Sanofi (SNY) Olivier Brandicourt on Q4 2015 Results - Earnings Call Transcript

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Sanofi (NYSE:SNY)

Q4 2015 Earnings Call

February 09, 2016 8:30 am ET

Executives

Sébastien Martel - Vice President, Investor Relations

Olivier Brandicourt - Chief Executive Officer

Jérôme Contamine - Executive Vice President and Chief Financial Officer

Pascale Witz - Executive Vice President, Diabetes & Cardiovascular

Peter Guenter - Executive Vice President, General Medicine & Emerging Markets

Karen Linehan - Executive Vice President, Legal Affairs and General Counsel

Elias E. Zerhouni - President, Global Research & Development

Analysts

Richard Vosser - JPMorgan Securities Plc

Alexandra M. Hauber-Schuele - UBS AG (Broker)

Graham Parry - Bank of America Merrill Lynch

Johannah H. Walton - Credit Suisse Securities (Europe) Ltd.

Florent Cespedes - Société Générale SA (France)

Vincent Meunier - Morgan Stanley & Co. International Plc

Timothy Minton Anderson - Sanford C. Bernstein & Co. LLC

Philippe Lanone - Natixis SA (Broker)

Stephen M. Scala - Cowen & Co. LLC

Operator

Ladies and gentlemen, good afternoon. Welcome to the Sanofi Full-Year Results 2015 Conference Call and Live Webcast. I am Shire, the Chorus Call operator. The conference must not be recorded for publication or broadcast. I would now like to turn the call over to Mr. Sébastien Martel, Vice President, Head of Investor Relations at Sanofi. Please go ahead, sir.

Sébastien Martel - Vice President, Investor Relations

Thank you very much. Good morning and good afternoon to everyone on the call. Thank you for joining us to review Sanofi's fourth quarter and full-year results. As always, the slides of this call have been posted on the Investors page of our website at sanofi.com.

As you can see on slide two, I'd like to remind you that information presented in this call contains forward-looking statements that involves known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. I refer you to our Form 20-F documents on file with the SEC and also our document de reference for description of these risk factors.

With that, please advance to slide three, and let me introduce our speakers on the call today. With me are Olivier Brandicourt, our Chief Executive Officer; Jérôme Contamine, our Executive VP and Chief Financial Officer. Also joining us today for Q&A are the heads of the five global business units. Olivier Charmeil, Executive VP Sanofi Pasteur; Peter Guenter, Executive VP, General Medicines & Emerging Markets; Carsten Hellmann, Executive Vice President, Merial; David Meeker, Executive Vice President, Sanofi Genzyme; and Pascale Witz, Executive VP, Diabetes & Cardiovascular. We also have Elias Zerhouni, President of Global R&D with us for Q&A.

So, first, Olivier will discuss the key highlights of the fourth quarter and full-year 2015, and then Jérôme will review Sanofi's financial results. After that, we'll open the call to Q&A.

Just before we start, I'd like to draw your attention on the fact that as a result of the announcement of exclusive negotiations with Boehringer Ingelheim on the potential assets swap, certain changes in the way we report and present our results are required. On the current IFRS accounting standards, we need to report Animal Health separately as a discontinued operation. However, to help you with the year-over-year comparisons, we will use the term aggregates, which simply means that our Animal Health business is included in our financial results line as before.

With that, I'd like to turn the call over to Olivier.

Olivier Brandicourt - Chief Executive Officer

Thank you, Sébastien. Good morning and good afternoon to everyone. Welcome to our fourth quarter earnings conference call. So before I comment on our 2015 results in detail, please turn to slide five and let me review some of last year's key accomplishments.

Over the last 10 months, we have worked hard to lay the ground work for our future success and I'm pleased with the achievements we have made so far. Since driving innovation is at the core of what we are doing, I'd like to highlight the significant successes in R&D which we delivered in 2015. We've launched three key new products Toujeo, Praluent, and Dengvaxia, and their worldwide rollout is underway.

Also in 2015, we submitted three new products for regulatory review in the U.S. and they are expected to become the next wave of launches in 2016. Additionally, we advanced our pipeline and concluded a number of new significant R&D alliances. This include two in-licensing agreements for late stage assets in diabetes, which underscore our continued commitment to leadership in this large therapeutic area. We also took several important steps to progressively rebuild our oncology business, the most important of which is a new collaboration in immuno-oncology with Regeneron.

Especially in November, we announced our strategic roadmap for 2020, designed to create long term value for our shareholders. Ahead of this, we began implementing the new organizational model based around five global business units, which came into effect on January 1. This will simplify the company and be a key enabler of our strategy.

Lastly, in December, we made progress on our strategic objective of reshaping the portfolio and announced that we are in exclusive negotiations with Boehringer Ingelheim on a business swap, which would bolster our CHC business in exchange for our Animal Health business. The proposed deal would allow us to become the leader in the growing but highly fragmented global CHC market.

Now, let's turn to slide six to review Sanofi's sales performance in 2015. Aggregate Group sales, which include Animal Health, reached €37.1 billion, up 2.2% at constant exchange rate. The impact from foreign currencies had a strong positive effect. As a result of this tailwind, we saw stronger growth at 2015 rates with annual sales up 9.7%.

Looking at the fourth quarter specifically, sales were at €9.3 billion, down 1.6% at CER. Q4 sales were impacted by three main items. First, expected lower sales of Lantus in the U.S. Second, the recall of Auvi-Q in North America. And third, the erosion of Plavix sales in Japan due to generic competition. If we strip out Auvi-Q, sales would have been broadly stable at minus 0.3%.

Now, on slide seven, looking at the breakdown of aggregate sales by business area, we saw sales growth in each of Pharmaceuticals, Vaccines and Animal Health in 2015. Within the Pharmaceuticals business, which reached sales of almost €30 billion, I'm particularly impressed by the continued performance of Genzyme with sales up 29.5%. It may be interesting for you to note that the fourth of 2015 represents the 11th consecutive quarter of growth above 20% at Genzyme.

Sales of Diabetes were down 6.8% in line with the guidance we provided to you last October. Sales of Established Products were down 2.3% reflecting generic competition to Plavix in Japan since June. The category was also negatively impacted by the recall of Auvi-Q in the U.S. and Canada last October.

Our Vaccines business delivered a strong performance in 2015, up 7.3%. Sustained growth was driven by our global leadership in influenza vaccines and sales in emerging markets. Lastly, Animal Health delivered a strong growth of 10.8% in 2015, mostly due to the continued success of NexGard in the Companion Animal segment of the business. This represents a further improvement of the growth acceleration this franchise has seen in 2014 and is an outstanding turnaround achieved under the leadership of Carsten Hellmann.

On slide eight, as anticipated, Diabetes was a main drag on the performance of the Group in 2015. If we strip out the sales decline in Diabetes of around €0.5 billion, we can see that the group would have delivered solid underlying growth of 4.7% at constant exchange rate.

