FORM 20-F
`2018
`
`\
`
`
`
`Q
`
`\ \
`
`Biogen Exhibit 2142
`Mylan v. Biogen
`IPR 2018-01403
`
`Page 1 of 360
`
`

`

`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`
`Washington, D.C. 20549
`
`FORM 20-F
`
`(Mark One)
`‘ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
`OF 1934
`
`or
`È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the fiscal year ended December 31, 2018
`Or
`‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`Or
`‘ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`Date of event requiring this shell company report
`For the transition period from
`to
`Commission File Number: 001-31368
`Sanofi
`(Exact name of registrant as specified in its charter)
`N/A
`(Translation of registrant’s name into English)
`France
`(Jurisdiction of incorporation or organization)
`54, Rue La Boétie, 75008 Paris, France
`(Address of principal executive offices)
`
`Karen Linehan, Executive Vice President Legal Affairs and General Counsel
`54, Rue La Boétie, 75008 Paris, France. Fax: 011 + 33 1 53 77 43 03. Tel: 011 + 33 1 53 77 40 00
`(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
`
`Securities registered or to be registered pursuant to Section 12(b) of the Act:
`Title of each class:
`Name of each exchange on which registered:
`American Depositary Shares, each representing one half
`NASDAQ Global Select Market
`of one ordinary share, par value €2 per share
`NASDAQ Global Select Market*
`Ordinary shares, par value €2 per share
`NASDAQ Global Market
`Contingent Value Rights
`Securities registered pursuant to Section 12(g) of the Act: None
`The number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31,
`2018 was:
`Ordinary shares: 1,245,454,385
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
`Act. YES È NO ‘.
`If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
`Section 13 or 15(d) of the Securities Exchange Act of 1934. YES ‘ NO È.
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
`Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
`No ‘
`reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È
`Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
`pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
`No ‘
`the registrant was required to submit such files). Yes È
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an
`emerging growth company. See definition of “large accelerated filer,” “accelerated filer” or “emerging growth company” in
`Rule 12b-2 of the Exchange Act.
`Emerging growth company ‘
`Non-accelerated filer ‘
`Accelerated filer ‘
`Large accelerated filer È
`If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the
`registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards†
`provided pursuant to Section 13(a) of the Exchange Act. ‘
`† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
`Board to its Accounting Standards Codification after April 5, 2012.
`Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in
`this filing:
`
`International Financial Reporting Standards as issued by
`Other ‘
`the International Accounting Standards Board È
`U.S. GAAP ‘
`If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the
`Item 18 ‘
`registrant has elected to follow. Item 17 ‘
`If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
`No È.
`Exchange Act). Yes ‘
`*Not for trading but only in connection with the registration of American Depositary Shares representing such ordinary shares.
`
`Page 2 of 360
`
`

