Document 2. HALF-YEAR MANAGEMENT REPORT A SIGNIFICANT EVENTS OF THE FIRST HALF OF 2020 A.1. FIRST-HALF OVERVIEW In the first half of 2020, and since the onset of the pandemic, Sanofi has played a leading role in the figh

In the first half of 2020, and since the onset of the pandemic, Sanofi has played a leading role in the fight against COVID-19 on multiple fronts

On February 18, 2020, Sanofi announced that it would leverage previous development work for a vaccine against severe acute respiratory syndrome (SARS) to attempt to unlock a fast path forward for developing a COVID-19 vaccine. Sanofi is collaborating with BARDA (the US Biomedical Advanced Research and Development Authority), part of the Office of the Assistant Secretary for Preparedness and Response within the US Department of Health and Human Services, expanding Sanofi's long-standing partnership with BARDA.

On March 27, 2020, Sanofi and Translate Bio, a clinical-stage messenger RNA (mRNA) therapeutics company, announced a collaboration to develop a novel mRNA vaccine for the virus responsible for COVID-19. This collaboration leverages an existing agreement from 2018 between the two companies to develop mRNA vaccines for infectious diseases. Translate Bio has begun to produce multiple mRNA constructs and will use its mRNA platform to discover, design, and manufacture a number of SARS-CoV-2 vaccine candidates. Sanofi will provide deep vaccine expertise and support from its external research networks to advance identified vaccine candidates for potential further development.

On April 14, 2020, Sanofi and GSK announced that they had signed a letter of intent to develop an adjuvanted vaccine for COVID 19, using innovative technology from both companies to help address the pandemic. Sanofi is contributing its S protein COVID-19 antigen, which is based on recombinant DNA technology. This technology has produced an exact genetic match to proteins found on the surface of the virus, and the DNA sequence encoding this antigen has been combined into the DNA of the baculovirus expression platform, the basis of Sanofi's licensed recombinant influenza product in the United States. GSK will contribute its proven pandemic adjuvant technology. The use of an adjuvant can be of particular importance in a pandemic situation since it may reduce the amount of vaccine protein required per dose, allowing more vaccine doses to be produced and thereby helping to protect more people.

On April 16, 2020, Sanofi and Luminostics signed an agreement to evaluate a collaboration on a unique self-testing solution for COVID-19 using Luminostics' innovative technology. Luminostics is contributing its proprietary consumer-diagnostics technology for COVID-19 testing, while Sanofi is bringing its clinical research testing experience and capabilities. The goal is to provide a smartphone-based solution that eliminates the need for healthcare professional administration or laboratory tests.

Also in the first half of 2020, Sanofi continued to implement its new "Play to Win" strategy, involving major decisions and positive actions that will support and rebuild the competitive margins necessary for Sanofi to continue to deliver on its mission. The strategy is based on four major priorities focus on growth, lead with innovation, accelerate efficiency, and reinvent how we work.

On January 23, 2020, Sanofi completed the acquisition of Synthorx, Inc., a clinical-stage biotechnology company focused on prolonging and improving the lives of people suffering from cancer and autoimmune disorders, for $68 per share in cash, representing an aggregate equity value of approximately $2.5 billion (on a fully diluted basis).

On February 24, 2020, Sanofi announced its ambition to create a leading European company dedicated to the production and marketing to third parties of active pharmaceutical ingredients (API), the essential molecules responsible for the beneficial effects used in the composition of any drug. The project involves creating a new standalone company combining Sanofi's API commercial and development activities with six of its European API production sites Brindisi (Italy), Frankfurt Chemistry (Germany), Haverhill (UK), St Aubin les Elbeuf (France), jpest (Hungary), and Vertolaye (France). With increasing medicine shortages that critically impact patient care, the new entity will contribute to securing API manufacturing and supply capacity for Europe and beyond. The new entity is expected to rank as the world's second-largest API company, with approximately 1 billion of sales expected by 2022 and 3,100 employees it is to be headquartered in France. An initial public offering on Euronext Paris is being evaluated with a decision expected by 2022, subject to market conditions. Sanofi is fully committed to the long-term success of the new entity, in which it intends to retain a minority stake of approximately 30%. To provide optimal conditions for success, Sanofi intends the new company to be debt free in order to maximize its future investment capacities, and is committed to remaining an important customer of the new entity.

