Full Press Release Details
| 2 | HALF-YEAR MANAGEMENT REPORT | 37 | |
| A Significant events of the first half of 2024 | 37 | ||
| B Progress on implementation of the Corporate Social Responsibility strategy | 40 | ||
| C Events subsequent to June 30 , 2024 | 43 | ||
| D Consolidated financial statements for the first half of 2024 | 44 | ||
| E Risk factors and related party transactions | 57 | ||
| F Outlook | 58 | ||
| G Appendix - Research and Development Pipeline | 60 | ||
| 3 | STATUTORY AUDITORS' REPORT | 63 | |
| 4 | RESPONSIBILITY STATEMENT OF THE CERTIFYING OFFICER - HALF-YEAR FINANCIAL REPORT | 64 |
| A SIGNIFICANT EVENTS OF THE FIRST HALF OF 2024 |
| A.1. FIRST-HALF OVERVIEW |
During the first half of 2024, Sanofi continued to implement its "Play to Win" strategy, initiating the second phase which aims to launch major innovations, redeploy resources and develop leading innovative R D. Significant events connected with the implementation of that strategy are described below (for additional information on developments related to Research and Development see also section "A.2. Research and Development").
On January 9 2024, Brian Foard, a healthcare industry veteran and Sanofi leader in the United States, was named head of the Specialty Care Global Business Unit (GBU). With this appointment, Brian became a member of Sanofi's Executive Committee.
On February 1, 2024, Sanofi announced that Fran ois-Xavier Roger would be appointed Chief Financial Officer and a member of Sanofi's Executive Committee effective April 1, 2024. Based in Paris, he succeeds Jean-Baptiste Chasseloup de Chatillon, who has stepped down from his role to become Head of Apprentis d'Auteuil.
On May 10, 2024, as part of its commitment to developing a diverse portfolio of best-in-class vaccines, Sanofi announced that it had entered into a co-exclusive licensing agreement with Novavax, a biotechnology company headquartered in Maryland, US. The terms of the agreement include (i) a co-exclusive license to co-commercialize Novavax's current stand-alone adjuvanted COVID-19 vaccine worldwide (except in countries with existing Advance Purchase Agreements and in India, Japan, and South Korea, where Novavax has existing partnership agreements) (ii) a sole license to Novavax's adjuvanted COVID-19 vaccine for use in combination with Sanofi's flu vaccines and (iii) a non-exclusive license to use the Matrix-M adjuvant in vaccine products. In addition, Sanofi took a minority ( 5%) equity investment in Novavax.
On May 13, 2024, as the largest private contributor to the security and independence of France's health ecosystem, Sanofi announced that it was increasing its investment in major industrial projects by 1.1 billion, by creating new bioproduction capacity at its sites in Vitry-sur-Seine (Val de Marne), Le Trait (Seine-Maritime) and Lyon Gerland (Rh ne). This new investment will create more than 500 jobs and significantly strengthen France's ability to control the production of essential medicines from start to finish, for the present day and into the future. This plan brings to more than 3.5 billion the amount committed by Sanofi since the COVID-19 pandemic to major projects to keep production of medicines and vaccines in France for patients around the world.
On May 21, 2024, Sanofi announced a collaboration with Formation Bio and OpenAI to build AI-powered software to accelerate drug development and bring new medicines to patients more efficiently. The three teams will bring together data, software and tuned models to develop custom, purpose-built solutions across the drug development lifecycle. This is the first collaboration of its kind within the pharma and life sciences industries. Sanofi will leverage this partnership to provide access to proprietary data to develop AI models as it continues on its path to becoming the first biopharma company powered by AI at scale.
