit with investors to say that management is confident that there's no legal risk in China for Sanofi?

I think you can understand, Graham, I can't really say anything more at this time. I mean, I think, again, you can bet that every company is looking at things very closely in China.

Maybe -- sorry, I will maybe take a question from Richard Vosser [indiscernible] on the margin. So I would like to leave this question unanswered. So Richard, so you raised a question about operating margin. So a, maybe I did not express myself exactly well last time. I'll try to correct it later on. The objective we had was not -- was to get to an operating margin which was in line with the average level we had last year, which was between 31 and 32. You should remember the guidance we gave for last year. Well, actually, it's clear that we are not heading into this exact level now, even more because we feel that we want to continue to invest, whether it is behind our Phase III trials or behind the new launches. So we are not just going to squeeze the costs and to jeopardize the launches for the sake of getting 0.1% or 0.2%, more or less, margin. What I would like to say there is that -- and of course, I mean, the first half, as you noticed, has been hit by the Brazilian issue, but also internal ratio, but also by the separate [ph] issue, which is impacting those across [ph] on the operating margin, in particular, the yen, because it's no secrecy that we have more renews and costs in yen. So I mean, this is not -- this is something which goes down into the P&L. And you know already the figure, which is, on a net basis, EUR 300 million [ph], the EUR 0.07 per quarter, which I just referred to earlier. So if I put all that together and if I look back where was the gross margin -- where's the operating margin, excluding Plavix contribution last year, I think that we should be assuming there should not be any change in the constant exchange rate [ph] that relates to the constant share basis. We should be the same range for the second half of the year, excluding Plavix impact last year, of course.

We have another question from Peter Verdult from Morgan Stanley.

Chris or Jerome, just a question on the dividend. The policy has been laid out pretty clearly. It's all based on payout. Have you or the board given any consideration to committing to a flat dividend this year? Or should we assume that the dividend will fall in line with the new earnings guidance? A very quick one, Chris, I mean, if you look at some of your peers, they are basically carving out Central and Eastern Europe and putting it into Western Europe when they report their sales, obviously, making their emerging market growth look better. Wondering if that's something you would consider. And then, can I just push you on Brazil in Animal Health? I know you probably don't want to be talking about it continuously, but obviously, confidence that we've reached the bottom here and there's not another shoe to drop is critical to just sort of where the shares go next. So can you just remind us what sort of trajectory you baked into your guidance for Brazil in Animal Health for the remainder of the second half?

Jérôme, do you want to take the dividend?

So on dividend, Peter. So -- well, obviously, I mean, under French law, boards decide upon dividend at year end. So this is something, of course, which will be decided upon at year end. However, I think that from the day 1, we said that the dividend is an important element of the overall policy towards shareholders on return to -- on cash return to shareholders, which is key in our objective. That is not just by coincidence that we announced our intention to increase the dividend, as well in the past year, so to increase the payout. At the same time, all of us have figured [ph] that we have seen a decrease in profit. We have not only maintained, but we will increase the dividend. And I would add that the 50% payout ratio, which could be considered as an average target is, of course, not a ceiling, I mean, should I say, it's a floor more. So putting all that together, I think that it's clear that we will pay all attention necessary to consider returns to shareholders. And I don't believe that in the event, which is not repeatable like the Medley, obviously, but indirect event will any way hurt our dividend policy. So in short, I think we will continue to be -- to pay high attention to dividend payment, and the 50% is an average target, but this will be considered as a floor. And once again, I mean, I could just repeat that even to the period that we have decreased in profits, we increased the dividend.

Just -- sorry, Pete -- we have a question on Brazil in Animal Health. So on Brazil, we clearly have had a very close look at all of this. We had, obviously, auditors come in and have a lot to make sure that we were appropriately reflecting the economic situation. And based on everything we know now, clearly, yes, we believe we have cleaned up the situation. You can imagine, it's not in our interest either to have any second shoes dropping later on. On Animal Health, I would say I'm not expecting a quick return onto the business. I would expect to see Animal Health continue along these lines into the second half. Really, what will change the dynamic of this, at this stage, I think, is the launch of this successor product. So I don't foresee certainly any deterioration. Probably, some small improvement, but I think Animal Health is going to be broadly in line with the first half as we go into the second half.