On February 28, 2020, the Sanofi subsidiary Aventis Inc. acquired from Bristol-Myers Squibb Investco LLC., E.R. Squibb Sons LLC and Bristol-Myers Squibb Puerto Rico, Inc. (all subsidiaries of BMS) their respective equity interests in the three partnerships that organize the commercialization of Plavix in the United States and Puerto Rico. As a result of those transactions, Sanofi obtained sole control and freedom to operate commercially with respect to Plavix in the United States and Puerto Rico. As from March 2020, Sanofi recognizes in its consolidated financial statements the revenues and expenses generated by its own operations in the two territories.

On April 6, 2020, Sanofi announced that it had finalized the planned restructuring related to Praluent (alirocumab) with Regeneron Pharmaceuticals, Inc. ("Regeneron"). Effective April 1, 2020, Sanofi has sole responsibility for Praluent outside the United States, while Regeneron has sole responsibility for Praluent in the United States. The restructuring simplifies the antibody collaboration between the companies, increases efficiency, and streamlines operations for Praluent . Although each company has responsibility

for supplying Praluent in its respective territory, the companies have entered into agreements to support manufacturing needs in the near term. Sanofi had previously announced its intention to restructure the antibody collaboration on Praluent and Kevzara (sarilumab) in December 2019.

On May 29, 2020, Sanofi announced the closing of its sale of 13 million shares of Regeneron common stock through a registered offering at a price of $515 per share. This included a previously-announced overallotment option, which was fully exercised by the underwriters. In addition, Sanofi announced the completion of Regeneron's repurchase of 9.8 million shares or approximately $5 billion in common stock directly from Sanofi. As a result of the offering, Sanofi has sold its entire equity investment in Regeneron (except for 400,000 Regeneron shares retained by Sanofi to support its ongoing collaboration with Regeneron) for total gross proceeds of $11.7 billion. Consequently, Sanofi's equity interest in Regeneron ceased to be accounted for by the equity method. The registered offering and share repurchase will not affect the ongoing collaboration between Sanofi and Regeneron the two companies have had a successful and long-standing clinical and commercial collaboration dating back to 2003 that has resulted in five approved treatments to date, with additional candidates currently in clinical development.

On June 16, 2020, Sanofi announced that it is investing in France to increase its vaccine research and production capacities, and to respond to future pandemic risks. In line with the corporate strategy presented in December 2019, Sanofi is investing 610 million to create a new flexible, digitalized production site and a research center in France, both dedicated to vaccines. Sanofi's investment in vaccine production in France involves the creation of an Evolutive Vaccine Facility (EVF) in Neuville sur Sa ne. This state-of-the-art industrial site will use the latest innovative vaccine production technologies. The project represents an investment of 490 million over a five-year period, and is expected to create 200 new jobs. Building this plant will enable Sanofi Pasteur, Sanofi's global vaccines entity, to be the first pharmaceutical manufacturer to benefit from such a facility, and will help secure vaccine supplies in France and the rest of Europe in the event of new pandemics. Sanofi is also investing 120 million to create a new R D center in France, on the Sanofi Pasteur site at Marcy-l'Etoile. This state-of-the-art digital facility will house biosecurity level 3 (BSL 3) laboratories for the development of vaccines against emerging diseases and pandemic risks, and aims to set a global standard for pre-clinical research and pharmaceutical and clinical development.

On June 23, 2020, Sanofi Pasteur and Translate Bio announced they had expanded their existing 2018 collaboration and license agreement to develop mRNA vaccines for infectious diseases. Under the terms of the expanded agreement, Translate Bio receive a total upfront payment of $425 million, consisting of a $300 million cash payment and a private placement equity investment of $125 million at $25.59 per share, representing a 50% premium to the 20-day moving average share price prior to signing. Translate Bio will also be eligible for potential future milestones and other payments of up to $1.9 billion, including $450 million of milestones under the 2018 agreement. Of those potential milestones and other payments, approximately $360 million are anticipated over the next several years, inclusive of COVID-19 vaccine development milestones (under the collaboration announced on March 27, 2020 as described above). Translate Bio is also eligible to receive tiered royalty payments based upon worldwide sales of the developed vaccines. Sanofi Pasteur will pay for all costs during the collaboration term. Under this agreement Sanofi Pasteur will receive exclusive worldwide rights for infectious disease vaccines.

