Sanofi continues to deliver strong business EPS(1) growth driven by higher sales and improved margins in Q1
Sanofi continues to deliver strong business EPS(1) growth driven by higher sales and improved margins in Q1
Paris, April 28, 2022
Q1 2022 sales growth of 8.6% at CER driven by Dupixent® and CHC
Q1 2022 business EPS(1) up 16.1% at CER driven by higher sales and improving margins
Progress on Corporate Social Responsibility strategy
Key milestone and regulatory achievements on R&D transformation
2022 financial outlook
Sanofi Chief Executive Officer, Paul Hudson, commented:
“We are off to a strong start to 2022 propelled by the continued outstanding performance of Dupixent®, double-digit growth of our CHC business and improved margins in the first quarter. In R&D, we increased our investments to fuel our rapidly advancing pipeline which was further enhanced through BD collaborations such as Seagen, IGM, Exscientia and Blackstone during the period. As highlighted at our investor event in March, we remain focused on our path to industry leadership in Immunology with a broad set of novel treatments in development, including additional indications for Dupixent® in diseases such as Prurigo Nodularis and Eosinophilic Esophagitis which were recently submitted for regulatory approval. In addition, we are particularly excited about the positive pivotal trial readout for efanesoctogog alfa, our potentially revolutionizing treatment for Hemophilia A patients, with its filing planned for mid-year. Also in the quarter, we continued to execute well against our strategic priorities with our decision for the proposed EUROAPI shares listing and spin-off through an extraordinary dividend. Based on the strong first quarter, we are on track to deliver on our 2022 financial guidance, despite the challenging business environment.“
Changes in net sales are expressed at constant exchange rates (CER) unless otherwise indicated (definition in Appendix 7)
(1) In order to facilitate an understanding of operational performance, Sanofi comments on the business net income statement. Business net income is a non-GAAP financial measure (definition in Appendix 7). The consolidated income statement for Q1 2022 is provided in Appendix 3 and a reconciliation of reported IFRS net income to business net income is set forth in Appendix 4; (2) 2021 business EPS was €6.56; (3) Free cash flow is a non-GAAP financial measure (definition in Appendix 7).
2022 first-quarter Sanofi sales
Unless otherwise indicated, all percentage changes in sales in this press release are stated at CER1
In the first quarter of 2022, Sanofi sales were €9,674 million, up 12.6% on a reported basis. Exchange rate movements had a positive effect of 4.0 percentage points, mainly due to the U.S. dollar. At CER, company sales were up 8.6%.
Global Business Units
First-quarter 2022 net sales by Global Business Unit (variation at CER; € million; % of total sales)
First-quarter 2022 net sales by geographic region (variation at CER; € million; % of total sales)
First-quarter 2022 operating income
First-quarter business operating income (BOI) increased 16.2% to €3,065 million. At CER, BOI increased 12.2%. The ratio of BOI to net sales increased 1.0 percentage point to 31.7% (31.7% at CER).
First-quarter 2022 Pharmaceutical sales increased 7.5% to €7,326 million, mainly driven by the Specialty Care portfolio (up 17.8%) with continued strong performance of Dupixent® while sales in General Medicines decreased 0.7%.
In the first quarter, Dupixent® (collaboration with Regeneron) sales increased 45.7% to €1,614 million. In the U.S., Dupixent® sales of €1,176 million (up 38.1%) were driven by continued strong demand in AD in adults, adolescents, and children aged 6 to 11 years, and continued uptake in asthma and chronic rhinosinusitis with nasal polyposis (CRSwNP). Dupixent® total prescriptions (TRx) increased 43% (year-over-year) and new-to-brand prescriptions (NBRx) grew 32%. In Europe, first-quarter Dupixent® sales grew 53.3% to €211 million reflecting continued growth in AD and additional launches in younger population in AD, asthma and CRSwNP.
Neurology and Immunology
In the first quarter, Neurology and Immunology sales grew 0.3% to €611 million, reflecting strong Kevzara® sales which were partially offset by lower Aubagio® sales.
Aubagio® sales decreased 6.6% in the first quarter to €491 million due to lower sales in the U.S. as a result of both competitive pressure and price. Sales in Europe were stable.