`

`Presentation of financial and other
`information
`The consolidated financial statements contained in this annual
`report on Form 20-F have been prepared in accordance with
`International Financial Reporting Standards (IFRS) as issued by
`the International Accounting Standards Board (IASB) and with
`IFRS as
`adopted
`by
`the European Union,
`as
`of
`December 31, 2018.
`
`Unless the context requires otherwise, the terms “Sanofi,” the
`“Company,” the “Group,” “we,” “our” or “us” refer to Sanofi and its
`consolidated subsidiaries.
`
`All references herein to “United States” or “US” are to the
`United States of America, references to “dollars” or “$” are to the
`currency of the United States, references to “France” are to the
`Republic of France, and references to “euro” and “€” are to the
`currency of
`the European Union member states (including
`France) participating in the European Monetary Union.
`
`Brand names appearing in this annual report are trademarks of
`Sanofi and/or its affiliates, with the exception of:
`
`/ trademarks used or that may be or have been used under
`license by Sanofi and/or its affiliates, such as Actonel®, a
`trademark of Actavis; Aldurazyme®, a trademark of the Joint
`Venture Biomarin/Genzyme LLC; Cialis® OTC, a trademark of
`Eli Lilly; Leukine®, a trademark of Alcafleu; UshStat®, a
`trademark of Oxford Biomedica; Vaxelis®, a trademark of MCM
`Vaccine Co (USA) and MCM Vaccine B.V. (Netherlands); and
`Zaltrap®, a trademark of Regeneron in the United States;
`
`/ trademarks sold by Sanofi and/or its affiliates to a third party,
`such as Altace®, a trademark of King Pharmaceuticals in the
`United States; Hyalgan®, a trademark of Fidia Farmaceutici
`Insulia®, a trademark of Voluntis; LibertyLink® Rice
`S.p.A.;
`601, LibertyLink® Rice 604 and StarLink®,
`trademarks of
`Bayer; and
`
`/ other third party trademarks such as Aabasaglar®, Basaglar®
`and Humalog®, trademarks of Eli Lilly; Eylia®, a trademark of
`Regeneron; GLAAS®, a trademark of
`Immune Design ;
`Kyprolis®, a trademark of Onyx Pharmaceuticals Inc.;
`Revlimid® trademark of Celgene Corporation; Semglee™, a
`trademark of Mylan Pharmaceuticals Inc.; Velcade®, a
`trademark of Millenium Pharmaceuticals Inc ; Xyzal® Allergy
`24, a trademark of GSK in some countries and UCB Farchim in
`other countries; and Zantac®, a trademark of Glaxo Group
`Limited.
`
`Not all trademarks related to investigational agents have been
`authorized as of the date of this annual report by the relevant
`health authorities; for instance, the Lyxumia® trade name has not
`been approved by the FDA.
`
`The data relating to market shares and ranking information for
`pharmaceutical products, in particular as presented in “Item 4.
`Information on the Company – B. Business Overview –
`B.6. Markets – B.6.1. Marketing and distribution,” are based
`mainly on sales data excluding vaccines and in constant euros
`(unless otherwise indicated) on a September 2018 MAT (Moving
`
`Annual Total) basis. The data are mainly from IQVIA local sales
`audit, supplemented by country-specific sources.
`
`Data relating to market shares and ranking information presented
`herein for our Consumer Healthcare products are based on sales
`data from Nicholas Hall.
`
`Data relating to market shares and ranking information presented
`herein for our vaccines business are based on internal estimates
`unless stated otherwise.
`
`Product indications described in this annual report are composite
`summaries of the major indications approved in the product’s
`principal markets. Not all indications are necessarily available in
`each of the markets in which the products are approved. The
`summaries presented herein for the purpose of financial reporting
`do not substitute for careful consideration of
`the full
`labeling
`approved in each market.
`
`Cautionary statement regarding
`forward-looking statements
`This Annual Report contains certain forward-looking statements
`within the meaning of the Private Securities Litigation Reform Act
`of 1995, as amended. We may also make written or oral forward-
`looking statements in our periodic reports to the Securities and
`Exchange Commission on Form 6-K,
`in our annual report
`to
`shareholders, in our offering circulars and prospectuses, in press
`releases and other written materials and in oral statements made
`by our officers, directors or employees to third parties. Examples
`of such forward-looking statements include:
`
`/ projections of operating revenues, net income, business net
`income, earnings per share, business earnings per share,
`capital expenditures, cost savings, restructuring costs, positive
`or negative synergies, dividends, capital structure or other
`financial items or ratios;
`
`/ statements of our profit forecasts, trends, plans, objectives or
`goals,
`including those relating to products, clinical
`trials,
`regulatory approvals and competition; and
`
`/ statements about our future events and economic performance
`or that of France, the United States or any other countries in
`which we operate.
`
`This information is based on data, assumptions and estimates
`considered as reasonable by Sanofi as at the date of this annual
`report and undue reliance should not be placed on such
`statements.
`
`Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,”
`“target,”
`“estimate,”
`“project,”
`“predict,”
`“forecast,”
`“guideline,”
`“should” and similar expressions are intended to identify forward-
`looking statements but are not the exclusive means of identifying
`such statements.
`
`known and
`involve inherent,
`Forward-looking statements
`unknown, risks and uncertainties associated with the regulatory,
`economic,
`financial and competitive environment, and other
`factors that could cause future results and objectives to differ
`materially from those expressed or implied in the forward-looking
`statements.
`
`Page 3 of 360
`
`