Net sales for the first half of 2020 amounted to 17,180 million, 0.9% higher than in the first half of 2019. At constant exchange rates (CER)1, net sales rose by 1.6%, mainly reflecting good performances for Dupixent and the Specialty Care GBU generally, which more than offset a decrease in net sales for the General Medicines GBU (and more specifically, lower sales for Plavix and Aprovel family products in China, Lantus in the United States, and Lovenox in Europe). Net sales for the Vaccines segment were down year-on-year, due largely to reduced sales of travel vaccines due to Covid-19-related travel restrictions. Sales of Consumer Healthcare products also decreased, reflecting in particular the recall of Zantac in the United States and Canada.

Net income attributable to equity holders of Sanofi amounted to 9,281 million, versus 1,050 million in the first half of 2019, mainly reflecting the gain on the divestment of Sanofi's equity investment in Regeneron ( 7,382 million) following the transaction of May 29, 2020 (see Note B.1. to the condensed half-year consolidated financial statements). Earnings per share was 7.41, versus 0.84 for the first half of 2019. Business net income2 was 3,521 million, up 8.7% on the first half of 2019, while business earnings per share (business EPS3) was 8.1% higher than in the first half of 2019 at 2.81.

1 Non-GAAP financial measure see definition in C.3., "Net sales".

2 Non-GAAP financial measure see definition in C.2., "Business net income".

Highlights of Sanofi's research and development efforts in the first half of 2020 in the Pharmaceuticals segment included the launch of Phase III trials of venglustat (GZ402671), an orally administered glucosylceramide synthase (GCS) inhibitor, in the treatment of GM2 gangliosidoses of Sarclisa (isatuximab-irfc) in the treatment of indolent multiple myeloma and of SAR442168, a BTK inhibitor, in the treatment of remitting-relapsing multiple sclerosis.

Sanofi obtained regulatory marketing approval for a number of products in the first half of 2020. The US Food and Drug Administration (FDA) approved Sarclisa (isatuximab-irfc) in combination with pomalidomide and dexamethasone (pom-dex) for the treatment of adults with relapsed or refractory multiple myeloma (RRMM). The European Commission and the Japanese healthcare authorities (PDMA) also approved Sarclisa (isatuximab) for the treatment of adults with RRMM. The FDA approved Dupixent in the treatment of moderate to severe atopic dermatitis in children aged 6 to 11 years. The Chinese National Medical Products Administration (NMPA) approved Dupixent (dupilumab) in the treatment of adults with moderate to severe atopic dermatitis not controlled by medically-prescribed topical treatments, or for whom such treatments are contra-indicated. The NMPA identified Dupixent as a foreign drug for which China has an urgent need in clinical practice, accelerating the evaluation and approval process. Dupixent was also approved by the PDMA in Japan for nasal polyps. In China, the NPMA approved Aldurazyme for the treatment of mucopolysaccharidosis type 1. Soliqua was approved by the PDMA in Japan for the treatment of type 2 diabetes. The FDA approved a Biologics License Application (BLA) for MenQuadfiTM, a conjugate meningococcal vaccine to prevent invasive meningococcal infections (serogroups A, C, W and Y) from age 2 onwards. Finally, Fluzone QIV HD, an inactivated quadrivalent influenza vaccine, was approved by the European Commission..

For an update on our research and development pipeline, refer to Section F of this half-year management report.