Now, let's turn to the review of the individual businesses. On slide nine, we begin with the performance of our growth drivers in MS. Here, we have been able to grow the business very significantly over the last couple of years. In 2015, the entire franchise more than doubled and now exceeds €1.1 billion.

Aubagio, now Genzyme's largest product by sales, grew by 78% and became the fastest growing oral MS drug in the U.S. Aubagio continues to capture share in a competitive marketplace and reached 6.6% of total prescriptions in the U.S. by mid-January.

Our second brand in MS, Lemtrada, is increasingly contributing to the outstanding performance of the franchise and generated sales of €243 million last year. Sales tripled in Western Europe reflecting the continued launch progress in this region.

Now, still looking at Genzyme on slide 10, you can see that the success story of our Rare Disease business is continuing as well. Full-year 2015 sales were at €2.6 billion, up 11.4%. New patient accruals are fueling the growth of our core rare diseases franchise, Gaucher, Fabry and Pompe.

Specifically in Gaucher, we successfully increased the number of patients treated with Genzyme's product to more than 5,400 worldwide. New patient accruals also translated into double digit growth for Fabrazyme and Myozyme. At the same time, we made further progress with our R&D pipeline in rare diseases, and I'm pleased to highlight that we expect pivotal trials for three important assets, Olipudase, NeoGAA and Fitusiran to start later this year.

Moving on to the next business area on slide 11. Our Vaccine business continues to deliver and matched the strong growth we saw in 2014. Sales reached over €4.7 billion and growth was 7.3%. Sales of flu vaccines were up 2%, but would have been up 7% if we exclude Brazil where we had anticipated lower sales due to a technology transfer to a local manufacturer. In the important U.S. market, we sold 66 million doses, 96% of sales were generated by the differentiated offerings in our Influenza portfolio.

Another major contributor to growth was our PPH family of vaccine, which grew about 8.1%. Strong sales in emerging markets, especially of Pentaxim in China and Hexaxim in the Middle East were partially offset by a delay in batch release of Pentacel in the U.S. We expect the supply of Pentacel in the U.S. to remain constrained throughout the first half of the year.

The final point I want to highlight on this slide is the financial performance. Consistent with our commentary at the Meet Management event in November, Vaccines' profitability is improving. In 2015, the business operating margin increased by 4.8 percentage points to 29.8%, and we expect further improvements in the coming years.

Turning to slide 12. I'm very proud of our team at Sanofi Pasteur for their success in introducing the first ever dengue vaccine. Last December, regulatory approvals for Dengvaxia were granted in three countries; Mexico, the Philippines and Brazil. Last week, we also obtained approval in El Salvador.

This success marks a historical milestone of our company and for half the world's population who live at risk of dengue. Initial shipments of the vaccines arrived in the Philippines at the end of January. Further regulatory decisions are pending in 16 additional countries. And going forward, we expect 2016 to be a year of transition from additional licenser to vaccination campaigns in priority countries.

Now, on slide 13, let me turn to Diabetes. The good news is that there is no news. We delivered exactly what we said we would in our revised guidance from last October. As we had highlighted, sales of Lantus in the U.S. in the fourth quarter continued to be negatively impacted by slower growth in the basal market and by higher discounts as compared to the same period of last year. Additionally, we continue to see an unfavorable mix shift towards highly-discounted government channels. As we were expecting, this quarter also included delayed Medicaid bill from multiple states.

As for Toujeo, I'm pleased to see the encouraging launch uptake. As you can see from the chart, the sales performance of the brand has accelerated over the recent quarters, primarily driven by rapid market access in the U.S. and fast adoption by prescribers. This uptake compares favorably with other brands in the same strategic category. Outside the U.S., Toujeo is also gaining momentum following its rollout in over 20 markets including Germany, the UK, Japan and Canada.

Overall, Diabetes performed in line with our revised guidance and we continue to expect global sales to be down minus 4% to minus 8% annually over the period of 2015 to 2018. As we enter 2016, we expect to benefit from the initiatives we launched last year to further improve our operational effectiveness.

Moving to slide 14, let me take a few minutes to update you on the launch progress of Praluent and add some perspective to the early uptake since U.S. approval. First, the launch of Praluent is proceeding according to our plans, and I'm encouraged by the recent success we had in gaining broad market access in the U.S.

Indeed, Praluent has secured positive reimbursement positions for over 170 million covered lives, about 72 million of which in either an exclusive or preferred position. Of the covered lives, over 30 million are Medicare, which is particularly important because our major indication for Praluent is for patient with a history of atherosclerotic cardiovascular disease who tend to be older. According to our estimates, about 28% of statin patients in the U.S. are Medicare Part D patients. Approximately 85% of Medicare payer decisions chose exclusivity for either Praluent or alirocumab. Importantly, almost 95% of those exclusive decisions were for Praluent.

As of today, most U.S. Praluent patients are benefiting from our patient assistance and reimbursement bridge programs. These prescriptions are not captured by IMS prescription data. As eligible patients gain reimbursement throughout 2016, we should see this trend reflected in reported sales of Praluent.

Outside the U.S., the rollout of Praluent is underway in several European countries. So far, it's been launched in the UK, Germany and the Nordic region, and reimbursement discussions in important European countries have been initiated.

Of course, results from the ODYSSEY cardiovascular outcome study will be a key driver in shaping the future success of Praluent. Enrollment in this 18,000-patient global Phase III trial was completed in November and we are expecting the second interim data analysis in the second half of this year and completion of the trial in 2017.

On slide 15, looking at the breakdown of sales by geographies, you will see the significant contribution from emerging markets to grow. Despite economic slowdown and volatility in some countries, sales in our strongest region, Asia, grew 13.2%. This was particularly boosted by double-digit growth in China where we have gained market share. In 2015, China has become Sanofi's third largest country by sales with €2.2 billion, up 19.5%.

As we turn to slide 16, let me change gears and talk to you about the progress we are making in reshaping our business portfolio. In line with our 2020 road map, we have entered into exclusive negotiations with Boehringer Ingelheim on a proposed business swap that would lift Sanofi to a global leadership position in CHC. Sanofi would become the number one in several large CHC categories and would benefit from the addition of iconic brands to its portfolio.

This business swap consist of an exchange of our Animal Health business with an enterprise value of €11.4 billion and Boehringer Ingelheim's CHC business with a value of €6.7 billion. Given the valuation gap, Boehringer would also make a gross cash payment to us of €4.7 billion.

The overall transaction is expected to be business EPS neutral in 2017 and accretive in subsequent years. This will be supported by share buybacks funded from part of the net cash proceeds from the deal and confirm that our goal is to close the potential transaction by the end of the year.

Now, on slide 17, looking at 2015 business EPS, we once again sees a currency tailwind that I mentioned earlier when we reviewed the sales figure. Business EPS was €5.64 per share, up 8.5% at 2015 rates and stable at constant exchange rate, consistent with our 2015 full-year financial guidance. In the fourth quarter specifically, business EPS was €1.31, a decline of 5.8% at 2015 rates or minus 12.9% at constant exchange rate.