`

`Risk factors which could affect future results and cause actual
`results to differ materially from those contained in any forward-
`looking statements are discussed under
`“Item 3. Key
`Information – D. Risk Factors”. Additional risks, not currently
`known or considered immaterial by the Group, may have the
`
`same unfavorable effect and investors may lose all or part of their
`investment.
`
`Forward-looking statements speak only as of the date they are
`made. Other than required by law, we do not undertake any
`obligation to update them in light of new information or future
`developments.
`
`Page 4 of 360
`
`

`

`Abbreviations
`
`Principal abbreviations used in the Annual Report on Form 20-F
`
`ADR
`ADS
`
`AFEP
`
`AMF
`
`ANDA
`BLA
`BMS
`CEO
`CER
`CGU
`CHC
`CHMP
`CVR
`ECB
`
`EFPIA
`
`EMA
`EU
`FDA
`GAVI
`GBU
`GCP
`GDP
`GLP
`GLP-1
`GMP
`Hib
`HSE
`IASB
`ICH
`
`American Depositary Receipt
`American Depositary Share
`Association française des entreprises privées (French
`Association of Large Companies)
`Autorité des marchés financiers (the French market
`regulator)
`Abbreviated New Drug Application
`Biologic License Application
`Bristol-Myers Squibb
`Chief Executive Officer
`Constant exchange rates
`Cash generating unit
`Consumer Healthcare
`Committee for Medicinal Products for Human Use
`Contingent value right
`European Central Bank
`European Federation of Pharmaceutical Industries and
`Associations
`European Medicines Agency
`European Union
`US Food and Drug Administration
`Global Alliance for Vaccines and Immunisation
`Global Business Unit
`Good clinical practices
`Good distribution practices
`Good laboratory practices
`Glucagon-like peptide-1
`Good manufacturing practices
`Haemophilus influenzae type b
`Health, Safety and Environment
`International Accounting Standards Board
`International Council for Harmonization
`
`IFPMA
`
`IFRS
`IPV
`ISIN
`J-MHLW
`LSD
`
`MEDEF
`
`MS
`
`NASDAQ
`
`NDA
`NHI
`NYSE
`OECD
`OPV
`OTC
`PhRMA
`PMDA
`PRV
`PTE
`QIV
`R&D
`ROA
`SA
`SEC
`SPC
`TSR
`UNICEF
`US
`WHO
`
`International Federation of Pharmaceutical
`Manufacturers & Associations
`International Financial Reporting Standards
`Inactivated polio vaccine
`International Securities Identification Number
`Japanese Ministry of Health, Labor and Welfare
`Lysosomal storage disorder
`Mouvement des entreprises de France (French business
`confederation)
`Multiple sclerosis
`National Association of Securities Dealers Automated
`Quotations
`New Drug Application
`National Health Insurance (Japan)
`New York Stock Exchange
`Organisation for Economic Co-operation and Development
`Oral polio vaccine
`Over the counter
`Pharmaceutical Research and Manufacturers of America
`Pharmaceuticals and Medical Devices Agency (Japan)
`Priority Review Voucher
`Patent Term Extension
`Quadrivalent influenza vaccine
`Research and development
`Return on assets
`Société anonyme (French public limited corporation)
`US Securities and Exchange Commission
`Supplementary Protection Certificate
`Total shareholder return
`United Nations Children’s Emergency Fund
`United States of America
`World Health Organization
`
`Page 5 of 360
`
`