On May 30, 2024, Sanofi announced that it had completed the acquisition of Inhibrx, Inc (Inhibrx), a publicly-traded, clinical-stage biopharmaceutical company focused on developing a pipeline of novel biologic therapeutic candidates in oncology and orphan diseases. The acquisition added SAR447537 (formerly INBRX-101) to Sanofi's rare disease development portfolio, and underscores the company's commitment to developing differentiated, potentially best-in-class therapeutics, leveraging its existing strengths and capabilities. This transaction followed on from Sanofi's January 23, 2024 announcement of a merger agreement under which Sanofi planned to acquire Inhibrx following the spin-off of its non-INBRX-101 assets and liabilities into a new publicly-traded company ( New Inhibrx ). Under the terms of the merger agreement, Sanofi agreed to (i) pay Inhibrx stockholders $30 per share of Inhibrx common stock on closing of the merger (approximately $1.7 billion) and issue one contingent value right (CVR) per share of Inhibrx common stock, entitling its holder to receive a deferred cash payment of $5, contingent upon the achievement of certain regulatory milestones (approximately $0.3 billion, if those milestones are achieved) (ii) pay off Inhibrx's outstanding third-party debt (approximately $0.2 billion) and (iii) contribute capital to New Inhibrx (at least $0.2 billion). Since the closing of the merger, Sanofi has held 100% of the equity interests in Inhibrx, which has become a wholly owned subsidiary of Sanofi. Additionally, Inhibrx retained a minority stake (approximately 8%) in New Inhibrx .
On June 20, 2024, Sanofi and Biovac, a biopharmaceutical company based in Cape Town, South Africa, announced a local manufacturing partnership to produce inactivated polio vaccines (IPV) in Africa. This agreement is designed to enable regional manufacturing of IPV to serve the potential needs of over 40 African countries. This partnership with Sanofi makes Biovac the first African producer of IPV on and for the African continent, and supports the Africa Centers for Disease Control and Prevention's ambition to have 60% of local vaccines produced in Africa by 2040.
On June 21 2024, Audrey Duval Derveloy, a seasoned healthcare industry leader and Sanofi France's President, was named Executive Vice President, Global Head of Corporate Affairs. Audrey became a member of Sanofi's Executive Committee, reporting to CEO Paul Hudson, and is based in Paris. Her appointment was effective July 1, 2024.
Net sales for the first half of 2024 amounted to 21,209 million, 5.1% higher than in the first half of 2023. At constant exchange rates (CER)(1), net sales rose by 8.4%, driven mainly by strong performances for Dupixent, increased sales of Nexviazyme, ALTUVIIIO, and Beyfortus.
Net income attributable to equity holders of Sanofi amounted to 2,246 million in the first half of 2024, versus 3,430 million in the first half of 2023. Earnings per share was 1.80, versus 2.74 for the first half of 2023. Business net income(2) was 4,380 million, down 10.2% on the first half of 2023, while business earnings per share (business EPS2) was 3.51, 10.0% lower than in the first half of 2023.
During the first half of 2024, Sanofi maintained its R D efforts with the aim of improving quality of life for people around the globe by developing innovative vaccines and medicines.
Dupixent (dupilumab) was approved by the US Food and Drug Administration (FDA) in January for the treatment of pediatric patients aged 1 to 11 years, weighing at least 15 kg, with eosinophilic esophagitis (EoE). This approval expands the initial FDA approval for EoE in May 2022 for patients aged 12 years and older, weighing at least 40 kg. The FDA evaluated Dupixent for this expanded indication under Priority Review, which is reserved for medicines that represent potentially significant improvements in efficacy or safety in treating serious conditions. Dupixent is now the first and only medicine approved in the US specifically indicated to treat these patients, and regulatory submission is currently under review by the European Medicines Agency for this age group. The New England Journal of Medicine has published results from the positive Phase 3 study that was the basis for the FDA approval and regulatory submission in Europe. The study showed a greater proportion of those receiving weight-tiered higher dose Dupixent experienced significant improvements in many key disease measures of EoE, compared to placebo at week 16.
The FDA updated the label for Dupixent in atopic dermatitis, adding efficacy and safety data for patients aged 12 years and older with atopic dermatitis with uncontrolled moderate-to-severe hand and or foot involvement. These Phase 3 data are from the first and only trial evaluating a biologic specifically for this difficult-to-treat population and have also been added to the Dupixent label in the European Union, with regulatory submissions underway in additional countries.