Let's take a closer look at the quarter on slide 18. This chart shows you the bridge of business EPS in the fourth quarter 2014 to the same period of 2015. As you can see from the slide, the recall of Auvi-Q as well as certain charges and expenses related to the termination of our agreement with MannKind for Afrezza, had a combined negative impact of €0.16. This explains nearly the entire EPS decline in the quarter. Without this impact, business EPS in the fourth quarter would have been down only 1.4% at constant exchange rate.

Moving to slide 19 now. Let me conclude my presentation review today by providing you with our outlook for 2016. 2016 business EPS is expected to be broadly stable versus 2015 at constant average exchange rates, barring major unforeseen adverse events. When applying December 2015 average exchange rate to the full-year 2016 guidance, the impact from foreign exchange on business EPS is expected to be negligible. Jérôme will highlight later in his presentation some important elements which will help you in modeling the earnings profile of the company during the first half and the second half of 2016.

Before I hand over the call to Jérôme, I want to highlight on slide 20 the key pipeline news and data points which we expect in the coming year. As you can see, 2016 will be a very busy year for us. As mentioned earlier, we foresee additional regulatory approvals for Dengvaxia throughout the year. In diabetes, we expect a U.S. regulatory decision on LixiLan, which we submitted to the FDA in December using the priority review voucher. In Europe, the submission of LixiLan is planned for this quarter.

For sarilumab, the FDA accepted for review our BLA for RA and the PDUFA date is set for October 30. We are particularly looking forward to Phase III top-line data of dupilumab in atopic dermatitis in the coming months. If positive, U.S. regulatory submission for this breakthrough innovation is scheduled for the third quarter.

And as I mentioned earlier, we expect the second interim analysis of ODYSSEY OUTCOMES during the second half of the year. Additionally, we expect to begin six pivotal studies for our next wave of innovative medicines in diabetes, oncology, and rare diseases.

And with that, I will now turn the call over to Jérôme to discuss the details of our financial results.

Jérôme Contamine - Executive Vice President and Chief Financial Officer

Thank you very much, Olivier, and good morning, good afternoon to everyone. So, I'm now turning to slide 22. As Olivier mentioned earlier, you can see that we benefited from a strong FX tailwind in all quarters, increasing our sales by over €2.5 billion on a full-year basis representing a boost of 7.5%. This benefit was mainly driven by the strength of the U.S. dollar versus the euro. The impact on the full-year EPS was even stronger, boosting EPS by €0.44 per share or 8.5 percentage points. As always, for additional information on foreign exchange sensitivities to key currencies, please refer to the first slide in the final appendices of the slide deck.

Now on slide 23, let's have a closer look at the fourth quarter P&L. Let me remind you that we will comment on aggregate sales as mentioned by Olivier at the beginning of the call, which will include still our Animal Health sales while under the IFRS rules Merial is treated as discontinued operations as from January 1, 2015.

Aggregate Group sales in the quarter were €9.3 billion, a decrease of 1.6% at constant exchange rate. Aggregate gross profit was €6.3 billion in the period, down 2.2% at constant exchange rate. I will come back to the details of the gross margin on OpEx on the following slides, but let me highlight here the anticipated increase in SG&A up 5.4%, effecting the U.S. launch cost of Praluent and Toujeo on commercial expenses supporting the MS franchise in 2015.

Now, I'm moving to the line other current operating income and expenses. Other current operating income was positive €20 million in this quarter compared to positive €96 million during the same period of last year. In the fourth quarter 2015, capital gains before tax of €83 million were recorded resulting from the sales of several small products. This is comparable to the €79 million before tax booked in the fourth quarter of 2014. But this year, in addition, a charge of €71 million was recorded in this line, which was associated with the expected termination of the MannKind agreement as described by Olivier already, as well as the €10 million charge associated to the Auvi-Q recall.

Moving onto the next item, the share of profits from associates, which was €31 million in the fourth quarter. And this compare to €65 million in the same period in 2014. This line includes Sanofi's profit share, sorry, from our equity stake of 22% in Regeneron, and in the vaccine joint venture of Sanofi Pasteur with Merck in Europe. The initial cost of our Diabetes collaboration with Verily, formerly known as Google Life Science, was also recorded in this line in the fourth quarter of 2015.

Aggregate business operating income of €2.2 billion was down 16.6% at constant exchange rates effecting the impact of the recall of Auvi-Q and the termination of the MannKind agreement. Let me just highlight that excluding these elements, the BOI would have been €236 million higher.

Turning to slide 24 and reviewing the items below the BOI. Net financial expenses were lower as compared to the same period of the previous year, effecting lower cost for financing and pension interest as well as some capital gains on the disposal of minor financial interests.

Of note, the effective tax rate in the fourth quarter was down to 19.5% and 23% for the full-year 2015, compared with 21% for the fourth quarter of 2014 and 24% for the whole year of 2014. This decrease is mainly due to the effect of modification to the taxation scheme of intercompany dividends in France.

Business net income in the fourth quarter of 2015 was €1.7 billion, down 13.5% at constant exchange rates. And as I mentioned earlier, business EPS of €1.31 in the fourth quarter was down 12.9% or 5.8% on a constant exchange rate on reported basis respectively. As a result of share buyback, the average number of shares outstanding decreased in the fourth quarter of 2015 by approximately 11 million versus last year.

Turning to slide 25, let's look at the evolution of our gross margin. Consistent with our expectations, we saw a slight improvement in the gross margin on a full-year basis, which increased by 0.8% to 69.1%. However, in the fourth quarter, the gross margin was 67.9%, down 0.5 percentage points at constant exchange rate.

The positive effect of higher sales of Genzyme on Vaccines as well as foreign exchange rates were more than offset by lower sales of Diabetes in the U.S., increased investments in monoclonal antibody production, general erosion of Plavix sales in Japan, and the recall of Auvi-Q.

To help you with your modeling for 2016, we would expect the gross margin to remain relatively stable between 68% or 69% at constant exchange rate. This reflects the continued dynamics around Lantus in the U.S. It's also generic erosion of Plavix in Japan on investment in the industrial production of monoclonal antibodies partially offset by increasing contribution from Praluent vaccines on multiple sclerosis.

Finally, looking closer at the evolution of operating expenses on slide 26, aggregate OpEx was €4.1 billion, up 3.4% at constant exchange rate in the fourth quarter and €15.5 billion at 4.5% at constant exchange rate in full-year 2015. As I highlighted already, higher operating expenses in the quarter on a full-year basis as well were consistent with our full-year target.

Full-year R&D expenses are €5.3 billion were up 1.8% at constant exchange rate, reflecting stringent portfolio prioritization that partially offset the higher spend on the dupilumab, the Praluent ODYSSEY cardiovascular outcome study and the immuno-oncology alliance with Regeneron. This resulted in a stable R&D-to-net-sales ratio of 14.2% in 2015 compared to the previous year.