`

`TABLE OF CONTENTS
`
`1
`
`Item 1.
`
`Item 2.
`
`Item 3.
`
`
`
`
`
`
`Item 4.
`
`
`
`
`
`
`
`Item 5.
`
`
`
`
`
`
`Item 6.
`
`
`
`
`
`
`
`Item 7.
`
`
`
`
`
`Item 8.
`
`
`
`Item 9.
`
`
`PART I
`
`IDENTITY OF DIRECTORS, SENIOR
`MANAGEMENT AND ADVISERS
`OFFER STATISTICS AND EXPECTED
`TIMETABLE
`KEY INFORMATION
`A. Selected Financial Data
`B. Capitalization and
`Indebtedness
`C. Reasons for Offer and Use of
`Proceeds
`D. Risk Factors
`INFORMATION ON THE
`COMPANY
`A/ History and Development of
`the Company
`B/ Business Overview
`C/ Organizational Structure
`D/ Property, Plant and
`Equipment
`OPERATING AND FINANCIAL
`REVIEW AND PROSPECTS
`A/ Operating results
`B. Liquidity and Capital
`Resources
`C. Off-Balance Sheet
`Arrangements / Contractual
`Obligations and Other
`Commercial Commitments
`DIRECTORS, SENIOR
`MANAGEMENT AND EMPLOYEES
`A. Directors and Senior
`Management
`B. Compensation
`C. Board Practices
`D. Employees
`E. Share Ownership
`MAJOR SHAREHOLDERS AND
`RELATED PARTY TRANSACTIONS
`A. Major Shareholders
`B. Related Party Transactions
`C. Interests of Experts and
`Counsel
`FINANCIAL INFORMATION
`A. Consolidated Financial
`Statements and Other Financial
`Information
`B. Significant Changes
`THE OFFER AND LISTING
`A. Offer and Listing Details
`
`1
`
`1
`
`1
`1
`1
`
`3
`
`3
`4
`
`20
`
`21
`22
`70
`
`71
`
`74
`74
`
`123
`
`128
`
`130
`
`130
`160
`180
`187
`188
`
`192
`192
`193
`
`193
`194
`
`194
`198
`199
`199
`
`
`
`
`
`
`Item 10.
`
`
`B. Plan of Distribution
`C. Markets
`D. Selling Shareholders
`E. Dilution
`F. Expenses of the Issue
`ADDITIONAL INFORMATION
`A. Memorandum and Articles of
`Association
`C. Material Contracts
`
`D. Exchange Controls
`
`E. Taxation
`
`F. Dividends and Paying Agents
`
`G. Statement by Experts
`
`H. Documents on Display
`
`I. Subsidiary Information
`
`Item 11. QUANTITATIVE AND QUALITATIVE
`DISCLOSURES ABOUT MARKET
`RISK
`DESCRIPTION OF SECURITIES
`OTHER THAN EQUITY SECURITIES
`
`Item 12.
`
`
`
`2
`
`
`PART II
`
`Item 13.
`
`DEFAULTS, DIVIDEND ARREARAGES
`AND DELINQUENCIES
`Item 14. MATERIAL MODIFICATIONS TO
`THE RIGHTS OF SECURITY
`HOLDERS
`Item 15. CONTROLS AND PROCEDURES
`Item 16A. AUDIT COMMITTEE FINANCIAL
`EXPERT
`Item 16B. CODE OF ETHICS
`Item 16C. PRINCIPAL ACCOUNTANTS’ FEES
`AND SERVICES
`Item 16D. EXEMPTIONS FROM THE LISTING
`STANDARDS FOR AUDIT
`COMMITTEES
`Item 16E. PURCHASES OF EQUITY
`SECURITIES BY THE ISSUER AND
`AFFILIATED PURCHASERS
`Item 16F. CHANGE IN REGISTRANT’S
`CERTIFYING ACCOUNTANT
`Item 16G. CORPORATE GOVERNANCE
`Item 16H. MINE SAFETY DISCLOSURE
`
`
`
`3
`
`Item 17.
`Item 18.
`Item 19.
`
`
`PART III
`
`FINANCIAL STATEMENTS
`FINANCIAL STATEMENTS
`EXHIBITS
`
`200
`200
`200
`200
`200
`217
`
`201
`213
`214
`214
`218
`218
`218
`218
`
`219
`
`223
`
`
`229
`
`229
`
`229
`229
`
`230
`230
`
`230
`
`230
`
`231
`
`231
`231
`232
`
`
`233
`233
`233
`233
`
`Page 6 of 360
`
`