In July, the European Medicines Agency (EMA) approved Dupixent as an add-on maintenance treatment for adults with uncontrolled chronic obstructive pulmonary disease (COPD) characterized by raised blood eosinophils. This approval represents the sixth approved indication for Dupixent in the EU and seventh approved indication globally. The approval was based on results from the landmark Phase 3 BOREAS and NOTUS studies, which were separately published in The New England Journal of Medicine and evaluated the efficacy and safety of Dupixent in adults with uncontrolled COPD with evidence of type 2 inflammation. Earlier in February, the US FDA accepted for Priority Review the supplemental Biologics License Application (sBLA) for Dupixent in this indication. In May, the agency extended by three months the target action date of its priority review of the sBLA the revised target action date is September 27, 2024. The FDA did not raise any concerns regarding the approvability of Dupixent for this indication. The FDA had requested additional efficacy analyses on the efficacy of Dupixent in the BOREAS and NOTUS pivotal trials.
The FDA has accepted for Priority Review the sBLA for Dupixent as an add-on maintenance treatment for adolescents aged 12 to 17 years with inadequately controlled chronic rhinosinusitis with nasal polyposis (CRSwNP). The target action date for the FDA decision is September 15, 2024. The sBLA in adolescents is supported by an extrapolation of efficacy data from two positive pivotal studies (SINUS-24 and SINUS-52) in adults with CRSwNP. These studies demonstrated that Dupixent significantly improved nasal congestion obstruction severity, nasal polyp size and sense of smell, while also reducing the need for systemic corticosteroids or surgery, at 24 weeks compared to placebo. The sBLA was also supported by the safety data of Dupixent in its currently approved indications for adolescents.
The Ministry of Health, Labor and Welfare (MHLW) in Japan has granted marketing and manufacturing authorization for Dupixent for the treatment of chronic spontaneous urticaria (CSU) in people aged 12 years and older whose disease is not adequately controlled with existing therapy. Japan is the first country to approve Dupixent for CSU, emphasizing the value of Dupixent as a novel treatment option to manage this disease in patients with unmet needs. Regulatory submissions are also under review in the European Union and China.
In June, the FDA approved the sBLA for the expanded use of Kevzara for treatment of active polyarticular juvenile idiopathic arthritis (pJIA) in patients who weigh 63 kg or greater.
Regulatory submissions for fitusiran for the treatment of hemophilia A or B in adults and adolescents with or without inhibitors have been completed in China, Brazil, and the US, with a target action date for the FDA decision of March 28, 2025. The FDA granted fitusiran Breakthrough Therapy Designation for hemophilia B with inhibitors in December 2023. New ATLAS Phase 3 study data reinforcing the potential of fitusiran to provide prophylaxis for people with hemophilia A or B, with or without inhibitors were presented in June at the 32nd Congress of the International Society on Thrombosis and Haemostasis (ISTH).
(1) Non-IFRS financial measure see definition in D.3., "Net sales".
(2) Non-IFRS financial measure see definition in D.2., "Business net income".
In June, the European Commission granted marketing authorization for ALTUVOCT (ALTUVIIIO in the US, Japan, and Taiwan) for the treatment and prevention of bleeds and perioperative prophylaxis in hemophilia A to Sanofi's partner in the EU, Sobi. The EU also endorsed the retention of orphan designation, granting a ten-year market exclusivity period. The FDA updated the label for ALTUVIIIO to include full results from the XTEND-Kids phase 3 study showing that once-weekly dosing with ALTUVIIIO delivers highly effective bleed protection in children with hemophilia A. ALTUVIIIO was first approved in February 2023 for adults and children with hemophilia A for routine prophylaxis and on-demand treatment to control bleeding episodes as well as for perioperative management (surgery), and this label update builds on the interim XTEND-Kids data from 2023 to include full results. Interim results on the efficacy and safety of ALTUVIIIO from the XTEND-Kids phase 3 study were presented in June at the 32nd Congress of the ISTH. Full results from the XTEND-Kids study were published in July in The New England Journal of Medicine (NEJM), highlighting the efficacy, safety, and pharmacokinetic profile of ALTUVIIIO.
Positive results from the LUNA 3 phase 3 study demonstrated that rilzabrutinib 400 mg twice daily orally achieved the primary endpoint of durable platelet response in adult patients with persistent or chronic immune thrombocytopenia (ITP). The safety profile of rilzabrutinib was consistent with that reported in previous studies. Regulatory submission is planned for the second half of 2024. Previously, rilzabrutinib was granted Fast Track Designation and Orphan Drug Designation by the FDA.