And moving Eastern Europe into Europe, when you report your emerging market sales going forward?

My view is, I really don't like changing the definition around just when it suits us. I think, we've -- we're very happy to have received an awful lot of support. And we won quite a few awards in Investor Relations, which we attribute, really, I think, to trying to be as transparent and consistent as possible. Yes, it might be sexier to transfer that out, but I prefer not to move the goal post all the time. So I think we've given you the data by region, not just all Emerging Markets. So I think investors are able to make that decision. But that's why actually our double-digit growth is a significant lift here because I don't see emerging -- Eastern Europe coming back quickly just because they're so tied to Western Europe. Now they're spending significantly less in Western Europe on health care and at some point, there will be a pressure on it. But again, we've kind of stuck with that definition, and I don't want to give anybody a sense that we would change that goal post in order to make a particular target.

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

The first one is on the capital allocation. You are now at the level of EUR 10 billion of debt, and that's your target. But also, you were talking about possible M&A in the presentation. So can you please elaborate on this? Is the bolt-on acquisition still the preferred route for you versus larger deal? The second question is on the evolution of the SG&A on R&D cost lines. You are talking about an increase due to the buildup of the sales force in MS and also on new Phase III trials. Is this fully in 2013 or is there a spillover into 2014?

So on the -- sorry, what was the...

M&A.

Oh, the M&A. Nothing has changed on M&A. I mean, we -- I'm very happy with the perimeter of the business. I think we've got a -- I would still believe that we're occupying the sweet spot of the industry. We have businesses that are long-life businesses, our Vaccines business and our consumer health business and our Emerging Markets business, et cetera, et cetera. And not only are we present in those, but unlike some other companies, we actually are the #1, 2 or 3 company in all of those different sectors. So we've got leadership, we've got critical mass. And therefore, what would make most sense is that you do bolt-on acquisitions to strengthen those. I think the current perimeter of the business, as I said, we wouldn't want the distraction of enlarging that by any other types of business versus where we are now. Largely, you have to pick and choose because valuations are pretty robust, and so you've seen us take a significant slowdown in M&A and largely because the number of value-enhancing transactions available are less. I'm not particularly crazy about buying companies with a single product because the valuations tend to assume that those companies have already achieved peak sales even before they launch. And therefore, it doesn't really leave you any room to create any value for Sanofi shareholders. And as I'd like to say, we're prepared to be judged, not only on the basis of the deals we do, do, but the ones that we don't do. And I think we passed on a number of transactions largely for that very reason that we don't see value-creation for Sanofi shareholders. So I think the guidance have kind of, on average, EUR 1 billion to EUR 2 billion. We didn't spend it all last…

On your question, Vincent, on the R&D and SG&A. Well, a, I think that we should look at R&D and, to a certain extent, SG&A as an investment. So the ratio as such is not really that meaningful. It's helpful, of course, when you want to be in the spreadsheet. But I think that this year is really is something you need to keep in mind that we have the opportunity -- has gone up already. So on one hand, you need to continue to take out all the fat on the inefficient costs. But on the other hand, when necessary, clearly, you need to invest, whether it is in -- behind attractive new compounds, or behind new launches, or to sustain your growth in the growth platforms in Emerging Markets as an example. So that's maybe my first comment. So we are going to continue as fast as possible to take out unnecessary costs. When we've done a lot of that, we clearly see a bit less of that in the coming year. When it comes to R&D, I mean, we've given the guidance, you remember now, it was 18 months ago. So overall, R&D expense. And here, it's a lot of different things, could be staying around 5 billion [ph]. [indiscernible] We will stay around that. Why it start to be more -- I mean, 3 years ago, it was not that easy to -- that difficult to get there because we didn't have so many projects. But now, we have many projects. So [indiscernible] is struggling somewhat to manage its priorities. In term of SG&A, on sales and marketing investments, I mean, clearly -- I mean, generally, you invest from the end [ph] to get the sales, which is why as a good example is in China, you are building the sales force, you are building the marketing. You have some post-marketing studies, which may come -- at the same time, you don't get a sense, as the ratio is, of course, getting worse. But in fact, because then you will get an improvement later on. So this is where -- so we brought them. And then keeping from -- being at some point to match this industry sector. I mean, when we get that -- I mean, you get along. So in short, I think that will be a spillover over next year. Well, yes or no, I mean, again, I mean, on what has been launched this year, I think it should not be significant more improvement more increase of investments behind that next year. Now if there is other launches taking place, whether into [indiscernible] hopefully in the U.S. next year. So there will be some investments behind that. But all in all, I mean, we gave an average guidance now some time ago on the R&D, on the SG&A of sales. And I don't think this would change over time.