`

`
`
`ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
`
`
`
`Part I
`Item 1. Identity of Directors, Senior Management and
`Advisers
`
`N/A
`
`Item 2. Offer Statistics and Expected Timetable
`
`N/A
`
`Item 3. Key Information
`
`A. Selected financial data
`
`Summary of selected financial data
`
`The tables below set forth selected consolidated financial data for
`Sanofi. These financial data are derived from the Sanofi
`consolidated
`financial statements. The Sanofi consolidated
`financial statements for the years ended December 31, 2018,
`2017 and 2016 are included in Item 18 of this annual report.
`
`The consolidated financial statements of Sanofi for the years
`ended December 31, 2018, 2017 and 2016 have been prepared
`in compliance with
`IFRS as
`issued by
`the
`International
`Accounting Standards Board (IASB) and with IFRS as adopted
`by the European Union as of December 31, 2018. The term
`“IFRS” refers collectively to international accounting and financial
`reporting standards (IAS and IFRS) and to interpretations of the
`interpretations committees
`(SIC and
`IFRIC) mandatorily
`applicable as of December 31, 2018.
`
`Sanofi reports its financial results in euros.
`
`SANOFI / FORM 20-F 2018
`
`1
`
`Page 7 of 360
`
`

`

`
`
`ITEM 3. KEY INFORMATION
`
`
`
`Selected condensed financial information
`
`
`
`(€ million, except per share data)
`
`IFRS Income statement data(b)
`Net sales(c)
`
`Gross profit
`
`Operating income
`
`Net income excluding the exchanged/
`held-for-exchange Animal Health business
`
`Net income attributable to equity holders of
`Sanofi
`Basic earnings per share (€)(d):
`Net income excluding the exchanged/
`held-for-exchange Animal Health business
`
`Net income attributable to equity holders of
`Sanofi
`Diluted earnings per share (€)(e):
`Net income attributable to equity holders of
`Sanofi
`IFRS Balance sheet data
`Goodwill and other intangible assets
`
`Total assets
`
`Outstanding share capital
`
`Equity attributable to equity holders of Sanofi
`
`Long term debt
`
`Cash dividend paid per share (€)(g)
`
`Cash dividend paid per share ($)(g) / (i)
`
`2018
`
`34,463
`
`24,242
`
`4,676
`
`4,423
`
`4,306
`
`
`3.46
`
`3.45
`
`
`3.43
`
`66,124
`
`111,408
`
`2,491
`
`58,876
`
`22,007
`
`As of and for the year ended December 31,
`2017(a)
`2016(a)
`2015
`
`
`
`35,072
`33,809
`34,060
`
`24,608
`
`5,804
`
`23,995
`
`6,531
`
`23,942
`
`5,624
`
`3,894
`
`8,416
`
`
`3.00
`
`6.70
`
`
`6.64
`
`53,344(f)
`
`99,813
`
`2,508
`
`58,070
`
`4,486
`
`4,709
`
`
`3.42
`
`3.66
`
`
`4,512
`
`4,287
`
`
`3.38
`
`3.28
`
`
`3.63
`
`51,166(f)
`
`104,679
`
`2,544
`
`57,552
`
`3.25
`
`51,583(f)
`
`102,321
`
`2,603
`
`58,049
`
`14,326(f)
`
`16,815(f)
`
`13,118(f)
`
`3.07(h)
`
`3.52(h)
`
`3.03
`
`3.63
`
`2.96
`
`3.12
`
`2.93
`
`3.19
`
`2014
`
`31,380
`
`21,769
`
`6,064
`
`4,392
`
`4,390
`
`
`3.25
`
`3.34
`
`
`3.30
`
`53,740
`
`97,392
`
`2,620
`
`56,120
`
`13,276
`
`2.85
`
`3.46
`
`(a) Includes the effects of the first-time application of IFRS 15 on revenue recognition, effective January 1,2018.
`(b) The results of the Animal Health business, and the gain on the divestment of that business, are presented separately in accordance with IFRS 5
`(Non-Current Assets Held for Sale and Discontinued Operations), see Notes D.2. and D.36. to our consolidated financial statements.
`(c) Following a change in accounting presentation in 2016, VaxServe sales of non-Sanofi products are included in Other revenues. The presentation of prior
`period Net sales and Other revenues has been amended accordingly (see note B.13. to our consolidated financial statements).
`(d) Based on the weighted average number of shares outstanding in each period used to compute basic earnings per share, equal to 1,247.1 million shares in
`2018, 1,256.9 million shares in 2017, 1,286.6 million shares in 2016, 1,306.2 million shares in 2015, and 1,315.8 million shares in 2014.
`(e) Based on the weighted average in each period of the number of shares outstanding plus stock options and restricted shares with a potentially dilutive
`effect:1,255.2 million shares in 2018, 1,266.8 million shares in 2017, 1,296.0 million shares in 2016, 1,320.7 million shares in 2015, and 1,331.1 million
`shares in 2014.
`(f) As reported, excluding the Animal Health business presented in the line items, Assets held for sale or exchange and Liabilities related to assets held
`for sale or exchange as of December 31, 2015, December 31, 2016 and December 31, 2017.
`(g) Each American Depositary Share, or ADS, represents one half of one share.
`(h) Dividends for 2018 will be proposed for approval at the annual general meeting scheduled for April 30, 2019.
`(i) Based on the relevant year-end exchange rate.
`
`2
`
`SANOFI / FORM 20-F 2018
`
`Page 8 of 360
`
`