The Annual General Meeting of Sanofi shareholders was held on April 28, 2020 behind closed doors, in accordance with exceptional measures implemented by the French authorities to adapt the rules for holding shareholder meetings in light of the COVID-19 crisis. The meeting, chaired by Serge Weinberg, took place at Sanofi's Paris headquarters. All the resolutions put to the vote were passed except for the 19th resolution on the compensation awarded in respect of the 2019 financial year to Olivier Brandicourt, the former Chief Executive Officer, who left office on August 31, 2019. Sanofi's Board of Directors met immediately after the shareholder meeting. The Annual General Meeting approved the individual company financial statements and the consolidated financial statements for the year ended December 31, 2019 it also approved the distribution of a cash dividend of 3.15 per share, paid on May 6, 2020. The meeting approved the reappointment of Laurent Attal, Carole Piwnica, Diane Souza and Thomas S dhof as directors ratified the co-opting of Paul Hudson as a director and approved the appointment of Rachel Duan and Lise Kingo as independent directors to replace Suet-Fern Lee and Claudie Haigner . Following the Annual General Meeting, the Board of Directors still has 16 members, six of whom are women and two of whom are employee representatives. The Board retains a substantial majority of independent directors.

A Board meeting held on May 22, 2020 noted the resignation of Emmanuel Babeau and decided, on advice from the Appointments, Governance and CSR Committee, to co-opt Gilles Schnepp to serve as an independent director for the remaining term of office of Emmanuel Babeau (i.e. until the end of the Annual General Meeting held in 2022 to approve the financial statements for the year ended December 31, 2021). The appointment of Gilles Schnepp will be submitted for ratification at the next Annual General Meeting of Sanofi shareholders on April 28, 2021. Gilles Schnepp was also appointed as a member of the Audit Committee.

On May 29, 2020, Sanofi appointed four new members to its Executive Committee, building on previous organizational changes to put in place a streamlined executive leadership team. The full Executive Committee team now includes the four heads of Sanofi's global business units (Specialty Care, General Medicines, Sanofi Pasteur, and Consumer Healthcare) as well as the global Heads of Research and Development, Industrial Affairs, Finance, Human Resources, Legal and Digital.

Natalie Bickford will take up the post of Executive Vice President, Chief People Officer on August 1, 2020. She joins Sanofi from Merlin Entertainments, the world's second largest location-based entertainment business (which includes brands like Legoland Resorts, Madame Tussaud's and Sealife Aquariums). At Merlin, she was responsible for 30,000 employees across Europe, North America, and Asia Pacific. Natalie Bickford brings a wealth of consumer-facing experience. She held previous Human Resources leadership positions at Sodexo, AstraZeneca, and Kingfisher, and has consistently demonstrated a passion for engaging teams and driving change in behaviors and culture. She also has a solid track record of transforming organizations, with a strong focus on inclusion and diversity.

Arnaud Robert, previously Chief Digital Officer (CDO) at cruise operator Viking Cruises, joined Sanofi as Executive Vice President, CDO on June 15, 2020, and will drive Sanofi's digital, data and technology strategy. As a newcomer to the pharmaceuticals sector, Arnaud Robert brings a strong background in consumer and omni-channel strategies, plus expertise in platforms, technology, big data, and user experience. He has held previous leadership positions at The Walt Disney Company and Nike, where he devised and launched the Apple Watch l Nike+ digital community.

Julie Van Ongevalle will join Sanofi on September 1, 2020, succeeding Alan Main as Executive Vice President, Head of Consumer Healthcare. She is currently Global Brand President of Origins, a division of the Est e Lauder Companies, based in New York City. With more than 20 years of international experience, Julie Van Ongevalle has a strong track record in building

brands, from identifying accelerated growth opportunities to devising and delivering sustainable, profitable growth strategies. Her deep knowledge of consumers and digital will be essential as Sanofi builds an agile, stand-alone Consumer Healthcare business.

Thomas Triomphe, previously Head of Franchises and Product Strategy at Sanofi Pasteur, was promoted to Executive Vice President, Head of Sanofi Pasteur, on June 15, 2020, replacing David Loew who has left to take the helm at another company. Thomas Triomphe joined Sanofi Pasteur in 2004 as part of a talent management program and has since held roles of increasing responsibility in sales and marketing at country, regional and global levels.

For a description of the most significant developments in legal and arbitration proceedings since publication of the financial statements for the year ended December 31, 2019, refer to Note B.14. to the condensed half-year consolidated financial statements.

The following events have occurred in respect of litigation, arbitration and other legal proceedings in which Sanofi and its affiliates are involved

Lantus Mylan Patent Litigation (United States)

In March 2020, the New Jersey District Court issued a ruling in Mylan Biocon's favor finding the asserted claims of U.S. Patent No. 9,526,844 invalid and not infringed by Mylan's pen product. Sanofi intends to appeal. The 30-month stay is no longer in place for either Mylan's pen or vial products.