Aggregate SG&A expenses in 2015 now were €10.2 billion, effecting an increase of 6% at constant exchange rate. The growth mainly reflects the U.S. launch cost for Praluent, Toujeo, and commercial expenses supporting the multiple sclerosis franchise. In 2015, the ratio of aggregate SG&A to aggregate sales increased 1.1 percentage points to 27.7% compared with the previous year.

Looking to 2016, growth in SG&A expenses is excepted to be mainly driven by investments behind Praluent, Dengvaxia, as well as a launch preparations for LixiLan and sarilumab. In parallel, we expect savings in SG&A in other areas resulting from prioritization of the gradual impact from the implementation of our new organization.

At the R&D level, our new collaborations in immuno-oncology on Diabetes as well as post-marketing studies with newly-launched products will lead to higher expenses. Overall, we expect total OpEx in 2016 to grow at a similar rate versus 2015 at constant exchange rates.

I move now to slide 27. At your right is the aggregate business P&L. Let me make three comments on this slide. First, I'm pleased to say that we met our business EPS guidance this year despite the negative impact of Auvi-Q and Afrezza in Q4. Second, although the tax rate in 2015 was slightly lower than what we anticipated, our current expectation is that the tax rate in 2016 will be slightly higher than the level of 2015 in the range between 24% and 25%.

Thirdly, other – current operating income and expenses includes in 2015 the €240 million ForEx loss on the re-measurement of our intra-Group U.S. dollar-denominated payables for our Venezuelan business. This loss was €104 million in H1 2015 and €136 million in H2 2015. Given the current economic conditions, we are not able to assess the rate at which our operations in this country will be settled in 2016. The remaining potential exposure we have on our balance sheet, as I speak, is roughly €100 million.

Moving now to slide 28 on the cash flow and net debt evolution, I'm pleased to report that we increased our free cash flow by 12.2%, reaching €8.1 billion for the full-year 2015. Now, this is contrary to what is written in the footnote, after CapEx and not before. So, we are consistent with what we perceived before as free cash flow.

We benefited from the better-than-expected decrease in working capital, thanks to a tight working capital management and achieved this increase in cash flow despite €1.5 billion of CapEx, which were around €250 million higher than in 2014. Most of the increase in CapEx were made to support our development in biologics on Vaccines.

This strong free cash flow generation helped us to maintain a net debt level around €7.3 billion. This was substantially below the €8.5 billion to €9 billion estimate, which we provided at the Meet Management meeting back in November. This relatively low debt level as well as our good credit ratings on low cost of borrowing provide us with flexibility in view of business development on M&A activities. For additional information of the change in net debt in 2015, please refer to the last slide in the financial appendices of the slide deck.

With the next slide, 29, I'd like to reiterate our commitment to shareholder returns with a progressively-growing dividend. The dividend continues to be a core part of our value proposition to investors. Today, we have proposed to our shareholders the dividend of €2.93 per share for the 2015 fiscal year, which would mark the 22nd consecutive year of dividend increases. The dividend would represent an €0.8 increase versus last year and also continuation of a strong payout ratio.

Slide 30 shows that we have sustained our buyback activity during 2015. In fact, our net buyback activity reached €1.2 billion with further increase over 2014 while our gross buyback was maintained at around €1.8 billion. Given general financial market weakness since the beginning of 2016, we have taken the opportunity to intensify our opportunistic buyback activity, and so far, we have purchased shares for the amount of almost €1.3 billion.

Now, let me move to slide 31. As Olivier has already mentioned, we are guiding for business EPS to be broadly stable at constant exchange rates in 2016. That being said, I want to bring your attention to some important elements to help you model the expected growth profile of the two halves of 2016.

First, in the box on the left, we can see a number of elements in 2015 resulting in a higher sales base during the first half of the year. In particular, Plavix was genericized in Japan only in June 2015. Moreover, the increasing weight of U.S. government channels impacting Lantus sales was more visible in H2 than in H1 2015.

Also, 2015 sales in Venezuela were altogether €457 million, increasing by 22.2% at constant exchange rate. Sales were frontloaded, if you remember well, in the first half of the year as a consequence of the buying patterns associated with local market conditions.

Sales were €399 million in H1 2015, up 73% and €58 million in H2, down 24%. In H1 2015, we used the official rate of VEF 6.3 for $1 while H2 2015 sales effected the transition to the SICAD administered rate which parity is currently at VEF 13.5 for $1. So, in short, the pattern we saw in 2015 will not be replicated in 2016, and the exchange rate on which we made these sales could be significantly lower than in 2015.

So, given these elements I have just described, this relatively high sales base in H1 2015 will create an unfavorable comparison for our results in H1 2016. The unfavorable sales base in H1 2015 will be coupled with relatively low operational expenses in the first half of 2015 on front-loaded OpEx foreseen in 2016. In the second half of 2016, on the contrary, we expect to see a favorable effect from the comparison versus the same period of 2015.

The growth profile in the last six months of 2016 is expected to benefit from a number of positive drivers including; first, more money from sales contributions from our key launches in 2015; second, on Diabetes, the payer pressure on channel mix impact we experienced in 2015 will begin to annualize in 2016 and the rate of decline is expected to moderate in the second half; third, expected strong sales of vaccines including Dengvaxia plus a favorable base of comparison as a result of charges and expenses booked in the fourth quarter as a consequence of Auvi-Q and planned termination of the Afrezza agreement. Lastly, we would also expect to see some initial benefit from our €1.5 billion savings program in the second half of the year. So, clearly, 2016 will be a year of two different halves.

To wrap that, moving to slide 32. If we compare our 2015 financial objectives with what we delivered, we can see that our achievements either matched or even exceed our objectives communicated at the beginning of last year. And recall, this was achieved in the face of the tougher market conditions in diabetes than what we had originally planned on the fourth quarter charges we have highlighted today. I think this demonstrates the broad-based strength of the Sanofi group and the solid momentum in the majority of our business. On this task, we are committed to continue to deliver in 2016.

With that, I would like to turn the call back to Olivier for his closing remarks.

Olivier Brandicourt - Chief Executive Officer

Thank you, Jérôme. Let me conclude by reminding you of our strategic priorities. At our recent Investor Seminar in November, we set out four strategic goals along our 2020 road map. First, we had started to reshape our portfolio around core businesses and we are in the process of executing on the proposed business swap to become a global leading in CHC. At the same time, we are focused on delivering our growth objectives for existing leadership businesses such as diabetes, vaccines, rare diseases, and emerging markets, and on building competitive positions in multiple sclerosis, oncology and immunology.

At this point, I'm pleased to tell you that effective as of February 22, Muz Mansuri has been appointed as Executive Vice President, Strategy and Business Development at Sanofi, and he will be a new member of our executive committee. Muz joins us from Gilead Sciences and has a deep understanding of business development and strategy of global biopharmaceutical organizations.