First-quarter Kevzara® (collaboration with Regeneron) sales increased 61.4% to €95 million due to a COVID-19 related increase in global demand for IL-6 receptor blockers and the temporary tocilizumab shortage.
In the first quarter, Rare Disease sales increased 1.9% to €804 million driven by the Pompe franchise, partially offset by unfavorable purchasing patterns in Rest of the World region primarily for the Gaucher and Fabrazyme franchises. Underlying patients base treated grew around 6% compared to the same quarter of last year.
First-quarter sales of the Pompe franchise (Myozyme/Lumizyme® + Nexviazyme®) increased 8.9% to €265 million primarily from new patient accruals and the ramp up of Nexviazyme®. Myozyme®/Lumizyme® sales decreased 3.0% to €235 million mainly reflecting the conversion to Nexviazyme® in the U.S. Sales of Nexviazyme® (which was launched in the US in August 2021 and in Japan in November 2021) were €30 million in the first quarter (of which €26 million in the U.S.).
Sales of the Gaucher franchise (Cerezyme® + Cerdelga®) decreased 4.2% (to €232 million) in the first quarter. Over the period, Cerezyme® sales decreased 6.7% to €165 million, mainly due to unfavorable buying patterns resulting in lower sales in the Rest of the World region. In parallel, Cerdelga® sales were up 3.2% driven by switches and new patient accruals in Europe and the U.S.
First-quarter Fabrazyme® sales increased 2.4% to €220 million driven mainly by Europe and the U.S. In the Rest of the World region, despite unfavorable purchasing patterns, Fabrazyme® sales were stable.
First-quarter 2022 sales of Oncology increased 6.8% (to €244 million) driven by the Sarclisa® launch which more than offset the impact of Jevtana® generic competition in Europe.
First-quarter Jevtana® sales decreased 25.4% to €98 million following the entry of generic competition in some European markets (down 75.6%) at the end of March 2021. In the U.S., sales were up 8.6%, where Jevtana® is currently covered by four Orange Book listed patents US 7,241,907, US 8,927,592, US 10,583,110 and US 10,716,777. Sanofi filed patent infringement suits under Hatch-Waxman against generic filers asserting the ‘110 patent, the ‘777 patent and the '592 patent in the US District Court for the District of Delaware. Sanofi has reached settlement agreements with some of the defendants and the suit against the remaining defendants is ongoing. A 3-day trial against Apotex and Sandoz has been scheduled starting January 2023 and the remaining defendants have agreed not to launch any generic cabazitaxel product until the earlier of a district court decision in favor of the defendants or four months after the completion of the post-trial briefing. Jevtana® also received a regulatory data exclusivity related to the CARD clinical study which expires in December 2023.
First-quarter Sarclisa® sales were €65 million (versus €34 million in the first quarter of 2021) primarily driven by performance in the U.S. (€25 million), Europe (€22 million) and Japan.
Rare Blood Disorders
In the first quarter, Rare Blood Disorders franchise sales increased 1.8% (€293 million), reflecting Cablivi® and Alprolix® growth partially offset by lower Eloctate®/Alprolix® industrial sales to Sobi (recorded in the Rest of the World region).
Eloctate® sales were €138 million in the first quarter, down 3.0% reflecting lower sales in the U.S. (down 1.9%) and in the Rest of the World region.
First-quarter Alprolix® sales were up 2.0% to €108 million driven by the U.S. sales (up 8.9%), partially offset by lower sales in the Rest of the World region.
Cablivi® sales increased by 15.8% to €46 million in the first quarter driven by launches in Europe (up 46.7% to €23 million). In the U.S., sales of the product were down 4.5% to €22 million, due to the COVID-19 environment impacting treatment initiations at the hospital level.
First quarter General Medicines sales decreased 0.7% to €3,760 million and were stable excluding portfolio streamlining.
In the first quarter, core assets sales increased 4.7% to €1,594 million, driven by Toujeo®, Praluent®, Multaq®, Thymoglobulin® and Rezurock® (consolidated from November 9, 2021), partially offset by lower sales of Lovenox®. Core assets sales grew across all geographies in the first quarter.