The AMETHIST Phase 3 study of venglustat for the treatment of GM2 gangliosidosis was discontinued based on the absence of positive trends on clinical endpoints. The data reinforced the favorable safety profile and did not impact the other indications currently being tested in Phase 3 studies (Fabry disease and Gaucher disease type 3).
Sanofi and Fulcrum Therapeutics entered into a collaboration and license agreement for the development and commercialization of losmapimod, a selective p38 mitogen-activated protein kinase (MAPK) small molecule inhibitor being investigated in phase 3 for the treatment of facioscapulohumeral muscular dystrophy. Losmapimod has orphan drug designation in US, orphan designation in the EU, FDA fast track designation and FSHD is included on the list of rare diseases in China.
Supported by encouraging efficacy and safety Phase 2 data, two Phase 3 studies, evaluating rilibrubart in standard-of-care (SOC)-refractory chronic inflammatory demyelinating polyneuropathy (CIDP) and intravenous immunoglobulin (IVIg)-treated CIDP, have been initiated and are currently recruiting patients.
The FDA accepted for Priority Review the sBLA for the investigational use of Sarclisa (isatuximab) in combination with bortezomib, lenalidomide and dexamethasone (VRd) for the treatment of patients with transplant-ineligible newly diagnosed multiple myeloma (NDMM). If approved, Sarclisa would be the first anti-CD38 therapy in combination with standard-of-care VRd in newly diagnosed patients not eligible for transplant, which would be the third indication for Sarclisa in multiple myeloma. The target action date for the FDA decision is September 27, 2024. Other regulatory submissions are currently under review in the EU, Japan, and China. Data from the IMROZ Phase 3 study demonstrated Sarclisa in combination with standard-of-care (VRd) followed by Sarclisa-Rd (the IMROZ regimen) significantly reduced the risk of disease progression or death by 40%, compared to VRd followed by Rd in patients with NDMM not eligible for transplant. IMROZ is the first global Phase 3 study of an anti-CD38 monoclonal antibody in combination with standard-of-care VRd to significantly improve PFS and show deep responses in this patient population who often have poor prognoses.
In March, Beyfortus (nirsevimab) was approved in Japan for the prophylaxis of lower respiratory tract disease (LRTD) caused by respiratory syncytial virus (RSV) in all neonates, infants and children entering their first RSV season, and the prevention of RSV LRTD in neonates, infants and children at risk of serious RSV infection entering their first or second RSV season.
New Beyfortus real-world evidence data were published in The Lancet, showing Beyfortus substantially reduced RSV lower respiratory tract disease and hospitalizations in infants during the 2023-2024 RSV season, versus no intervention. Results add to the consistent high efficacy of Beyfortus against medically attended RSV lower respiratory tract disease, shown in the pivotal clinical studies and the outcomes from HARMONIE, a Phase 3b clinical study conducted in close to real-life conditions.
The Phase 3 study of MenQuadfi to protect infants from six weeks of age against invasive meningococcal disease caused by serogroups ACWY read out positively on safety and immunogenicity, supporting regulatory submission in the US in the second half of 2024 to extend the indication down to six weeks of age.
The Phase 3 study evaluating SP0125, a live attenuated RSV vaccine for toddlers, for the prevention of respiratory syncytial virus (RSV) in toddlers was initiated.
Sanofi and Novavax announced, in May, co-exclusive licensing agreement to co-commercialize COVID-19 vaccine and develop novel flu-COVID-19 combination vaccines.