Yes, let me just add to that. I would say, I don't want anybody getting the idea we're bringing the punch bowl out of the closet and turning on the party lights here. I think we -- if you look at our R&D budget, or even if you look at the numbers that Jérôme showed on SG&A, I mean, they are still broadly flat. You will see an artificial bump-up in ratios because sales are softer, and we've chosen not to titrate down costs, largely because R&D is suddenly performing. Just a year ago, we suddenly realized that we could put an IL-4 into Phase III. We have a high percentage -- 70% of our portfolio is in Biologics, and these things actually move at a faster pace than pharmaceuticals do. So -- but if I also look at it, that we have a major program in PCSK9, a major program in U300, a major program with the dengue vaccine. We're just starting a major program on a C. difficile vaccine. There's an awful lot in that pipeline and yet, we are still spending less than we spent 5 years ago. And so what has really happened over the last 4 or 5 years is we've converted spend which was a waste of money into particularly clinical development of the asset that you now see in our pipeline. And even the increase in the multiple sclerosis, yes, you need to build up a field force in particularly the U.S., and in Europe, remember, we had Copaxone. And so a big chunk of that actually were converted into our multiple sclerosis field force in Europe. But we were still really taking out costs out of the business in other areas. So I think you may see some fluctuation a little bit in ratios. But I think our objective is still to make sure that we're really being tight on our priorities, funding those things and making sure we're not harming longer-term growth, but not necessarily going back to old pharma ways either, where we throw money at everything that moves or doesn't move in the industry.

We have another question from Matthew Weston from Crédit Suisse. Matthew Weston - Crédit Suisse AG, Research Division: Two, if I can. Firstly, you've been very clear with the onetime negative impact of Brazil on EPS of EUR 0.17. But I think, also, in other operating income, there were a number of onetime positives. Can you set out how much the ramipril gain is, the capital gain on the sale of the U.S. rights and also, I think, there's another negative in there, the Plavix fine, just so we can get a clear pre-one-off earnings number to work with going forward? And then, secondly, on SG&A. A number of competitors, particularly in diabetes, have made it clear that with the new entrants coming into the market and also with a number of prior entrants significantly stepping up marketing spend, investment is needed simply to stand still in that market. So can you tell us, given the investment that you've made in Q2, is that to cover the Lyxumia launch? Is that to cover Lyxumia launch and further investments to stand still? And really, what you think you need to do in diabetes versus spending on SG&A going forward?

I think on the -- Jérôme can take you through the ups and downs of the others in there. You're right, there are some upsides. There are some less visible downsides as well. There's kind of some co-promoting come in Japan, for instance, that's not in there. My personal view is, certainly, looking at it from a management point of view, that those things are a wash through the year. And certainly, on a year-on-year impact, there's no significant effect. Clearly, the tax rate is an impact. But I think the things like here and there some product sales, but some finds on the other things. I think that -- I'll let Jérôme comment in more detail, but that's largely a wash. On the diabetes, I would argue that investing to standstill would not really correspond to 16% growth in sales. So I think we continue to invest because we believe this is to be one of the biggest markets anywhere in the world. We have an opportunity to launch some new products, notably with Lyxumia, preparing the prelaunch for U300. And it is true that there is a higher spend elsewhere. But remember, there's also segments in this market. I mean, we're not really competing with the people who are duking it out in the DPP-4 market, as an example, even in the GLP-1 class. Victoza really is an add-on to orals, whereas Lyxumia is looking at use in combination with Lantus. So we're not necessarily even going after the same patient on the GLP-1s. Yes, Novo has put some more money behind the Levemir, but we've been beating Levemir on market share for years and years now, and I don't think that's going to change. I think you will see some investments certainly in emerging markets because there's a huge opportunity there. We have Insuman launching out. We have our AllStar reusable pen launching. But I think when you look at the sales growth there, the diabetes investment is certainly accretive to the bottom line. As it is, if you actually benchmark us, we are actually probably the most effective investment-effective company in this industry. If you look at the level of sales, the spend that we have, we are probably getting a better return to the point where you could potentially make an argument, in some markets at least, that we have under-invested in that market. But again, I believe the investment we make will be earnings-enhancing. You want to add anything to the other items, Jérôme?