Moving on to our second priority, we are executing on very important product launches. As we showed you in the presentation, we are working on accelerating the uptake of our key new products, Praluent, Toujeo and Dengvaxia. We also expect to deliver further important approvals with LixiLan and sarilumab.

Third, we continue to build momentum in R&D in order to sustain innovation for the long term. In 2016, we expect key late stage readouts particularly for dupilumab and six Phase III starts. At the same time, we continue to pursue new pipeline opportunities through external collaborations and other business development activities.

And fourth and in parallel, we have already taken significant steps to simplify the organization with the objective to achieve savings, which we intend to largely reinvest in the growth of our business. Focusing on these four strategic priorities, we will lay the groundwork for Sanofi's success in 2016.

I would like now to turn the call back to Sébastien to open our Q&A session.

Sébastien Martel - Vice President, Investor Relations

Many thanks, Olivier. We're now ready to open the call to questions. As always, I must remind you that we will like to have you ask only two questions at a time so that we allow as many participants as possible in the Q&A session. So, just two questions at a time. Thank you. Operator?

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. The first question is from Richard Vosser, JPMorgan. Please go ahead.

Richard Vosser - JPMorgan Securities Plc

Hi. Thanks for taking my questions. Richard Vosser, JPMorgan. Just on Praluent, could you talk through in a bit more detail your expectations for the development of sales ahead of the OUTCOMES data? And specifically, what proportion of patients do you have on assistance programs at the moment so we can see what the rollover might be?

And then a second question just on the Diabetes guidance, your comment suggested operational effectiveness. And I suppose Toujeo, you're improving the development of that business. So, should we be thinking of a slower decline in 2016? Just some more guidance there would be very useful. Thanks very much.

Olivier Brandicourt - Chief Executive Officer

All right. Thank you, Richard. Pascale, do you want to answer both questions maybe?

Pascale Witz - Executive Vice President, Diabetes & Cardiovascular

Sure. I'll start at least. Richard, so first of all on Praluent, what we have focused on in 2015 is really on access, and we at this stage very pleased with the level of access and coverage we have obtained. We have now more than 172 million lives covered. And as you could hear Olivier talk about, this is really a very good start and that was really the focus of 2015.

Now, on your question of the proportion of the patients on PATH and bridge program. In our case, actually a majority of patients are in those programs. And as we have now a good position on the coverage, we do expect that it will ramp up and we'll see an acceleration of the prescription throughout the Q1 of this year.

Olivier Brandicourt - Chief Executive Officer

Yeah so, Richard, we think we're going to have a very good coverage of Medicare Part D patients by the end of the first quarter and we expect a fair amount of patients coming from that part, that channel where we have obtained the best coverage. So again, to confirm what Pascale was saying, we expect to see patient being transformed in commercial prescription after that first quarter.

Olivier Brandicourt - Chief Executive Officer

On Diabetes.

Pascale Witz - Executive Vice President, Diabetes & Cardiovascular

Then on Diabetes, yes. So, in terms of, your question was on the operational effectiveness and the evolution, the slower decline. Now, you can, and this was on one of the slides of Olivier, we do expect the first half to still see some pressure given the Medicaid extension and the backfills and the year-over-year comparison. But as we move throughout the year, we do think that those factors are going to relax a little bit. And meanwhile, we'll see the acceleration of the Toujeo ramp up, which we're very pleased with.

Sébastien Martel - Vice President, Investor Relations

Okay.

Richard Vosser - JPMorgan Securities Plc

Thank you. Thanks very much.

Sébastien Martel - Vice President, Investor Relations

Next question, please.

Operator

The next question is from Alexandra Hauber, UBS. Please go ahead.

Alexandra M. Hauber-Schuele - UBS AG (Broker)

Thank you. Sorry. Just a follow-up on the Praluent. Since you seem to be focusing on the Part D coverage, what is the average co-pay a patient has on Praluent given that you can't give co-pay assistance in the Part D?

And secondly, on the U.S. insulin market, can you comment on volume growth there? I mean, there's IMS data seem to suggest a slowdown. Is that correct given that we don't see all the channels? And if there is a slowdown, have you got any explanation where that's coming from and whether that's potentially temporary? Thank you.

Olivier Brandicourt - Chief Executive Officer

Okay. So, do you want to take the Praluent co-pay question, Pascale?

Pascale Witz - Executive Vice President, Diabetes & Cardiovascular

I can take the market as well. Sure. In terms of a Praluent co-pay, I mean at this stage I don't think we comment on this one. I don't know. I think at this stage, Alexandra, really at this stage, I don't think we can comment on this one. We have, as we said, we're proud of the coverage both on Medicare and on commercial. We are very satisfied with the starting point that we have here. I think that's all we can say here.

On the insulin market, for your second question, as you remember in 2014, the market growth was 7%, 7.2%, if I'm recalling correctly. We saw a slowdown in 2015 in the range of 4.9%. And we do think that some of it may come from what we have seen historically, which is when there is a growth of a different class in diabetes, it is slowing down on insulin. And in this case, we have seen an acceleration of the SGLT2 and the GMP1 class, which may explain this slowdown. Now as far as 2016 are concerned, we are expecting or we have modeled the low single digit market growth.

Alexandra M. Hauber-Schuele - UBS AG (Broker)

Thank you.

Sébastien Martel - Vice President, Investor Relations

Okay. Thank you, Alexandra. Next question, please.

Operator

The next question is from Graham Parry, Bank of America Merrill Lynch. Please go ahead.

Graham Parry - Bank of America Merrill Lynch

Great. Thank you for taking my questions. Just I wanted to run through a couple of other assumptions that are built into the guidance. Specifically, how many Dengvaxia doses you think you might be able to ship during the course of this year, and roughly what kind of sales estimate that would give you? What are you assuming for Renagel generic competition? And do you have a target buyback level for the year given you've already bought back quite a lot of stock already?

And then my second question is on M&A. You commented at a recent conference that you'd consider M&A to address the flat EPS profile in 2016 and 2017. So, what sort of thing would you have in mind that would be so immediately accretive? What sort of business or therapeutic areas and size of deals would you consider? And what ROIC hurdles would you put in place to ensure that you're not destroying value just to chase EPS accretion? Thank you.

Sébastien Martel - Vice President, Investor Relations

Thank you, Graham. You managed to put four into two, but that's okay.

Jérôme Contamine - Executive Vice President and Chief Financial Officer

Dengvaxia, Olivier you want to answer? And Peter, Renagel. And I'll take M&A.

Olivier Brandicourt - Chief Executive Officer

So, as we speak, we have Dengvaxia licensed in four countries. And we are expecting some new licenser in the upcoming months. We have shipped, for the first time, for the public and private market and to the Philippines, 1 million doses. And we are expecting to get the first dose arm on the private market by the end of February. And we are expecting, in the upcoming weeks, the public market to start in the Philippines. We are discussing with the Filipino authorities on a tender of 3 million doses that we should get in the upcoming days. You probably saw that it was reported that the price that is considered is €20.