First-quarter Lovenox® sales decreased 8.2% to €377 million, mainly reflecting lower sales in the Rest of the World region (down 11.9%) due to high base of comparison in the first quarter of 2021 which benefitted from strong Covid-related demand (WHO guidelines recommending the use of low molecular weight heparins in hospitalized COVID-19 patients). In addition, biosimilar competition and supply limitations affected the performance.
First-quarter Toujeo® sales increased 6.3% to €274 million due to growth in Europe and the Rest of the World region, partially offset by lower sales in the U.S.
In China, the Volume Based Procurement (VBP) for insulins is expected to be implemented in May 2022. In November 2021, Sanofi participated in the VBP tender for basal insulin analogues and was among the bidding winners in the group A with Lantus®/Toujeo®. Sanofi expects that its glargine (Toujeo®/Lantus®) sales to decrease by around 30% in China in 2022, benefitting from high volumes at significantly lower prices. In China, Toujeo®/Lantus® sales were €459 million in 2021.
Plavix® sales were stable in the first quarter to €261 million, higher sales in the Rest of the World region (up 1.4%) offsetting lower sales in Europe. Plavix® sales in China were down 3.4% to €123 million due to a high base of comparison in the first quarter of 2021.
Multaq® first quarter sales grew 13.9% to €87 million, reflecting strong U.S. sales growth.
Sales of Rezurock®, a recently FDA-approved, first-in-class treatment for chronic graft-versus-host disease (cGVHD) for adult and pediatric patients 12 years and older who have failed at least two prior lines of systemic therapy, were consolidated as of November 9, 2021 (through the Kadmon acquisition) and generated €41 million in the first quarter. Rezurock® performance reflects the rapidly expanding pool of prescribing institutions as well as pent-up demand from cGVHD patients who have already failed multiple systemic therapies.
Praluent® first-quarter sales were €69 million, up 21.4% driven by Europe performance. In Rest of the World region, sales were up 6.7%. In China, Praluent® was included in the NDRL list at the beginning of 2022.
First-quarter Soliqua® sales increased 15.9% to €53 million driven by the Rest of World region (up 54.5%) supported by new launches and Solimix results.
In the first quarter, non-core assets sales decreased 4.2% to €1,983 million reflecting portfolio streamlining (-1.4ppt), lower Lantus® sales as well as the impact of VBP wave 5 in China on Eloxatin® and Taxotere® sales.
Lantus® sales were €671 million, down 1.5% in the first quarter, due to lower sales in Europe, reflecting biosimilar competition and continuous Toujeo® switches.
First-quarter Aprovel®/Avapro® sales were up 17.8% to €125 million, due to some supply improvement and compared with a low base in the first quarter of 2021.
Pharmaceuticals business operating income
In the first quarter, business operating income (BOI) of Pharmaceuticals increased 12.6% to €2,831 million (up 8.8% at CER). The ratio of BOI to net sales increased by 0.3 percentage point to 38.6% (38.8% at CER), reflecting an improvement of the gross margin ratio.
First-quarter Vaccines sales increased 6.8% to €1,020 million driven by double-digit growth of Polio/Pertussis/Hib vaccines sales and partial recovery of Travel vaccines.
In the first quarter, Polio/Pertussis/Hib (PPH) vaccines sales increased 10.3% to €613 million. In the Rest of the World region, PPH sales grew 23.1% driven by a strong performance of Pentaxim® in China compared to a low base last year and favorable timing of polio tender delivery. In the U.S., PPH sales were impacted by inventory fluctuation and progressive ramp up of Vaxelis® sales. As a reminder, Vaxelis® in-market sales are not consolidated and the profits are shared equally between Sanofi and Merck.
First-quarter Meningitis sales decreased 16.4% to €112 million, due to lower sales in Latin America reflecting price competition in public tenders.
Booster vaccines sales increased 4.0% in the first quarter to €109 million, driven by the Rest of the World region.
First-quarter Travel and endemic vaccines sales increased 61.0% to €98 million, reflecting a partial recovery of Travel vaccines in Europe and the U.S. as well as higher endemic vaccines sales in the Rest of the World region.
Influenza vaccines sales decreased 18.2% in the first quarter, reaching €66 million due to an exceptional high demand in the first quarter of 2021.