For an update on our research and development pipeline, refer to Section G of this half-year management report.
| A.3. OTHER SIGNIFICANT EVENTS |
| A.3.1 CORPORATE GOVERNANCE |
The Combined General Shareholders' Meeting of Sanofi was held on April 30, 2024 at the Palais des Congr s in Paris, and was chaired by Fr d ric Oud a. All resolutions submitted to the vote were adopted by the shareholders. Decisions taken by the General Meeting included approving the individual company and consolidated financial statements for the year ended December 31, 2023 and distributing an ordinary annual dividend of 3.76 per share. The meeting also approved the reappointment of Rachel Duan and Lise Kingo as directors, and the appointment of Clotilde Debos, Anne-Fran oise Nesmes and John Sundy as independent directors. On a proposal from the Appointments, Governance and CSR Committee, the Board of Directors appointed Clotilde Delbos as a member of the Audit and Compensation Committees Anne-Fran oise Nesmes as a member of the Audit Committee and John Sundy as member of the Scientific Committee. Carole Ferrand was appointed as Chair of the Audit Committee she succeeds Fabienne Lecorvaisier, who will remain as a member of the Committee for the final year of her term of office. Antoine Yver was appointed as Chair of the Scientific Committee and a member of the Strategy Review Committee. The Board of Directors temporarily comprises 17 members, of whom seven are women and two are directors representing employees. The Board of Directors retains a large majority of independent directors.
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, 2023, refer to Note B.14. to the condensed half-year consolidated financial statements.
To the Company's knowledge, with the exception of the significant developments described in Note B.14. to the condensed half-year consolidated financial statements, there are no other governmental, judicial or arbitral proceedings, including any pending or threatened proceedings of which the Company is aware, that are likely to have, or have had over the last six months, material effects on the financial position or profitability of the Company and or the Group.
On May 31, 2024. Sanofi launched Action 2024, a global employee share ownership plan open to around 80,000 employees in 56 countries. Now in its tenth year, the program demonstrates the ongoing commitment of Sanofi and its Board of Directors to ensuring that employees benefit from the company's growth and success.
The shares were offered at a subscription price of 72.87, representing a 20% discount to the average of the 20 opening prices of Sanofi shares from May 2 to May 29, 2024. For every five shares subscribed, employees were entitled to receive one free share (up to a maximum of four free shares per employee). Every eligible employee was able to purchase up to 1,500 Sanofi shares, subject to the maximum legal limit set at 25% of their gross annual salary, minus any voluntary deductions already made under employee savings schemes (such as the Group Savings Plan or Group Retirement Savings Plan) during 2024.
Sanofi continues its progress to improve access to medicines
Sanofi Global Health Unit making a difference for our patients in low- and middle-income countries
Sanofi's Global Health Unit (GHU) works to address today's many growing healthcare challenges - with a focus on countries with the highest unmet medical needs - through a self-sustained not-for-profit social business model.
Sanofi's GHU aims to provide access to a broad portfolio of medicines in 40 countries with the highest unmet medical needs. To that end the GHU created Impact, a unique not-for-profit brand with 30 standard-of-care medicines produced by Sanofi, some of which are considered essential by the World Health Organization (WHO). The Impact medicines cover a wide range of therapeutic areas including diabetes, cardiovascular disease, tuberculosis, malaria and cancer.
Sanofi's GHU aims to reach two million people with non-communicable disease (NCD) care in its 40 countries in scope by 2030. Since its creation in 2021, the GHU has made significant progress towards its objective, having already treated 506,130 NCD patients in 31 countries as of the end of March 2024.
To support the set up and development of sustainable healthcare systems, the GHU is also working closely with local communities, authorities and non-governmental organizations to develop disease awareness programs and establish partnerships to drive better care through
-strengthening supply chains
-conducting medical training and
-providing services to patients.