No, I think that I can. I'm not so sure there is so much to add. So first of all, maybe to make it clear, if it was not clear enough. I mean, you were not there last year. But the ramipril thing is something which impacted last year, not this year, and it was -- this was a charge. Well, this year, basically, the overall 140 [ph] represents is, I mean, corresponding to the disposal of the tail products to Covis [indiscernible]. We book on this slide the revenue we get from [indiscernible] from our former partnership on ACTONEL, and this is, of course, something which comes quarter-after-quarter. The rest is plus or minus some of the competition fine that we dealt on which we appealed as well. I mean, that's a small negative impact, which has somewhat, I mean, reduced net contribution of the divestment. I'm not so sure if there is any more to add to that. So just keep in mind that the net is -- for this year is, I mean, as Chris said, let's consider it's a wash in the long run is resulting from these [indiscernible] assets.

Yes, because what you don't put on that line is a loss of some Japanese co-promotion income, which is around EUR 100 million or EUR 90 million. But at some point, you can't detail all of these things. So that's why, personally, I think, I'm not so sure. But certainly, if I'm looking at our own internal forecast, I haven't seen any need to take any of those things into account. We just went through a long-range plan exercise, and you need to set a baseline for that just as you all do. And we didn't actually see a need to make any adjustment to our own 2013 baseline for those. Matthew Weston - Crédit Suisse AG, Research Division: Next, can I just actually just take a quick follow-up, if I can. So just to clarify that in the other operating income, is the inventory write-down for the Brazil generics, is that correct? So the smaller part of the 2 Brazil charges, and that when offset with a gain and all the normal income, comes to 140 million gain? And then just very quickly, Chris, regarding the investment in the diabetes sales force. Just as Jérôme commented that you invest in SG&A, but you get the sales later, the comments from your competitors, that they have started to invest now, and therefore, that suggests the competition will come. I guess my question is, do your plans now include the fact that you simply need to raise the number of salespeople just to keep the share of voice that you currently have?

And the answer to the diabetes question is yes, and the investment is happening now and has been included in our plans.

On your first question, I mean, if you want to go into all the details, so the write-off of inventory which we own goes into the comps. But now, all the associated costs of this write-off as an example, the impact this may have on the very complex tax system which exists in Brazil, or the cost of destruction of these inventories, which maybe written off, goes into this line. So it's only part of the 79, which has been disclosed, which is going on the slide on the right is going on the comp side.

We have a question from Michael Leuchten from Barclays.

Two questions. I just want to go back to your guidance, if I could. If I take the EUR 0.17 earnings per share that you mentioned for Brazil, that's about 3% for the full year on EPS. But you do get a tax benefit that makes up for that, almost gets into positive territory, yet you decided to drop the guidance, which means there's other things going on, and you did mention generics. You mentioned Japan as well. But how much of that is stuff that you think you can deal with this year, and how much of this is extra-structural changes that resets the bar for 2014 and thereafter? And then a second quick question for Jérôme. Your comment on the tax rate of 24%, you did mention there were some agreements in smaller countries. Are those one-off benefits, or is that a sustainable tax rate?

So I think on the -- I think this was, if I remember, it was Graham's question. I think we went through each one of those growth platforms. I don't think there's anything really there that is structural. We clearly need to do a better job in Emerging Markets, but I don't think it's structural. I think there is an execution element. I think on Animal Health, Animal Health, I don't think is going to improve for the rest of this year. I would argue -- I guess you could argue that Animal Health would be structural if we didn't have the new products coming along. But the reality is that we do have the new products coming along, so I don't even think Animal Health is structural. So I think this is a series of things. We've had some production issues in our Vaccines business. We've had a little bit more generic erosion in Japan. The Animal Health business is down. We have lower consumer sales in China, as we cleaned up some things. We clearly have the Brazilian situation. And the Brazilian situation, even though we believe we've cleaned up the market, will take some time to get back. So on a like-for-like basis, we'll still see some drag on the business in the second half from the Brazilian Generics business. So not a year to be proud of. But I don't think anything either to say that longer term, there's anything fundamentally changed on the business. Jérôme?