`

`
`
`ITEM 3. KEY INFORMATION
`
`
`
`Selected exchange rate information
`
`The following table sets forth, for the periods and dates indicated,
`certain information concerning the exchange rates for the euro
`from 2014 through March 2019 expressed in US dollars per euro.
`The information concerning the US dollar exchange rate is based
`on the noon buying rate in New York City for cable transfers in
`foreign currencies as certified for customs purposes by the
`
`Federal Reserve Bank of New York (the “Noon Buying Rate”).
`We provide
`the exchange
`rates below solely
`for your
`convenience. We do not represent that euros were, could have
`been, or could be, converted into US dollars at these rates or at
`any other rate. For information regarding the effect of currency
`fluctuations on our results of operations, see “Item 5. Operating
`and Financial Review and Prospects” and “Item 11. Quantitative
`and Qualitative Disclosures about Market Risk.”
`
`(U.S. dollar per euro)
`
`2014
`
`2015
`
`2016
`
`2017
`
`2018
`
`Last 6 months
`
`2018
`
`September
`
`October
`
`November
`
`December
`
`2019
`
`January
`
`February
`
`March(b)
`
`Period-
`end Rate
`1.21
`
`Average
`Rate(a)
`1.32
`
`1.09
`
`1.06
`
`1.20
`
`1.15
`
`
`
`
`
`1.16
`
`1.13
`
`1.13
`
`1.15
`
`
`
`1.15
`
`1.13
`
`1.13
`
`1.10
`
`1.10
`
`1.14
`
`1.18
`
`
`
`
`
`1.17
`
`1.15
`
`1.14
`
`1.14
`
`
`
`1.14
`
`1.14
`
`1.13
`
`High
`1.39
`
`1.20
`
`1.15
`
`1.20
`
`1.25
`
`
`
`
`
`1.18
`
`1.16
`
`1.15
`
`1.15
`
`
`
`1.15
`
`1.15
`
`1.14
`
`Low
`1.21
`
`1.05
`
`1.04
`
`1.04
`
`1.13
`
`
`
`
`
`1.16
`
`1.13
`
`1.13
`
`1.13
`
`
`
`1.13
`
`1.13
`
`1.13
`
`(a) The average of the Noon Buying Rates on the last business day of each month during the relevant period for the full year average, and on each business
`day of the month for the monthly average. The latest available Noon Buying Rate being March 1, 2019, we have used European Central Bank Rates for
`the period from March 4, 2019 through March 7, 2019.
`(b) In each case, measured through March 7, 2019.
`
`On March 7, 2019 the European Central Bank Rate was 1.13 per euro.
`
`B. Capitalization and indebtedness
`N/A
`
`C. Reasons for offer and use of proceeds
`N/A
`
`SANOFI / FORM 20-F 2018
`
`3
`
`Page 9 of 360
`
`