Sanofi's GHU has engaged with Ministries of Health and other partners in several countries, including Rwanda, Uganda, Tanzania and Cambodia. As of March 2024, the GHU pilots 44 active partnerships in 21 countries. Selected examples of projects supported are described below
| Name | Therapeutic Area | Country(s) | Activity pillar(s) | Overview and progress in numbers |
| PharmAccess | Cardio Diabetes | Zanzibar | Patient Care model | The project is an integrated patient-centered model of care aiming at improving diagnosis and disease management for patients with cardio-metabolic diseases through a care bundle consisting of access to patient group meetings, digital self-management support, remote care and medications. |
| CHAZ FBO Zambia | Cardio Diabetes | Zambia | Scaling Patient Care services with faith-based organizations | The primary goal is to institutionalize NCD Prevention WHO Best Buys as a standard of care within the church health institutions participating in the project. It includes building the capacity of health workers and community educators in church health institutions in diabetes and hypertension prevention and management, raising awareness of common NCD risk factors, and providing diabetes and hypertension diagnostic and treatment services in the selected church health institutions. |
| WCEA | Cardio Diabetes | Malawi Tanzania Sierre Leone Zimbabwe Uganda | Online HCP Training | Online NCD training of healthcare professionals across multiple countries. |
| CNSS | Cardio Diabetes | Djibouti | Empowering HCPs and supply chain actors | The specific objectives of this partnership are focused on strengthening advocacy and knowledge about NCDs, increasing the capacity of healthcare professionals for better management of NCDs and of supply chain actors, while building a sustainable procurement mechanism for affordable access to treatment. |
| Touch Foundation | Cardio Diabetes | Tanzania | Strengthen Supply Chain | The primary goal is to improve supply chain management for NCD medicines and patient tracking at each facility to ensure patients are adhering to treatment. |
| Action 4 Diabetes (A4D) | Diabetes (type 1) | Cambodia Laos Myanmar | Care for Type 1 Diabetes Patients | Action 4 Diabetes focuses on type 1 diabetes patients and includes healthcare professional training, patient services, support in monitoring blood glucose levels and access to insulins, to increase efficiency in the management of type 1 diabetes patients. A4D also holds diabetes camps for patients and their families to build awareness and understanding. |
| City Cancer Challenge | Oncology | Cambodia Rwanda | Health System Strengthening | Working with City Cancer, the objectives are to create city-wide oncology stakeholder leadership groups and complete situational analysis and needs assessments of oncology services (including digital oncology services), forming the basis for a successful approach to empower and strengthen the health system. |
Cancer and work Sanofi supporting health and wellbeing in the workplace
Sanofi has launched Cancer Work Acting Together', a program which covers all Sanofi employees in the world if they are diagnosed with cancer or critical illnesses1. It provides social, emotional and financial support and secures the job, salary and benefits of any employee for up to twelve months, no matter the role or geographical location.
It will allow employees to incorporate further flexible work arrangements to better navigate cancer and work and will have access to a network of volunteer colleagues trained to help them navigate from initial diagnosis through the treatment journey and return to work. The program is also designed to better equip managers to support members of their team who are affected by cancer. Throughout 2024, Sanofi also intends to implement coverage of miscellaneous non-medical expenses. Moreover, Sanofi permanent employees will become eligible for an unpaid caregiver leave which allows them to carry out caregiving duties for their close family member suffering from a critical illness(1).
In 2017, several volunteer employees in France, with complementary expert skills and experience as patients, caregivers or managers, started the initiative. The program has since grown to a network of 27 partner teams with one team at each Sanofi site in France, with 150 members who share feedback and best practice. More than 350 employees have benefited (42% sick employees, 30% caregivers, 28% managers).
The program "Cancer Work" has started to roll out globally in early 2024 and is part of our programs supporting health and wellbeing in the workplace. This complements other initiatives already launched for employees such as the gender-neutral parental leave, allowing all new parents 14 weeks of paid leave to welcome a new child into their lives.
Sanofi continues its progress to limit its impact on the environment
Sanofi's Planet Care strategy concrete actions towards net zero emissions
For several years, Sanofi has been implementing its Planet Care strategy, aiming for net zero greenhouse gas emissions across all scopes by 2045, with an intermediate carbon neutrality milestone in 2030. The company has already achieved a 43% decrease in scopes 1 and 2 emissions, targeting 55% by 2030, and a 10% reduction in scope 3 emissions, aiming for 30% by 2030.
For scopes 1 and 2, Sanofi is focusing on the following key decarbonization levers to reach its 2030 targets
Energy decarbonization increasing renewable electricity share from 11% in 2019 to 85% in Q2 2024 through solar panels, power purchase agreements (PPA), and guarantees of origin. In France, three PPAs have been signed with the Compagnie Nationale du Rh ne, for an annual volume of 83 GWh year over a twenty-year period, covering 19% of Sanofi's annual electricity needs in France. Sanofi also has a renewable electricity PPA in Mexico to supply energy to its three Mexican sites and is exploring PPAs opportunities in other European countries and the US. Sanofi is also incorporating biomethane and biomass to reduce reliance on fossil fuels
Energy reduction and efficiency aiming to reduce energy consumption by 15% in existing facilities by 2025 compared to 2021.