So on your question on tax rate. So first of all, I mean, in a company like ourselves, you need to keep in mind that there is permanently [indiscernible] ongoing tax credits all of us work. So it's not something which is, I mean, which is recurring, by construction, where we could all tax facilities in all parts of the world are reviewing our accounts. And as a matter of fact, because of the level of profits we generate, I mean, admittedly the risk, but also maybe the good news you may have arising from these tax facilities go back and forth. In general, when you assume that there is some risk, you take some reserves based on probability rules and then, the outcome could be either more positive than what you think or less positive, it depends. Clearly, this quarter, we had some positive outcome, and things went pretty well, which has helped to get to this 24% ratio. So I will not say that this 24% ratio is sustainable because, individually, some things would go the other way around on some occasions. And secondly, for more structural reasons that we have less revenues, at least for the 2 years to come, from patent-protected products which benefit from lower tax rates, which are generally linked to IP taxation in many countries, including France. Now if you remember, I have said in previous time that the -- when the -- the best estimate I can give you, and maybe a bit conservative, is that we should head back to 28% to 30%, that's in 2015. We are working on ways to improve this rate, and I think that we're heading into the right direction. So not everything from the 24% is coming from these tax facilities, but also, part of it is coming from the evolution of the location of those production, as well as where we generate our sales and our profit. So to give you again balance today, I would say that progressively, there will be an increase of tax rate. The range, let's say, before we get into a period where we have more patented product, could be more in the 28% to 30%. We'll expect 2 15 [ph], and hopefully, I could come with something a bit better in the coming quarters.

So we have a question from Andrew Baum from Citigroup.

A couple of questions, please, Chris. First, you mentioned that you replaced the head of LatAm, as well as the head of Brazil. I just want to be sure that the reason for replacing the head of LatAm was solely related to overseeing Brazil? Or was there any other reason for replacing the head? And then second, could you comment for the European pharma business, particularly on the tail, what you're seeing in terms of incremental pricing pressure and access pressure within Europe?

So just to be clear, in actual fact at the time this occurred, the head of Latin America and the head of Brazil were the same person. So this was in fact related to Brazil. The structure had been that we had a head of Brazil and a head of Latam, and we have moved to that. So we have a new person who has taken on Brazil, and we have another manager looking after Latin America. From 1st of October, we have a new person coming on board from Novartis, actually, who will be looking at Brazil. And then, the person that has stepped in on an interim basis in Brazil becomes the head of Latin America. So probably a little more detail that you wanted to know, but it just happened. At that time, there was no specific separate head for Brazil versus LatAm, and it has nothing to do with the rest of Latin America. I'll turn it over to Peter who, until recently, was actually head of Europe and is probably the best informed on the tail question.

Yes, so on the tail question, actually, we foresee that the price pressure continues. You see this portfolio going down with a base between 15% and 20% over the last quarters. And again, this quarter is no exception to that. However, what I want to mention to you is that we have seen also in that tail big small molecules generifications like Plavix and like Aprovel. And actually, what we will see is that with Aprovel, we have actually the last of the small molecules generification. So to a certain extent, due to a mechanistic or portfolio effect, you should expect a bit of a slowdown in the generification rate. But to answer to your question precisely in terms of price pressure on that tail business, we do foresee that this will continue. On the other hand, you will also have noticed that with our generics division in Europe, Zentiva, we also had profited from that and that we have now a very strong continued growth rate over the quarters with our generic business.

I guess I was referring to leaving out the recent genericizations, looking at the established tail that you have in Europe and just looking at the pricing pressure, so putting Aprovel and Plavix to one side and looking at the much older brands like Amaryl and the like.

Yes. If you look at what we call the tail of the tail, you would normally expect a [indiscernible] moving forward decreases, which are in the same neighborhood of what we have seen in the past.