`

`
`
`ITEM 3. KEY INFORMATION
`
`
`
`D. Risk factors
`
`Important factors that could cause actual financial, business,
`research or operating
`results
`to differ materially
`from
`expectations are disclosed in this annual report, including without
`limitation the following risk factors. Investors should carefully
`consider all the information set forth in the following risk factors
`before deciding to invest in any of the Company’s securities. In
`addition to the risks listed below, we may be subject to other
`material risks that as of the date of this report are not currently
`known to us or that we deem immaterial at this time.
`
`Risks relating to legal and regulatory matters
`We rely on our patents and other proprietary rights to
`provide exclusive rights to market certain of our
`products, and if such patents and other rights were
`limited, invalidated or circumvented, our financial results
`could be materially and adversely affected.
`
`Through patent and other proprietary rights such as data
`exclusivity or supplementary protection certificates in Europe, we
`hold exclusivity rights for a number of our research-based
`products. However, the protection that we are able to obtain
`varies in its duration and scope from product to product and
`country by country. This protection may not be sufficient to
`maintain effective product exclusivity because of local differences
`in the patents, in national laws, applicable legal systems or
`developments in law or jurisprudence, which may give rise to
`inconsistent judgments when we assert or defend our patents.
`
`Moreover, patent and other proprietary rights do not always
`provide effective protection for our products. Manufacturers of
`generic products or biosimilars are increasingly seeking to
`challenge patent validity or coverage before the patents expire,
`and manufacturers of biosimilars or interchangeable versions of
`the products are seeking to have their version of the product
`approved before the exclusivity period ends. Furthermore, in an
`infringement suit against a third-party, we may not prevail and the
`decision rendered may not conclude that our patent or other
`proprietary rights are valid, enforceable or
`infringed. Our
`competitors may also successfully avoid patents, for example
`through design innovation, and we may not hold sufficient
`evidence of infringement to bring suit.
`
`We are involved in litigation worldwide to enforce certain of our
`patent rights against generics, proposed generics and biosimilars
`of our small molecule and biological pharmaceutical products
`(see “Item 8. Financial Information – A. Consolidated Financial
`Statements and Other Financial Information – Information on
`Legal or Arbitration Proceedings” for additional information).
`Even in cases where we ultimately prevail in an infringement
`claim, legal remedies available for harm caused to us by
`infringing products may be inadequate to make us whole. A
`competitor may launch a generic or a biosimilar product “at risk”
`before the initiation or completion of the court proceedings, and
`the court may decline to grant us a preliminary injunction to halt
`
`4
`
`SANOFI / FORM 20-F 2018
`
`further “at risk” sales and order removal of the infringing product
`from the market. Additionally, while we would be entitled to obtain
`damages in such a case, the amount that we may ultimately be
`awarded and able to collect may be insufficient to compensate all
`harm caused to us. A successful result against a competing
`product for a given patent or in a specific country is not
`necessarily predictive of our future success against another
`competing product or in another country because of local
`variations in the patents and patent laws.
`
`In addition, if we lose patent protection as a result of an adverse
`court decision or a settlement, we face the risk that government
`and private third-party payers and purchasers of pharmaceutical
`products may claim damages alleging they have over-reimbursed
`or overpaid for a drug. For example, in Australia, our patent on
`clopidogrel was ultimately held invalid. Following this decision,
`the Australian Government is seeking damages for its alleged
`over-reimbursement of clopidogrel drugs due to the preliminary
`injunction we had secured against the sale of generic clopidogrel
`during the course of the litigation.
`
`In certain cases to terminate or avoid patent litigation, we or our
`collaborators may be required to obtain licenses from the holders
`of third-party intellectual property rights that already cover
`aspects of our existing and
`future products
`in order
`to
`manufacture, use and/or sell them. Any payments under these
`licenses may reduce our profits from such products and we may
`not be able to obtain these licenses on favorable terms or at all.
`
`Third parties may also request a preliminary or a permanent
`injunction in a country from a court of law to prevent us from
`marketing a product if they consider that we infringe their patent
`rights in that country. For example, Sanofi is currently party to
`patent infringement proceedings in several countries initiated
`against us and Regeneron by Amgen relating to Praluent® in
`which Amgen has requested injunctive relief (see Note D.22.b) to
`the consolidated financial statements included at Item 18 of this
`annual report for more information). If third parties obtain a
`preliminary or permanent injunction or if we fail to obtain a
`required license for a country where a valid third-party intellectual
`property rights as confirmed by a court of law exist, or if we are
`unable to alter the design of our technology to fall outside the
`scope of third-party intellectual property rights, we may be unable
`to market some of our products in certain countries, which may
`limit our profitability.
`
`Also, some countries may consider granting a compulsory
`license to a third-party to use patents protecting an innovator’s
`product, which limits the value of the patent protection granted to
`such products.
`
`We have increased the proportion of biological therapeutics in
`our pipeline relative to traditional small molecule pharmaceutical
`products. Typically, the development, manufacture, sale and
`distribution of biological therapeutics is complicated by third-party
`intellectual property rights (otherwise known as freedom to
`operate (FTO)
`issues),
`to a greater extent
`than
`for
`the
`development, manufacture, sale and distribution of small
`molecule therapeutics, because of the types of patents allowed
`
`Page 10 of 360
`
`