In June 2020, Sanofi filed a petition seeking review by the U.S. Supreme Court of the invalidity decisions for U.S. Patent Nos. 7,476,652 and 7,713,930. The New Jersey District Court proceedings are currently suspended pending Supreme Court review.

Regarding the ongoing Patent Trial and Appeal Board (PTAB) proceedings brought by Mylan and or Pfizer Inc. challenging the validity of certain claims of U.S. Patent Nos. 8,603,044, 8,679,069, 8,992,486, 9,526,844, and 9,604,008, in April and May 2020, the PTAB issued nine written decisions concerning validity, finding two claims of U.S. Patent No. 9,604,008 valid and the remainder of the challenged claims invalid. Sanofi has appealed the April 2020 and May 2020 PTAB decisions.

Regarding the ongoing PTAB proceedings brought by Mylan challenging the validity of the claims of U.S. Patent No. RE47,614, the PTAB decided to move forward with one of these two IPRs in April 2020. A written decision on the validity of this patent is expected in April 2021.

On March 31, 2020, two putative class actions on behalf of direct purchasers of insulin (Rochester Drug Co-Operative, Inc. and FWK Holdings, LLC) were filed in the New Jersey Federal Court against Sanofi U.S., asserting claims under the RICO Act and various state and federal laws. A third action was filed by another direct purchaser (Value Drug Co.) on April 27, 2020, and a motion to consolidate the three lawsuits is pending.

On March 24, 2020, Sanofi announced that it had successfully placed a 1.5 billion bond issue in two tranches. On April 6, 2020, Sanofi carried out a 500 million tap issue on two outstanding bond tranches.

Those issues were carried out under the Euro Medium Term Note program, and enable Sanofi to reduce the average cost and extend the average maturity of its debt. The proceeds of the issue have been allocated for general corporate purposes.

On June 8, 2020, Sanofi launched "Action 2020", a global employee stock ownership plan, across nearly 75 countries. Sanofi sees its employees as crucial to value creation, and issuing shares gives them a greater stake in the company's future growth and results. The plan stems from a decision by the Sanofi Board of Directors on February 5, 2020 to issue ordinary shares to employees belonging to the Group savings plan. The subscription price was 70.67, corresponding to 80% of the average opening price of Sanofi shares quoted on Euronext Paris for the 20 trading days preceding June 2, 2020. For each tranche of five shares applied for, the applicant received one additional new share by way of employer's contribution and for each application for 20 or more shares, the applicant received an additional four new shares by way of employer's contribution. Employees could subscribe for no more than 1,500 shares, subject to a cap set at 25% of their annual gross compensation. The issue is due to be completed and the shares delivered by the end of July 2020. The maximum number of Sanofi shares that can be issued under the plan is 6,269,231 (representing a maximum capital increase of 12,538,461 in nominal value, i.e. 0.5% of the share capital).

Early July, 2020, Sanofi entered into an exclusive license agreement with Kiadis Pharma N.V., a clinical-stage biopharmaceutical company developing natural killer (NK) cell therapies for patients with life-threatening diseases, for Kiadis' previously undisclosed K-NK004 program. The agreement covers Kiadis' proprietary CD38 knock out (CD38KO) K-NK therapeutic for combination with anti-CD38 monoclonal antibodies including Sarclisa , Sanofi's recently approved therapy for patients with multiple myeloma. Sanofi also obtained exclusive rights to use Kiadis' K-NK platform for two undisclosed pre-clinical programs. As part of the agreement, Kiadis will receive a 17.5 million upfront payment and will be entitled to receive up to 857.5 million upon Sanofi attaining preclinical, clinical, regulatory and commercial milestones. Kiadis will also receive double-digit royalties based on commercial sales of approved products resulting from the agreement.