For the ramp-up for the upcoming months, we don't guide product-by-product, but I would have to say that based on everything that we know today, everything that I see in your model, in the consensus that is roughly in the range of €200 million, makes a lot of sense to us. The upcoming months are going to be important because we are starting the design of the immunization program with the various countries. But so far so good.

Sébastien Martel - Vice President, Investor Relations

Thank you. Peter?

Peter Guenter - Executive Vice President, General Medicine & Emerging Markets

Yes. So, Graham on Renagel, as you know, we have generification already since 2015 in Europe. Still a little bit supply-constrained, so. But you see it accelerating. And actually Western Europe down in the last quarter by 36%, but still with some fluctuations. In the U.S., as you know, we have a pretty different situation. We have multiple ANDA filers with approval pending now since 83 months to be precise and still no approvals or tentative approvals in U.S. despite patent expiry since September 16, 2014. Now, it is obvious that we are not devoid of risk in that respect. And I can tell you that we have baked into the budget a scenario of progressive arrival of generics also in the U.S. market.

Olivier Brandicourt - Chief Executive Officer

All right. Thank you, Peter.

Sébastien Martel - Vice President, Investor Relations

Buyback

Olivier Brandicourt - Chief Executive Officer

Buyback, Jérôme.

Jérôme Contamine - Executive Vice President and Chief Financial Officer

Yes, Graham, good afternoon. So I think that you could assume – I think we don't give a guidance on the level of buyback. Now, looking at the last three years, I mean, we have bought back in the rage of €1.8 billion per year. As you said we have, let's say, accelerated early in the year this buyback program as we have already bought back €1.3 billion shares, that's around 17 million shares. And you could assume that these programs would be in the range of €1.7 billion, €2 billion as we had in the previous years. Keep also in mind that this doesn't take into account the potential cash payment that we could receive from the Boehringer Ingelheim transaction is closed which will more impact 2017.

Olivier Brandicourt - Chief Executive Officer

All right. Thank you, Jérôme. Graham, just I want to reassure you first, our solid focus is, of course, on transacting BD deals including M&A, which will create shareholder value, right, and help to position Sanofi for long-term growth. That's what we said in November. I want to make sure that everyone understands that we are not interested in deals for deals' sake.

Now, it's true that the valuation of biotech companies has come down in the last six months. It is also true that the valuations were very high and have risen very dramatically in the former three years to four years. And we're not sure that the expectation of boards and shareholders of this company may actually be realistic even after recent price falls, so.

Having said that, you remember what we said in November, that we have refined or redefined our priorities for the next five years in our 2020 road map. And we have highlighted areas and TAs where we want to be active. We are actually vigilant. We are agile and our M&A team is assessing different opportunities. And as you know and as you've seen, we are in a situation where we have flexibility as we have said in the last few months and we would act on opportunities if they present. So, that's what I would answer. Next, please? Thank you, Graham.

Sébastien Martel - Vice President, Investor Relations

Next question, please.

Operator

The next question is from Jo Walton, Credit Suisse. Please go ahead.

Johannah H. Walton - Credit Suisse Securities (Europe) Ltd.

Thank you. I'll try two questions. Again, I'm not sure how successful I'll be. For Praluent, we understand that there is very good access that you have. But I wonder if you could talk us through what you think the issues are that may be blocking doctors from prescribing. So, is there a heavy level of testing that you have to do to show that you have failed a number of statins before you could initiate? Is there some sort of step edit, if you could just – prior authorization, if you could just tell us some of the blocks that happened before you come to getting a prescription.

And on the insulin side, I wonder if you could talk a little bit about why we're seeing a slowdown in the new-to-brand. So, having seen throughout all of last year a very strong move towards Toujeo and away from Lantus, from December onwards, that's been much more stable. And it seems that Toujeo is finding it more difficult to gain new patients. So, I wonder if you could just talk a bit about the dynamics there. Thank you very much.

Operator

Ladies and gentlemen, please hold the line. The connection with the moderator has been lost. The conference will begin shortly. Thank you.

Sébastien Martel - Vice President, Investor Relations

Hello.

Johannah H. Walton - Credit Suisse Securities (Europe) Ltd.

Hello?

Sébastien Martel - Vice President, Investor Relations

Thank you. So we're connected again.

Johannah H. Walton - Credit Suisse Securities (Europe) Ltd.

Did you hear my questions?

Sébastien Martel - Vice President, Investor Relations

Jo, sorry, we lost the connection, Jo, while you, just at the time you started to ask your question. So if you don't mind repeating, please?

Johannah H. Walton - Credit Suisse Securities (Europe) Ltd.

Of course. Very quickly. I wonder if you could tell us a little about some of the barriers that doctors may have in prescribing Praluent in terms of issues like prior authorizations, step edit, proving you have to have failed five previous statins. And on the insulin side, I wonder if you could also address why we might have seen or the reasoning behind the slowdown in the trend in new-to-brand. So there was very strong growth in the Toujeo new-to-brand through to December, and then since December onwards, it seems to have plateaued?

Pascale Witz - Executive Vice President, Diabetes & Cardiovascular

Okay. So I'll start with the Praluent question. As you know, I mean, this is a new type of medicine here for the target physicians. So this is why the coverage was so important and this is why actually focusing on the access was really our only – I mean main focus in 2015. Actually now the only one, because the other focus was really on driving awareness and adoption. Now, this is for the label of Praluent. This is a medicine that is indicating for patients who are actually still at high level of LDL cholesterol despite the current regimen. And of course, we're working with the payers to make sure that this is – I mean, this is addressing the patients that it is intended to.

So, as part of this process, there is a first set of ensuring the coverage. And then the payers have different formularies to allow the prescription. So, some of them do ask for some settings, prescription before or ask some – check before the Praluent is prescribed. But, as I said, because it is a new medicine, it's a new thing and new type of treatment for the patients that these cardiologists are treating. And therefore, we think that this is something that is going to iron out as we are going through. And again, because we have this large amount of patients around the PATH and Bridge program, we think that actually, as people are going through a number of patients, they will become more at ease with what are the criteria under which the patients are covered.

In terms of the insulin question, your question related to the slowdown, I think to the NBRx. And actually, when you look at the analogs, this is something that we see. There is actually a couple of months. There is a plateauing effect of the NBRx. And I think this is something that is quite normal. Besides that you probably have seen that a little bit of ramp up of the Toujeo shares, TRx being above 4% and the NRx is following the same trend.

Olivier Brandicourt - Chief Executive Officer

Yeah. No. No. I just can add, I think that's an important phenomenon that Pascale is. So, Jo, you're right. I mean, we've seen NBRx moving from – to the point we're making, 15% or around 13.5% share of NBRxs. And when you look at this flattening, it is consistent with the trends we have seen with other analogs like Victoza or Bydureon where, in fact, NBRxs are very close to peak value after (61:31). So, that's where we are and that's what we think may be the explanation. The important aspect of all of that is our sales in Q4 were about €100 million globally. So, it's a very good pickup and a good run rate of about €400 million entering 2016. So, we're very encouraged by the pickup on Toujeo. Thank you very much, Jo. Next, please.