`

`
`
`by national patent offices. Further, our ability to successfully
`challenge third-party patent rights is dependent on the laws of
`national courts. Certain countries have laws that provide stronger
`bases for challenging third-party patent rights compared to the
`laws that are available to challenge patents in other countries.
`Therefore, we may be able to invalidate a certain third-party
`patent in one country but not invalidate counterpart patents in
`other countries. In addition, we expect to face increasing
`competition from biosimilars in the future. With the accelerated
`regulatory pathways provided in the US and Europe for biosimilar
`drug approval, biosimilars can be a threat to the exclusivity of any
`biological therapeutics we sell or may market in the future and
`can pose the same issues as the small molecule generic threat
`described above. Governments may adopt more permissive
`approval frameworks (for example, shortening the duration of
`data exclusivity, or narrowing the scope of new products
`receiving data exclusivity) which could allow competitors to
`obtain broader marketing approval for biosimilars including as a
`substitutable product, increasing competition for our products
`(see also “– Changes in the laws or regulations that apply to us
`could affect our business, results of operations and financial
`condition” below). If a biosimilar version of one of our products
`were to be approved, it could reduce our sales and/or profitability
`of that product.
`
`However, through our presence as a manufacturer of generics
`and biosimilars, we will also utilize patent challenge strategies
`against other innovators’ patents similar to those of long-
`established generic companies, though there is no assurance
`that these strategies will be successful.
`
`If our patents and/or proprietary rights to our products were
`limited or circumvented, our financial results could be materially
`and adversely affected.
`
`liability claims could adversely affect our
`Product
`business, results of operations and financial condition.
`
`Product liability is a significant risk for any pharmaceutical
`company and our product liability exposure could increase given
`that liability claims relating to our businesses may differ with
`regard to their nature, scope and level from the types of product
`liability claims that we have handled in the past. Substantial
`damages have been awarded and/or settlements agreed –
`notably in the United States and other common law jurisdictions –
`against pharmaceutical companies based on claims for injuries
`allegedly caused by the use of their products. Such claims can
`also be accompanied by consumer fraud claims by customers or
`third-party payers seeking reimbursement of
`the cost of
`the product.
`
`We are currently defending a number of product liability claims
`(see Note D.22.a) to the consolidated financial statements
`included at Item 18 of this annual report) and there can be no
`assurance that the Company will be successful in defending
`against these claims or will not face additional claims in
`the future.
`
`ITEM 3. KEY INFORMATION
`
`
`
`Often establishing the full side effect profile of a pharmaceutical
`drug goes beyond data derived from preapproval clinical studies
`which may only involve several hundred to several thousand
`patients. Routine review and analysis of th