Vaccines business operating income
In the first quarter, business operating income (BOI) decreased 20.2% (down 24.8% at CER) to €296 million compared to the same period of last year. This reflects higher R&D expenses related to Translate Bio and the mRNA center of excellence and the payment from Daiichi Sankyo recorded in the first quarter of 2021. BOI to net sales ratio was 29.0% (versus 40.5% in the first quarter of 2021, 27.5% excluding the payment from Daiichi Sankyo).
In the first quarter, Consumer Healthcare (CHC) sales increased 17.0% to €1,328 million sustained by growth in Europe and the Rest of the World region. This performance was mainly driven by the strong demand for Cough & Cold products, as well as the performance of Pain Care and Digestive Wellness categories. This global performance includes a positive price effect of 3%. The divestments of non-core products had an impact of -0.6 ppt of growth in the first quarter.
In the U.S., first-quarter CHC sales increased 2.1% to €310 million driven by double-digit growth of Allergy category partially offset by lower sales of Personal care and non-core assets mainly due to supply constraints.
In Europe, first-quarter CHC sales increased 21.0% to €406 million mainly reflecting strong growth of the Cough & Cold and Pain Care categories.
In Rest of World, first-quarter CHC sales increased 22.8% to €612 million, supported by growth in all categories.
CHC business operating income
In the first quarter, business operating income (BOI) of CHC increased 51.3% (up 48.0% at CER) to €596 million. The ratio of BOI to net sales increased 9.5 percentage point to 44.9% versus the prior year, reflecting strong top line growth as well as a capital gain related to divestments of non-strategic assets.
Company sales by geographic region
First-quarter sales in the U.S. increased +12.1% to €3,484 million supported by the strong performance of Dupixent®.
In Europe sales increased +6.7% in the first quarter to €2,392 million mainly driven by Dupixent® performance as well as strong CHC growth.
In Rest of World sales increased +7.0% to €3,798 million in the first quarter, reflecting the performance of Dupixent®, CHC and Vaccines which largely offset lower sales of General Medicines. Sales in China increased 13.4% to €901 million mainly as a result of the growth of Dupixent®, Vaccines and CHC. In Japan, first-quarter sales increased 1.6% to €433 million driven by Dupixent® and Sarclisa® which more than offset lower sales of General Medicines. In Russia, due to strong cough, cold and flu related sales, higher vaccines sales and unprecedented stockpiling at pharmacy and patient level sales increased 34.4% in the first quarter. In March, Sanofi has decided to stop any new spending not related to the supply of its essential and life-changing medicines and vaccines in Russia. This includes all advertising and promotional spending.
R&D update at the end of the first quarter 2022
Given the war in Ukraine and the suffering of the Ukrainian people, Sanofi has adapted its clinical trial implementation in the region. The company decided to halt any new recruitment of patients for ongoing clinical trials in Russia and Belarus, though it will continue to treat patients already enrolled. In Ukraine, Sanofi is doing everything it can to support and supply patients currently enrolled in Sanofi-sponsored clinical trials, including transferring them within Ukraine or into neighboring countries. In anticipation of potential loss of data, the company is currently activating new clinical sites and expanding patient enrollment in geographies not impacted by the war. This may lead to the planned primary completion dates of its pivotal trials in MS and COPD to shift, previously communicated submission timelines remain unchanged.
Acquisitions and major collaborations
An update of the R&D pipeline at as of March 31, 2022, is available on Sanofi’s website:
Progress on implementation of the Corporate Social Responsibility strategy
Sanofi continues its progress to improve access to medicines
Sustainability-linked bond tied to Sanofi’s Access commitments
Sanofi is committed to integrate sustainability within its Play to Win business strategy, as well as within its investment and financing strategy. More than a year after issuing its first sustainability-linked credit revolving facilities, Sanofi successfully priced an inaugural sustainability-linked bond indexed on access to medicines. A nominal amount of EUR 650 million of notes, tied to Sanofi’s commitment to improve access to essential medicines in low- and lower-middle-income countries via its global health non-profit unit. This transaction demonstrates Sanofi’s commitment to society, to ensure access to healthcare for the world’s vulnerable people.