And the real issue here is more increased generic erosion. These don't really get subject to any specific and direct price reductions. Here and there a little bit, but it's largely -- Southern Europe, for example, you had very low generic penetration rates historically in countries like Italy and Spain. Now you're obviously under austerity measures. You're seeing higher generic utilization. As a result, in the tail of the tail, as we call it here, obviously, those products which did not have much generic competition, they'll get more. So it was about EUR 100 million in Q2. And I think, as Peter said, you can probably expect that to continue at more or less that same rate. But again, that's not really a surprise. I mean, that actually has always been built into our forecast.

The last question is from Philippe Lanone from Natixis.

A quick one on R&D on PCSK9, because Roche announced last week that they would deemphasize their PCSK9 because of IP issues. Is there any reading to make on your development, whether on data or IP questions? And maybe one question, again, on the tail business, which, in the quarter, has been erasing 2/3 of the growth of the growth platforms. What -- Chris, what would be your take on some of your competitors making a specific division of the mature businesses, and maybe to facilitate some kind of M&A? And could you talk about the bolt-on products, about the possibility of maybe divesting some of the European business?

All right. I think on Roche, on the PCSK9, I think they can tell you. I think we would argue they were really just simply late to the game here. I mean, we certainly don't see any issues with our PCSK9 on IP or any other front. This is largely a race at this point with Amgen and ourselves. You've got a couple other companies like Pfizer who are coming in with a slightly different approach, who will come later in the game, but with a potentially different molecule. So no, we are absolutely bullish on our PCSK9. I think one of the things that people might forget in all of this -- because as you're trying to do your forecast, one of the biggest questions is well, how many people really want to get injected for high cholesterol? And one of the most interesting things is, is that we obviously have a big experience with our diabetes population here. And in actual fact, if I look at the rate of recruitment that we've had and a lot of the patient studies that we have done, there's actually quite a high willingness on this front. So I actually think that this is going to be quite a significant product. I mean, we have to get through Phase III, but we'll have our first 3 results late in the third quarter. Remember, this is also a group of -- there's a group of people walking around on the planet that have a genetic mutation that actually simulates this drug. And so I think we also have a reasonably high level of confidence in the safety and tolerability of the drug. Versus -- just concerning the tail, this is that kind of the Holy Grail of this industry. I've been looking for…

Yes. Look, there's no point in sugarcoating this. This is a quarter where we have disappointed. I personally don't like disappointing, my team doesn't like disappointing. And I think the fundamentals of the business are robust. The business model we have is a proven model. It's not 1-quarter results. You guys have all been around. I've known a lot of you for years. You know as well as I do that fundamentals of the business don't change from 1 quarter to the next, and that's the case with Sanofi. There's clearly some work to be done. There's work to be done in getting an organization mobilized through our launching new products and growing again. Sanofi is a company that hasn't launched an awful lot of new products in the last 10 years. Some of those launch muscles need reconditioning. And I think we've been able to attract some top talent, really, from other companies. Being able to attract top talent is a sign, also, of the fundamentals of the company. It's certainly one I pay close attention to myself. People who join this company join it because they see the business model and is one they like. They join the company because they see it as one that's willing to do things differently and, perhaps, take a more radical approach than some other companies they've come from. So nothing out of this really has any impact on my confidence in the long-term view of the company. That having been said, I can tell you, the first task of this new team, this new reinforced team that we have, is really making sure that we're addressing absolutely every element of our operating aspects here, that we have some businesses that have to do better. Some of that will require the launch of new products. And as I say, I look at the Lyxumia launch. I personally believe that Lyxumia has a higher value than most people are ascribing. I would say, in general, most people are discounting significantly what Sanofi has in its R&D pipeline. And obviously, looking at our Emerging Markets business, our Animal Health business and fixing finally, some of these manufacturing issues in vaccines are all top priorities. And that's what we're going to get on with. So we'll look forward to giving you an update in the third quarter. Thank you very much for listening, and thank you for your questions. Sébastien Martel: Thank you, Chris. I think, given the success we've had also with the ADA conference call on U300, we decided to do another investor relations call at Atkins [ph] in early October. And we will be issuing very shortly a save-the-date. The idea is to shed more light on to Aubagio and Lemtrada. So with that, I will thank everybody for their participation and wish everybody a good day.

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