Eco-fleet converting Sanofi's car fleet to an 80% eco-fleet (biofuel, hybrid and electric vehicles) by 2030 and
Refrigerant gas replacing existing refrigerant gases with lower global warming potential alternatives and improving leak prevention.
For scope 3, the majority of greenhouse gas (GHG) emissions come from raw materials and subcontracting, thus representing the primary target for the decarbonization efforts. Sanofi's eco-design program aims to integrate environmental criteria from product design. The company is seeking less carbon-intensive suppliers and considering the country of manufacture in supplier selection. For example, sourcing of a highly carbon-intensive raw material from China has been reduced from over 50% of the volume in 2019 to just 5% in 2024, with a shift to European suppliers. Additionally, Sanofi is implementing comprehensive measures to reduce emissions across multiple areas addressing business travel and employee commuting through remote work and low-carbon travel options, shifting from air to sea freight for product transport, setting ambitious waste management goals, and focusing on energy use.
Community-centric carbon offsetting
By 2045, the residual emissions will remain under 10% of the 2019 total emissions, in line with the Science Base Targets Initiative net zero commitment. Understanding that not all emissions can be immediately abated, we also created a community-focused carbon offsetting program. These initiatives not only compensate for residual emissions but also generate substantial environmental, social, and economic benefits in local communities.
Sanofi's carbon offsetting program has invested around 60 million in four strategic projects since 2019. These include the Sundari Mangrove Restoration project in India, which has restored 380 hectares of mangroves since 2022 with plans to rehabilitate an additional 3,750 hectares. In Kenya, 18,250 energy-saving biomass cookstoves have been distributed. A new project in Mozambique aims to rehabilitate 1,040 water handpumps, reducing the need to burn biomass for boiling water and providing clean water access to 312,000 people.
(1) Specific criteria identifying the conditions and circumstances that are eligible for coverage under this program might be governed by the terms and conditions of country-specific policies or legal requirements.
Business resilience to environmental changes
Sanofi is also actively working to strengthen its business resilience to environmental challenges which could impact its ability to support patients across the world. For instance, Sanofi has undertaken an end-to-end internal study, in order to better identify the associations between environmental change impacts and pipeline of products.
Among its conclusions, the study reported that 70% of Sanofi's portfolio indications and 78% of the R D pipeline indications are already targeting diseases impacted by at least one environmental hazard (air pollution, shift in seasonal patterns, chemical pollution, extreme temperatures, water pollution).
CSR dashboard as of Q2 2024
Please refer to the Q2 2024 results press release ESG appendix for Sanofi CSR reporting.
The main events related to research and development that occurred between the end of the reporting period and the date on which the condensed consolidated financial statements were signed off by the Board of Directors are described in section 'A.2. Research and Development'. No other significant events occurred during this period.