Access and Pricing Principles at Sanofi
Sanofi has a long history of working with healthcare systems to make its treatments accessible and affordable to patients in need. Sanofi understands and shares concerns about the affordability of medicines for patients and Sanofi encourages countries to improve value in healthcare spending. However, the Company firmly believes that the pharmaceutical industry is only one of the many stakeholders in the healthcare system that can and should contribute to this goal. Given the growing concerns over rising healthcare costs, Sanofi has developed an approach to pricing that reflects its commitment to broadly expanding patient access to medicines and vaccines while maintaining sustainable investment in Research & Development. The Access & Pricing Principles it puts forth are founded on 2 pillars:
When the Company sets the price of a new medicine, it holds itself to a rigorous and structured process that includes consultation with external stakeholders and considers the following factors:
Sanofi discloses more information on its global access and pricing principles on its global website and specifically on its U.S. pricing policy on the Sanofi U.S. website.
Building partnerships to support Sanofi’s pediatric cancer commitment
For the childhood cancer flagship program, Sanofi aims to work together with partners, across sectors, to advance knowledge in pediatric studies.
In the research field, Sanofi is now one of the partners of the Pediatric Pre-clinical Proof of Concept Platform (ITCC-P4) that aims to enable state of the art upfront preclinical testing of novel molecularly targeted compounds. Sanofi has recently engaged in a Pediatric Oncology Relevant Target collaboration led by the Foundation for the National Institutes of Health (FNIH) to review and prioritize targets.
For the development of innovative clinical trials, Sanofi is proud to be working closely with experts at MD Anderson Cancer Center, Institut Gustave Roussy, Children's Hospital of Philadelphia, Dana-Farber Cancer Institute, Memorial Sloan Kettering Cancer Center. All of these efforts are centered on patient needs as highlighted by Sanofi’s support to childhood cancer advocacy groups including Coalition Against Childhood Cancer (CAC2) and Imagine for Margo.
In 2020, as Sanofi renewed its CSR ambitions, the Company reviewed and updated its portfolio of initiatives. Numbers shown below highlight the ongoing progress in the implementation of Sanofi’s CSR strategy.
Sanofi Global Health, a non-profit unit formed within the company in April 2021, aims to provide 30 of Sanofi's medicines across a wide range of therapeutic areas to patients in 40 of the lowest income countries. Beyond the products provided, Sanofi Global Health will also focus on integrated programs that ensure optimal care management over time for patients.
Sanofi is also committed to helping 1,000 patients living with rare diseases who have no access to treatments and will donate 100,000 vials of medicine for their treatments each year. This continues Sanofi’s 30-year commitment to patients suffering from rare diseases, such as Fabry, Gaucher or Pompe diseases, for which access to treatment is often limited.
The third initiative on access is to develop a global access plan for all new products, making them available in selected relevant markets within two years of launch.
Innovating for vulnerable communities
Sanofi continues its efforts to fight polio and sleeping sickness, two of its legacy programs that address global health issues.
Sanofi has been involved in the fight against polio from the beginning and continues to play a critical role in the delivery of polio vaccines. The Company has also committed to collaborate with the WHO to eliminate sleeping sickness by 2030.
Part of Sanofi’s R&D ambition is to develop innovative medicines to eliminate cancer deaths in children.
Protecting the planet
To contribute to better resource conservation, Sanofi plans to remove all plastic blister packs for its vaccines by 2027. In addition, the company is committed to eco-designing all its new products by 2025. To reduce its greenhouse gas emissions by 55% by 2030, all Sanofi sites will use 100% electricity from renewable sources and the Company has set a target of a carbon-neutral for its car fleet, both by 2030.
Building an inclusive workplace
As a global company, Sanofi is committed to ensuring that its leaders reflect the communities and patients it serves. The Company is committed to continue fostering an organization where all employees have equal opportunities to reach positions of responsibility within the company. Sanofi’s ambition is to have 40% of women in top executive roles and 50% of women in senior leadership roles by 2025. Sanofi is continuing its social and economic engagement in the communities it operates in. Finally, Sanofi is embedding its commitment to society in its leaders’ career development paths to strengthen the social impact of their decisions.
Sanofi was recognized as one of the most sustainability-committed companies in an ESG Evaluation (Environment, Social, Governance) performed by Standard & Poor’s Global Ratings (S&P).