Early July, 2020, Sanofi and Kymera Therapeutics Inc. signed a multi-program strategic collaboration agreement to develop and commercialize first-in-class protein degrader therapies targeting IRAK4 in patients with immune-inflammatory diseases. The companies will also partner on a second earlier stage program. Kymera will receive $150 million in cash upfront and may receive more than $2 billion in potential milestones, as well as royalty payments. Kymera retains the option to participate in US development and commercialization for both programs subject to its having an equal share in the costs, profits and losses, and to co-promote partnered products in the US.

Unless otherwise indicated, all financial data in this report are presented in accordance with international financial reporting standards (IFRS), including international accounting standards and interpretations (see Note A.1. to the condensed half-year consolidated financial statements).

Consolidated income statements for the six months ended June 30, 2019 and June 30, 2020

In accordance with IFRS 8 (Operating Segments), the segment information reported by Sanofi is prepared on the basis of internal management data provided to our Chief Executive Officer, who is the chief operating decision maker of Sanofi. The performance of those segments is monitored individually using internal reports and common indicators. The operating segment disclosures required under IFRS 8 are provided in Note B.20. to the condensed half-year consolidated financial statements.

Sanofi has three operating segments Pharmaceuticals, Vaccines, and Consumer Healthcare.

The Pharmaceuticals segment comprises the commercial operations of the following global franchises Specialty Care (Dupixent , Multiple Sclerosis, Neurology, Other Inflammatory Diseases Immunology, Rare Diseases, Oncology, and Rare Blood Disorders) and General Medicines (Diabetes, Cardiovascular, and Established Prescription Products), together with research, development and production activities dedicated to the Pharmaceuticals segment. This segment also includes associates whose activities are related to pharmaceuticals. Following the transaction of May 29, 2020, Regeneron is no longer an associate of Sanofi (see Note B.1. to our condensed half-year consolidated financial statements). Consequently, the Pharmaceuticals segment no longer includes Sanofi's equity-accounted share of Regeneron's profits for all the periods presented in this section.

The Vaccines segment comprises, for all geographical territories, the commercial operations of Sanofi Pasteur, together with research, development and production activities dedicated to vaccines.

The Consumer Healthcare segment comprises, for all geographical territories, the commercial operations for Sanofi's Consumer Healthcare products, together with research, development and production activities dedicated to those products.

Inter-segment transactions are not material.

The costs of Sanofi's global support functions (External Affairs, Finance, Human Resources, Legal Affairs, Information Solutions Technologies, Sanofi Business Services, etc.) are mainly managed centrally at group-wide level. The costs of those functions are presented within the "Other" category. That category also includes other reconciling items such as retained commitments in respect of divested activities.

In 2020, Sanofi adopted a new management reporting structure. This resulted in cost reallocations between the Pharmaceuticals, Consumer Healthcare, Vaccines segments and the "Other" category, and product reallocations (mainly between Pharmaceuticals and Consumer Healthcare). Expenses relating to Medical Affairs, allocated to the "Other" category in the old management reporting structure, were reallocated to the Pharmaceuticals segment.

We report segment results on the basis of "Business operating income". This indicator is used internally by Sanofi's chief operating decision maker to measure the performance of each operating segment and to allocate resources. For a definition of "Business operating income", and a reconciliation between that indicator and Income before tax and investments accounted for using the equity method, refer to Note B.20.1.2. to our condensed half-year consolidated financial statements.

Following the transaction of May 29, 2020, Regeneron is no longer an associate of Sanofi (see Note B.1. to our condensed half-year consolidated financial statements). Consequently, the definition of the "Business operating income" indicator has been adjusted, and no longer includes Sanofi's share of the net income of Regeneron. This means that the Share of profit (loss) from investments accounted for using the equity method line in the table reconciling Operating income (as shown in the income statement) to "Business operating income" no longer includes the equity-accounted share of profits from Regeneron. The comparatives presented for 2019 have been restated to reflect that adjustment. In addition, the gain arising on the divestment of the equity investment in Regeneron is not included in "Business operating income", with the exception of the gain on the remeasurement of the 400,000 retained shares at market value at the transaction date.

In addition, with effect from January 1, 2020 "Business operating income" includes depreciation charged against right-of-use assets recognized under IFRS 16 (Leases), applicable since January 1, 2019, and excludes rental expenses previously recognized under IAS 17. In the interests of consistency, business operating income and business operating income margin for comparative periods of 2019 presented have been restated to include the effects of IFRS 16, and of certain expenses and income presented differently for segment reporting purposes to align on Sanofi's new 2020 management reporting structure (see C.1.1, "Operating Segments", above).