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, 2023 and June 30, 2024
| ( million) | June 30, 2024 (6 months) | as % of net sales | June 30, 2023 (6 months) | as % of net sales | |||||
| Net sales | 21,209 | 100.0 | % | 20,187 | 100.0 | % | |||
| Other revenues | 1,289 | 6.1 | % | 1,358 | 6.7 | % | |||
| Cost of sales | (6,849) | (32.3) | % | (6,347) | (31.4) | % | |||
| Gross profit | 15,649 | 73.8 | % | 15,198 | 75.3 | % | |||
| Research and development expenses | (3,423) | (16.1) | % | (3,193) | (15.8) | % | |||
| Selling and general expenses | (5,260) | (24.8) | % | (5,182) | (25.7) | % | |||
| Other operating income | 617 | 617 | |||||||
| Other operating expenses | (2,010) | (1,422) | |||||||
| Amortization of intangible assets | (1,061) | (1,035) | |||||||
| Impairment of intangible assets | 371 | (15) | |||||||
| Fair value remeasurement of contingent consideration | (66) | (26) | |||||||
| Restructuring costs and similar items | (1,331) | (547) | |||||||
| Other gains and losses, and litigation | (442) | (73) | |||||||
| Operating income | 3,044 | 14.4 | % | 4,322 | 21.4 | % | |||
| Financial expenses | (586) | (370) | |||||||
| Financial income | 281 | 286 | |||||||
| Income before tax and investments accounted for using the equity method | 2,739 | 12.9 | % | 4,238 | 21.0 | % | |||
| Income tax expense | (463) | (730) | |||||||
| Share of profit (loss) from investments accounted for using the equity method | (13) | (52) | |||||||
| Net income | 2,263 | 10.7 | % | 3,456 | 17.1 | % | |||
| Net income attributable to non-controlling interests | 17 | 26 | |||||||
| Net income attributable to equity holders of Sanofi | 2,246 | 10.6 | % | 3,430 | 17.0 | % | |||
| Average number of shares outstanding (million) | 1,249.4 | 1,249.9 | |||||||
| Average number of shares after dilution (million) | 1,253.8 | 1,254.5 | |||||||
| Basic earnings per share (in euros) | 1.80 | 2.74 | |||||||
| Diluted earnings per share (in euros) | 1.79 | 2.73 |
| D.1. SEGMENT INFORMATION |
| D.1.1. OPERATING SEGMENTS |
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 reports two operating segments Biopharma and Opella (formerly Consumer Healthcare - CHC).
The Biopharma operating segment comprises commercial operations and research, development and production activities relating to the Speciality Care, General Medicines and Vaccines franchises, for all geographical territories. The segment's results include the costs of global support functions that are not within the managerial responsibility of the Opella GBU.
The Opella operating segment comprises commercial operations relating to consumer healthcare products, and research, development and production activities and global support functions (as listed above) dedicated to the segment, for all geographical territories. The Opella GBU segment's results reflect all incurred costs of global support functions attributable to its business.
The "Other" category comprises reconciling items, primarily but not limited to (i) gains and losses on centralized foreign exchange risk hedging transactions that cannot be allocated to the operating segments and (ii) gains and losses on retained commitments in respect of previously divested operations.
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.
In the first half of 2024, "Business operating income" amounted to 5,656 million (versus 6,059 million for the first half of 2023), while "Business operating income margin" was 26.7% (versus 30.0% for the first half of 2023). "Business operating income margin" is a non-IFRS 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-IFRS financial measures of other companies using the same or similar non-IFRS financial measures. Despite the use of non-IFRS measures by management in setting goals and measuring performance, these are non-IFRS 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-IFRS financial measure represents "Business operating income", less net financial expenses and the relevant income tax effects.
"Business net income" for the first half of 2024 amounted to 4,380 million, 10.2% less than in the first half of 2023 ( 4,876 million). That represents 20.7% of net sales, versus 24.2% for the first half of 2023.
We also report "Business earnings per share" (business EPS), a non-IFRS financial measure which we define as business net income divided by the weighted average number of shares outstanding.
Business EPS was 3.51 for the first half of 2024, 10.0% lower than the 2023 first-half figure of 3.90, based on an average number of shares outstanding of 1,249.4 million for the first half of 2024 and 1,249.9 million for the first half of 2023.
The table below reconciles our "Business operating income" to our "Business net income"
| ( million) | June 30, 2024 (6 months) | June 30, 2023 (6 months) | December 31, 2023 (12 months) | |||||
| Business operating income | 5,656 | 6,059 | 12,670 | |||||
| Financial income and expenses (except those related to financial liabilities accounted for at amortized cost and subject to periodic remeasurement in accordance with paragraph B5.4.6 of IFRS 9) | (129) | (49) | (181) | |||||
| Income tax expense | (1,147) | (1,134) | (2,334) | |||||
| Business net income | 4,380 | 4,876 | 10,155 |
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 (IFRS 3), or to business divestments
expenses arising from the remeasurement of inventories following business combinations (IFRS 3) or acquisitions of groups of assets that do not constitute a business within the meaning of paragraph 2b of IFRS 3
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 divestments, presented within the line item Other gains and losses, and litigation)