The ESG Evaluation awarded Sanofi a score of 86 out of 100 points, one of the highest scores across all sectors globally. Sanofi’s ESG profile was awarded 80 points for its solid fundamentals, completed with an additional strong preparedness opinion of 6 points awarded for its excellent awareness of risks and opportunities and its capacity to anticipate and adapt to a variety of long-term plausible disruptions.
Sanofi's Social Profile was ranked as ‘leading’ in the category of communities highlighting the recent 2021 creation of its global health unit which aims to provide 30 of Sanofi's medicines across a wide range of therapeutic areas to patients in 40 of the lowest income countries. The report also noted Sanofi’s commitment to eliminating infectious disease such as polio, sleeping sickness and malaria.
Sanofi was notably distinguished for its commitment to access to medicines, particularly in vulnerable communities. The study, which recognized ‘the increasing challenges and inequalities in healthcare across all geographies’, identified the creation of a non-profit unit dedicated to providing poorest countries with access to essential medicines as one of Sanofi's leading differentiators.
The continuous implementation of Sanofi’s social impact strategy has led in recent months to a range of positive updates of the company’s rank or grade in most of the ESG rankings.
Sanofi and GSK applied for regulatory authorization of their first-generation COVID-19 vaccine in Europe with data supporting its use as a universal booster, designed to boost all currently approved COVID-19 vaccine platforms. In addition, the companies are developing a next-generation booster vaccine designed to provide broad protection against all variants of concern, from the original strain to Omicron BA.2. The data (VAT02 Cohort 2) is expected to be communicated in Q2 2022.
First-quarter 2022 financial results
Business Net Income2
In the first quarter of 2022, Sanofi generated net sales of €9,674 million, an increase of 12.6% (up 8.6% at CER).
First-quarter other revenues increased 28.5% (up 23.7% at CER) to €379 million, including VaxServe sales contribution of non-Sanofi products of €286 million (up 16.7 % at CER).
First-quarter Gross Profit increased 15.7% (up 11.1% at CER) to €7,175 million. The gross margin ratio increased 2.0 percentage points to 74.2% versus the first quarter of 2021, reflecting strong improvement of the Pharmaceuticals gross margin ratio (which increased from 75.2% to 77.9%) driven by favorable impact of growing weight of Specialty Care, efficiency gains in Industrial Affairs and lower royalty expenses. The Vaccines gross margin ratio slightly decreased to 61.6% from 62.0%. CHC gross margin ratio was 67.3%, down 0.7 percentage point.
Research and Development (R&D) expenses increased 17.5% (up 14.0% at CER) to €1,489 million in the first quarter, reflecting increase in priority assets development as well as recent acquisitions.
First-quarter selling general and administrative expenses (SG&A) increased 8.4% to €2,379 million. At CER, SG&A expenses were up 4.3%, reflecting increased commercial investments in Specialty Care growth drivers which were partially offset by continued streamlining initiatives. In the first quarter, the ratio of SG&A to sales decreased 0.9 percentage point to 24.6% compared to the prior year.
First-quarter operating expenses were €3,868 million, an increase of 11.8% and 7.8% at CER.
First-quarter other current operating income net of expenses was -€265 million versus -€101 million in the first quarter of 2021. Other current operating income net of expenses included an expense of €477 million (versus an expense of €279 million in the first quarter of 2021) corresponding to the share of profit to Regeneron of the monoclonal antibodies Alliance, reimbursement of development costs by Regeneron and the reimbursement of commercialization-related expenses incurred by Regeneron. In the first quarter, this line also included €232 million of net capital gains related to General Medicines and CHC portfolio streamlining compared to €56million in the same period of 2021.
The share of profit from associates was €30 million versus €9 million in the first quarter of 2021 and included the share of U.S profit related to Vaxelis®.
First-quarter business operating income2 (BOI) increased 16.2% to €3,065 million. At CER, BOI increased 12.2%. The ratio of BOI to net sales increased 1.0 percentage point to 31.7% mainly reflecting gross margin ratio improvement.
Net financial expenses were €78 million versus €84 million in the same period of 2021.
First-quarter effective tax rate was 19.0% versus 21.0% in the prior year. Sanofi expects its effective tax rate to be around 19% in 2022.
First-quarter business net income2 increased 20.2% to €2,424 million and increased 16.0% at CER. The ratio of business net income to net sales increased 1.6 percentage point to 25.1% versus the first quarter of 2021.