Operator

The next question is from Florent Cespedes, Société Générale. Please go ahead.

Florent Cespedes - Société Générale SA (France)

Good afternoon, gentlemen. Thank you very much for taking my questions. First, on the consensus, you said that you are quite comfortable with the consensus for Dengvaxia for 2016. I would like to ask the same question for Praluent. How comfortable are you with the consensus we can see for 2016 on your website which is around €400 million.

My second question is on emerging markets. Could we have your comments on the situation in China, which is performing quite well for Lantus and some thoughts on the overall pricing environment in this territory? And if you could add also something on Brazil and on Russia? Thank you.

Olivier Brandicourt - Chief Executive Officer

Thank you, Florent. As you know, we gave you that indication for Dengvaxia. We not choose to guide on products. And I would not like to deviate from that rule for Praluent next year. Now, having said that, the second question is for you, Peter.

Peter Guenter - Executive Vice President, General Medicine & Emerging Markets

Yeah, Florent. So, let me take them one by one, so let's start with China. Actually, you're right. We have a very encouraging performance, significantly outperformed the markets. And I think there were a couple of reasons for that which make me comfortable also that in the future, we will continue to outperform the market in China wherever that market growth will be. And I will come back to that in a second.

So, basically, what we have as competitive advantage is number one, a very adaptive portfolio to China. You know, we are really in chronic diseases, cardiovascular, diabetes, but also, oncology, also CNS, and of course, with a very good result of the Vaccines portfolio also in the fourth quarter. You will remember that we have been a pioneer in going to the counties that we have now a pretty significant striking force of close to 1,000 reps. And I can give you the number for the Q4 in the county segment, actually, we grew our business by 25%. So, that is definitely contributing.

And then, last but not least, we're just gaining share in markets where we compete. You mentioned it yourself, Diabetes, a very good performance, and Lantus is actually now the number one basal insulin in the Chinese market. Now, where this market is going is a little bit more difficult. You know, of course, that there have been a couple of measures taken which actually put additional pressure on prices in China.

You know that the NDRC ceiling price is actually abandoned. So, you go into a model with regional tenders, with hospital tenders, with much more pricing transparency between provinces or between regions. You also come into new tender categories. So we have also of course baked into our budget assumption some additional pressure on prices for our Chinese market. And we do think we will continue to beat the market.

Now, IMS forecast for 2016 China is 6%, also taking to account that IMS only accounts for the hospitals of more than 100 beds. So, smaller countries are not captured by IMS, community healthcare centers are not covered by IMS, et cetera, et cetera. So, that is for China.

In Brazil, obviously, very difficult macroeconomic situation. You know the country is in recession, et cetera, et cetera. Now, it is also true that in the past there is a sort of disassociation to some extent in Brazil between macroeconomic indicators and pharmaceutical growth. It's also true to say that in the last couple of months, the market growth in Brazil has come down a little bit.

I would also tell you that if you look at our Latin America sales for the fourth quarter, which actually are down, we have, of course, two effects in there. The first is the Venezuela effect where you will remember that we have front-loaded quite heavily in the first half. So you have, of course, a negative effect in Q4. And also in Brazil, which of course is by far the largest market for us in Latin America, we have actually two effects, we still have some reversal accruals in Q4 2014 that we don't have in Q4 2015. And we have actually also gone into a new distribution center in September in Brazil. So you kind of made sure that mark was sufficiently supplied in September with a lower sales in October. So these two effects adds to the overall Latin America performance. I can tell you, for example, Brazil. Without those two effects, the minus 7% of Brazil in Q4 would actually have been plus 5% in Q4 if you were kind of pro forma look at Brazil.

Russia. So Russia, we had a pretty rough ride, I would say, in the first nine months of the year. The fourth quarter, we see things a little bit trending better. So we came back to growth with our established products with our Diabetes. But as you probably also saw, we had an issue with less government funding into Q4 for Cerezyme. So Cerezyme was actually down and this compensated for the other parts of the businesses that actually trended to go in the right direction.

Now, outlook for Russia very difficult. And probably I would say for 2016, the most difficult in terms of a reliable forecast. But overall if you take a step back, Florent, and you look at emerging markets performance, you will remember we showed a slide during the Strategic Day that in the last three years, we have been doing roughly between 5% and 10% growth quarter-after-quarter. It's probably fair to say that given the economic difficulties, we might approach for the next year, we might approach the lower end of that band. But if you then put additional sales of Dengvaxia, we again are confident to outperform the market.

Olivier Brandicourt - Chief Executive Officer

Thank you, Peter.

Peter Guenter - Executive Vice President, General Medicine & Emerging Markets

All right.

Florent Cespedes - Société Générale SA (France)

Thank you very much.

Olivier Brandicourt - Chief Executive Officer

Well, my answer was short. But I think you got a good answer on emerging market. Hopefully, it would balance mine. Okay. Next please?

Operator

The next question is from Vincent Meunier, Morgan Stanley. Please go ahead.

Vincent Meunier - Morgan Stanley & Co. International Plc

Good afternoon. Thank you for taking my questions. Two please. The first one is on Praluent. Can you please give us an update on the legal disputes versus Amgen? What are the next steps? And is there a risk of triple damages here? The second question is on the disposal of the European generics unit. What is the favorite option for you? And can you update us on the proceeds, the use of the proceeds of such disposal? Thank you.

Olivier Brandicourt - Chief Executive Officer

Okay. Thank you, Vincent. So Praluent, it happens that we have our General Counsel in the room. And I'm going to ask Karen to give you the answer.

Karen Linehan - Executive Vice President, Legal Affairs and General Counsel

Thank you, Olivier. I'm pleased to be here. Considering the fact that I've been watching the Amgen patents well before they issued in 2014, I'm not so happy for the question. Needless to say, we don't believe that the Amgen patents are valid and we are confident on the law and the facts that will support our petition. Some of you may have realized that we are stipulating to infringement to simplify the issue at the trial. That's an indication that we have strong invalidity arguments. What's the next step? There will be a seven-day jury trial beginning on March 7 of this year. We will of course monitor it very carefully and be present. And needless to say, both Sanofi and Regeneron are vigorously defending any claims from Amgen.

Olivier Brandicourt - Chief Executive Officer

All right. Thank you very much, Karen. The second, Vincent, on the disposal of Gx. We are working on it. We are assessing different options. It would be premature to tell you what the decision is and what we would do eventually with the proceeds. So, more to come. You remember in November, which was only three months ago, we basically said we would come up with a final decision within a timeframe of a year. We're only three months in. We're working on it. And I can't give you much more than that as of today. So thank you, Vincent. That's all. Next, please.

Operator

The next question comes is from Tim Anderson, Bernstein. Please go ahead.