In the first half of 2020, "Business operating income" amounted to 4,683 million (versus 4,306 million for the first half of 2019), while "Business operating income margin" was 27.3% (versus 25.3% for the first half of 2019). "Business operating income margin" is a non-GAAP financial measure that we define as the ratio of "Business net income" to our consolidated net sales.

Because our business operating income and business operating income margin are not standardized measures, they may not be directly comparable with the non-GAAP financial measures of other companies using the same or similar non-GAAP financial measures. Despite the use of non-GAAP measures by management in setting goals and measuring performance, these are non-GAAP measures that have no standardized meaning prescribed by IFRS.

We believe that understanding of our operational performance by our management and our investors is enhanced by reporting "Business net income". This non-GAAP financial measure represents "Business operating income", less net financial expenses and the relevant income tax effects.

On May 29, 2020, Sanofi sold its entire equity investment in Regeneron (except for 400,000 Regeneron shares retained by Sanofi) for gross sale proceeds of $11.7 billion (see Note B.1. to our condensed half-year consolidated financial statements). As a result, the definition of the non-GAAP financial measure "Business net income" has been adjusted such that Share of profit (loss) from investments accounted for using the equity method now excludes the effects of applying the equity method to the investment in Regeneron. The effects of applying the equity method to the investment in Regeneron up to and including May 29, 2020 are now shown on a separate line in the table reconciling "Business net income" to Net income attributable to equity holders of Sanofi. The comparative periods of 2019 presented have been restated to reflect that adjustment.

In addition, with effect from January 1, 2020 "Business net income" includes depreciation charged against right-of-use assets recognized under IFRS 16 (Leases), applicable since January 1, 2019, and excludes rental expenses previously recognized under IAS 17.

"Business net income" for the first half of 2020 amounted to 3,521 million, 8.7% more than in the first half of 2019 ( 3,240 million). That represents 20.5% of net sales, versus 19.0% for the first half of 2019.

We also report "Business earnings per share" (business EPS), a non-GAAP financial measure which we define as business net income divided by the weighted average number of shares outstanding.

Business EPS was 2.81 for the first half of 2020, 8.1% higher than the 2019 first-half figure of 2.60, based on an average number of shares outstanding of 1,251.7 million for the first half of 2020 and 1,247.2 million for the first half of 2019.

The table below reconciles our "Business operating income" to our "Business net income"

(a)2019 figures have been restated to exclude Sanofi's share of profits from its equity investment in Regeneron (see Note B.1. to our condensed half-year consolidated financial statements) and to include the effects of IFRS 16 for comparative purposes.

We define "Business net income" as Net income attributable to equity holders of Sanofi determined under IFRS, excluding the following items

amortization and impairment losses charged against intangible assets (other than software and other rights of an industrial or operational nature)

fair value remeasurements of contingent consideration relating to business combinations or divestments

other impacts associated with acquisitions (including impacts of acquisitions on investments accounted for using the equity method)

restructuring costs and similar items (presented within the line item Restructuring costs and similar items)

other gains and losses, including gains and losses on major disposals of non-current assets (presented within the line item Other gains and losses, and litigation)

the gain on the divestment of Regeneron shares dated May 29, 2020 (not including the gain on the remeasurement of the 400,000 retained shares at market value as of that date)

other costs and provisions related to litigation (presented within the line item Other gains and losses, and litigation)

the tax effects of the items listed above, and the impact of major tax disputes and

the effects of the discontinuation of accounting by the equity method for the investment in Regeneron (see Note B.1. to our condensed half-year consolidated financial statements)

the portion attributable to non-controlling interests of the items listed above.

The table below reconciles our "Business net income" to Net income attributable to equity holders of Sanofi

(a)"Business net income" for the 2019 comparative periods has been restated to exclude Sanofi's share of profits from its equity investment in Regeneron, and to include the effects of IFRS 16 for comparative purposes.

(b)Includes amortization expense related to accounting for business combinations 839 million in the six months ended June 30, 2020 1,060 million in the six months ended June 30, 2019 and 2,044 million in the year ended December 31, 2019.