In the first quarter of 2022, business earnings per share2 (EPS) was €1.94, up 20.5% on a reported basis (up 16.1% at CER). The average number of shares outstanding was 1,249.2 million versus 1,249.3 million in first quarter 2021.
Reconciliation of IFRS net income reported to business net income (see Appendix 4)
In the first quarter of 2022, the IFRS net income was €2,009 million. The main items excluded from the business net income were:
In the first quarter of 2022, free cash flow before restructuring, acquisitions and disposals decreased by 15.5% to €1,998 million, after net changes in working capital (-€468 million) and capital expenditures (-€356 million). After acquisitions (-€277 million), proceeds from disposals3 (+€347 million) and payments related to restructuring and similar items (-€361 million), free cash flow4 decreased by 11.3% to €1,707 million. After the acquisition of Amunix (-€803 million), net debt decreased from €9,983 million at December 31, 2021 to €9,432 million at March 31, 2022 (amount net of €8,728 million cash and cash equivalents).
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Appendix 1: 2022 first-quarter net sales by GBU, franchise, geographic region and product
Appendix 2: Business net income statement
* Net of tax.
(1) Other includes the cost of global support functions (Finance, Human Resources, Information Solution & Technologies, Sanofi Business Services, etc…).
(2) Includes the impacts of the IFRIC final agenda decision of April 2021 on the attribution of benefits to periods of service.
Appendix 3: Consolidated income statements
(1) Includes the impacts of the IFRIC final agenda decision of April 2021 on the attribution of benefits to periods of service
Appendix 4: Reconciliation of Net income attributable to equity holders of Sanofi to Business net income
(1) Includes the impacts of the IFRIC final agenda decision of April 2021 on the attribution of benefits to periods of service.
(2) Of which related to amortization expense generated by the remeasurement of intangible assets as part of business combinations: €425 million in the first quarter of 2022 and €369 million in the first quarter of 2021.
(3) Based on an average number of shares outstanding of 1,249.2 million in the first quarter of 2022 and 1,249.3 million in the first quarter of 2021.
Appendix 5: Change in net debt
(1) Includes the impacts of the IFRIC final agenda decision of April 2021 on the attribution of benefits to periods of service.
(2) Free cash flow includes investments and divestments not exceeding a cap of €500 million per transaction (inclusive of all payments related to the transaction).
(3) Includes transactions that are above a cap of €500 million per transaction (inclusive of all payments related to the transaction).
Appendix 6: Currency sensitivity
2022 business EPS currency sensitivity
Currency exposure on Q1 2022 sales
Currency average rates
Company sales at constant exchange rates (CER)
When we refer to changes in our net sales “at constant exchange rates” (CER), this means that we exclude the effect of changes in exchange rates.
We eliminate the effect of exchange rates by recalculating net sales for the relevant period at the exchange rates used for the previous period.
Reconciliation of net sales to Company sales at constant exchange rates for the first quarter 2022
Business net income
Sanofi publishes a key non-GAAP indicator. Business net income is defined as net income attributable to equity holders of Sanofi excluding:
(1) Reported in the line items Restructuring costs and similar items and Gains and losses on disposals, and litigation, which are defined in Notes B.19. and B.20. to our consolidated financial statements.
Free cash flow
Free cash flow is a non-GAAP financial indicator which is reviewed by our management, and which we believe provides useful information to measure the net cash generated from the Company’s operations that is available for strategic investments1 (net of divestments1), for debt repayment, and for capital return to shareholders. Free Cash Flow is determined from the Business Net Income adjusted for depreciation, amortization and impairment, share of profit/loss in associates and joint ventures net of dividends received, gains & losses on disposals, net change in provisions including pensions and other post-employment benefits, deferred taxes, share-based expense and other non-cash items. It comprises net changes in working capital, capital expenditures and other asset acquisitions2 net of disposal proceeds2, and payments related to restructuring and similar items. Free cash flow is not defined by IFRS and it is not a substitute measure for the IFRS aggregate net cash flows in operating activities.
1 Amount of the transaction above a cap of €500 million per transaction (inclusive of all payments related to the transaction).
1 See Appendix 7 for definitions of financial indicators.
2 definition in Appendix 7