Timothy Minton Anderson - Sanford C. Bernstein & Co. LLC

Thank you. On U.S. drug pricing, is diabetes really the only area where you see pressure on pricing in the U.S.? As you look forward into 2016 and maybe 2017 too, are there other disease areas where you see this sort of thing starting to build? And then, your guidance for 2016, again kind of focusing on the U.S. market, qualitatively what have you built into your forecast about assumed price increases in the U.S.? Is it at a lesser level than what you were able to realize in 2015 due to voluntary price moderation?

Olivier Brandicourt - Chief Executive Officer

Okay. Thank you, Tim. So, do you want to answer the guidance question, Jérôme?

Jérôme Contamine - Executive Vice President and Chief Financial Officer

I think my understanding was about what did we bake into the guidance in terms of price increase in 2016 in the U.S., really basically no further.

Timothy Minton Anderson - Sanford C. Bernstein & Co. LLC

Yeah.

Jérôme Contamine - Executive Vice President and Chief Financial Officer

So, we have not. No, we have not baked any significant price increase or nothing different from what we had in 2015, actually. And of course as you know, I mean, in diabetes the Lantus situation is somewhat specific. So in that respect, I don't think it's very comparative, the question is more when do we stabilize. And I mentioned that as from the second half of 2016, we should see a stabilization of the channel mix impact versus 2015, not exactly in the first half of 2016. For the rest, we had been very conservative, but very much in line with what we did in 2015.

Olivier Brandicourt - Chief Executive Officer

And your question, Tim, on pricing, I think the answer is no. We're not, Diabetes is certainly, at least in our portfolio, the area where we have seen and we described it several times, pricing pressure. We're not observing anything similar in other area we are in, either MS or rare diseases. So, that would be the answer. And we don't see any new trends outside the U.S. with the exception which was I think described by Peter for China, where the old pricing system is under review and has moved from central government to provinces. But that's what I would say.

Timothy Minton Anderson - Sanford C. Bernstein & Co. LLC

Thank you, Olivier.

Olivier Brandicourt - Chief Executive Officer

Yes, we have time now to take two more participants, operator. Next question, please.

Operator

The next question is from Philippe Lanone, Natixis. Please go ahead.

Philippe Lanone - Natixis SA (Broker)

Hello, gentlemen. One question on Lantus. I just wanted to know that what in the Q4 has been the, in the 31% decline in the U.S. sales, has been the part of the true-up of discounts especially for Medicaid and how much you've baked in your guidance for 2016? And another one on consumer, consumer was not up, up only 1%. There's the Nasacort effect, but there is a number of other drugs in consumer that seems to have declined. So could you make a comment on what we can forecast for 2016?

Olivier Brandicourt - Chief Executive Officer

All right, thank you, Philippe. So, first question is for you, Pascale, on Lantus Q4, the 32% Lantus in the U.S. And then on consumer, Peter will answer.

Pascale Witz - Executive Vice President, Diabetes & Cardiovascular

Yeah. So, indeed, I mean Q4 Lantus was down 32%. But actually, although it looks greater than the 20% decline of the previous quarter, you remember that in Q4 2014 we took a price increase in mid-November. And actually, that accounts for about half of the differential, the decline. The remainder of that is actually the adverse gross to net effect of the clawback and the incremental Medicaid rebates. When you took those elements out, actually we are in line with the Q3 decline.

Philippe Lanone - Natixis SA (Broker)

All right. Thank you. Thank you, Pascale.

Peter Guenter - Executive Vice President, General Medicine & Emerging Markets

Yes. So, Philippe, on the question on CHC, indeed the fourth quarter growth of 1% again taking into account Venezuela there. So, if you would normalize the fourth quarter for Venezuela, it would come to 2.5% actually in the fourth quarter. So, much more in line to kind of a normalized growth rate for the year. It's also true you will have noticed in the Q3 that we have a very good quarter in the U.S. with 11% growth where it's actually more to do with phasing of invoices than anything else. So if you would normalize it for those two factors, you would actually look at a pretty, quote-unquote normal CHC quarter.

Last point is that in France, we have two price decreases of Doliprane, which is of course a very important product of our CHC franchise. We had one in January 2015 of 7% and another one in November, so which of course hits then the fourth quarter of 5%. So I think that those are the elements which kind of flush out the fourth quarter.

Olivier Brandicourt - Chief Executive Officer

All right. Thank you very much, Peter. Next please?

Sébastien Martel - Vice President, Investor Relations

That would be the last question.

Operator

The last question is from Steve Scala, Cowen & Co. Please go ahead.

Stephen M. Scala - Cowen & Co. LLC

Thank you. I have two questions. First to clarify, the company said on December 15 that the business swaps would be neutral to EPS in 2017 and accretive thereafter. May I ask neutral and accretive to what? Is that with Merial in the base or is it without Merial in the base in 2016?

And then the second question is what could you tell us about the event rate and pattern in ODYSSEY OUTCOMES? Sanofi expects to have 1,200 events by year-end, but isn't saying when you will see 50% of events or the 800 for the futility look. So any color on the rate and pattern would be helpful. Thank you.

Olivier Brandicourt - Chief Executive Officer

All right, Steve. Yeah. We will give you the answer to those two questions. So Jérôme, do you want to talk about the swap?

Jérôme Contamine - Executive Vice President and Chief Financial Officer

Okay. So, thank you, Steve, for the question to (78:16). So our guidance for 2016 includes Merial. And we include Merial as long as we believe our best assumption is that the transaction with Boehringer Ingelheim should close during Q4 as it was announced back in mid-December. And I can confirm that's a timing for closing taking to account earlier steps we have to go through. So now when it comes to 2017, the neutrality is, should we keep Merial or should we get rid of Merial, get CHC plus use of part of the proceed to do buybacks, this will be neutral of EPS. So, I compare Merial in versus Merial – or with CHC and plus some share buyback. And that's the same going forward when I look at 2018, of course, is assuming that we just have CHC.

Olivier Brandicourt - Chief Executive Officer

All right. Thank you very much, Jérôme. Elias, do you want to answer the 1,200 question?

Elias E. Zerhouni - President, Global Research & Development

Sure. As you know, this is an event rate-driven trial, so it's really not possible for us to have a fixed date. However, what I can tell you is that we completed enrollment ahead of schedule in November. I also can tell you there are two interim studies, one there's a 50% event rate, which will be a futility study to determine whether or not we have any effect. Second, a 75% event rate is for overwhelming efficacy.

At this point, what we have predicted from the planning of the study is that we would have all the results by the end of 2017. However, when you look at our event rate, we think that we have the first analysis within the first half of this year, the end of Q2, probably, and then second within the second half. So, you can do your math. And depending on statistical projections, you can see where those results might be. Again, I'll remind you that the interim analysis are not under our control. They're under an independent data safety monitoring board. And what they decide is really fully under their control.

Olivier Brandicourt - Chief Executive Officer

All right. Thank you very much, Elias. I think that concludes our call. And thank you very much to all for attending.

Operator

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Good-bye.

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