(c)For the first half of 2020, this line includes impairment losses taken against in-house and partnered R D programs within the Specialty Care GBU, and to the discontinuation of certain R D programs and collaboration agreements in Diabetes, in line with the strategy announced by Sanofi in December 2019. For 2019, this line includes impairment losses taken against Eloctate franchise assets amounting to 2,803 million over the full year and 1,609 million in the first half.

(d)For the six months ended June 30, 2020, this line mainly comprises the gain on the sale of operations related to the Seprafilm product to Baxter.

(e)This line includes the gain on the sale of (i) 13 million shares of Regeneron common stock in the registered public offering and (ii) the 9.8 million shares repurchased by Regeneron, but does not include the gain arising from the remeasurement of the 400,000 retained shares at market value as of May 29, 2020.

(f)"Business net income" no longer includes Sanofi's share of profits from its equity investment in Regeneron (see Note B.1. to our condensed half-year consolidated financial statements), which is reflected on this line.

(g)This line shows the residual impacts of the divestment of our Animal Health business.

The most significant reconciling items between "Business net income" and Net income attributable to equity holders of Sanofi relate to (i) the purchase accounting effects of our acquisitions and business combinations, particularly the amortization and impairment of intangible assets (other than software and other rights of an industrial or operational nature) and (ii) the impacts of restructurings or transactions regarded as non-recurring, where the amounts involved are particularly significant. We believe that excluding those impacts enhances an investor's understanding of our underlying economic performance, because it gives a better representation of our recurring operating performance.

We believe that eliminating charges related to the purchase accounting effect of our acquisitions and business combinations (particularly amortization and impairment of some intangible assets) enhances comparability of our ongoing operating performance relative to our peers. Those intangible assets (principally rights relating to research, development and commercialization of products) are accounted for in accordance with IFRS 3 (Business Combinations) and hence may be subject to remeasurement. Such remeasurements are not made other than in a business combination.

We also believe that eliminating the other effects of business combinations (such as the incremental cost of sales arising from the workdown of acquired inventories remeasured at fair value in business combinations) gives a better understanding of our recurring operating performance.

Eliminating restructuring costs and similar items enhances comparability with our peers because those costs are incurred in connection with reorganization and transformation processes intended to optimize our operations.

Finally, we believe that eliminating the effects of transactions that we regard as non-recurring and that involve particularly significant amounts (such as major gains and losses on disposals, and costs and provisions associated with major litigation and other major non-recurring items) improves comparability from one period to the next.

We remind investors, however, that "Business net income" should not be considered in isolation from, or as a substitute for, Net income attributable to equity holders of Sanofi reported in accordance with IFRS. In addition, we strongly encourage investors and potential investors not to rely on any single financial measure but to review our financial statements, including the notes thereto, carefully and in their entirety.

We compensate for the material limitations described above by using "Business net income" only to supplement our IFRS financial reporting and by ensuring that our disclosures provide sufficient information for a full understanding of all adjustments included in "Business net income".

Because our "Business net income" and "Business EPS" are not standardized measures, they may not be directly comparable with the non-GAAP financial measures of other companies using the same or similar non-GAAP financial measures.

Net sales for the first half of 2020 amounted to 17,180 million, 0.9% higher than in the first half of 2019. Exchange rate fluctuations had a negative effect of 0.7 of a percentage point overall, due mainly to adverse trends in the euro exchange rate against the Brazilian real, Argentinean peso and Turkish lira, partially offset by favorable trends in the US dollar and Japanese yen rates. At constant exchange rates (CER, see definition below), net sales rose by 1.6%. This mainly reflects good performances for Dupixent and the Specialty Care GBU generally, which more than offset a decrease in net sales for the General Medicines GBU (and more specifically, lower sales for Plavix and Aprovel family products in China, Lantus in the United States, and Lovenox in Europe). Net sales for the Vaccines segment were also down year-on-year, partly due to reduced sales of travel vaccines linked to Covid-19-related travel restrictions. Sales of Consumer Healthcare products also decreased, reflecting in particular the recall of Zantac in the United States and Canada.

Reconciliation of net sales to net sales at constant exchange rates