D.35. Segment information
As of December 31, 2017, and as described in Notes A.5. and B.26., Sanofi has three operating segments: Pharmaceuticals, Consumer Healthcare and Human Vaccines (Vaccines).
The Pharmaceuticals segment comprises the commercial operations of the following global franchises: Specialty Care (Rare Diseases, Multiple Sclerosis, Oncology, Immunology), Diabetes & Cardiovascular, Established Prescription Products and Generics, together with research, development and production activities dedicated to our Pharmaceuticals segment. This segment also includes all associates whose activities are related to pharmaceuticals, in particular our share of Regeneron.
The Consumer Healthcare segment comprises, for all geographical territories, the commercial operations for our Consumer Healthcare products, together with research, development and production activities dedicated to those products.
The Vaccines segment comprises, for all geographical territories (including from January 1, 2017 certain European territories previously included in the Sanofi Pasteur MSD joint venture), the commercial operations of Sanofi Pasteur, together with research, development and production activities dedicated to vaccines.
Inter-segment transactions are not material.
D.35.1. Segment results
Sanofi reports 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.
Business operating income is derived from Operating income, adjusted as follows:
| ∎ |
the amounts reported in the line items Restructuring costs and similar items, Fair value remeasurement of contingent consideration and Other gains and losses, and litigation are eliminated; |
| ∎ |
amortization and impairment losses charged against intangible assets (other than software and other rights of an industrial or operational nature) are eliminated; |
| ∎ |
the share of profits/losses from investments accounted for using the equity method is added; |
| ∎ |
net income attributable to non-controlling interests is deducted; |
| ∎ |
other acquisition-related effects (primarily the workdown of acquired inventories remeasured at fair value at the acquisition date, and the impact of acquisitions on investments accounted for using the equity method) are eliminated; |
| ∎ |
restructuring costs relating to investments accounted for using the equity method are eliminated. |
The table below sets forth our segment results for the year ended December 31, 2017, based on our new segment reporting model:
| 2017 | ||||||||||||||||||||
| (€ million) | Pharmaceuticals | Consumer Healthcare |
Vaccines | Other | Total Sanofi | |||||||||||||||
| Net sales | 25,122 | 4,832 | 5,101 | - | 35,055 | |||||||||||||||
| Other revenues | 287 | - | 862 | - | 1,149 | |||||||||||||||
| Cost of sales | (6,728) | (1,648) | (2,798) | (271) | (11,445) | |||||||||||||||
| Research and development expenses | (4,056) | (123) | (557) | (736) | (5,472) | |||||||||||||||
| Selling and general expenses | (5,750) | (1,605) | (698) | (2,005) | (10,058) | |||||||||||||||
| Other operating income and expenses | 34 | 94 | (107) | (17) | 4 | |||||||||||||||
| Share of profit/(loss) from investments accounted for using the equity method | 233 | 1 | 1 | - | 235 | |||||||||||||||
| Net income attributable to non-controlling interests | (117) | (8) | - | - | (125) | |||||||||||||||
| Business operating income | 9,025 | 1,543 | 1,804 | (3,029) | 9,343 | |||||||||||||||
Due to lack of available data and the too complex and significant adjustments that would be required (in particular to our reporting tools), the comparative information has not been restated to reflect the changes arising from our new segment reporting model. We have therefore also presented segment results for 2017 and comparative periods using our previous segment reporting model in the table below:
| 2017 | ||||||||||||||||
| (€ million) | Pharmaceuticals(a) | Vaccines(b) | Other | Total Sanofi | ||||||||||||
| Net sales | 29,954 | 5,101 | - | 35,055 | ||||||||||||
| Other revenues | 287 | 862 | - | 1,149 | ||||||||||||
| Cost of sales | (8,628) | (2,817) | - | (11,445) | ||||||||||||
| Research and development expenses | (4,835) | (637) | - | (5,472) | ||||||||||||
| Selling and general expenses | (9,176) | (881) | (1) | (10,058) | ||||||||||||
| Other operating income and expenses | 180 | (108) | (68) | 4 | ||||||||||||
| Share of profit/(loss) from investments accounted for using the equity method | 234 | 1 | - | 235 | ||||||||||||
| Net income attributable to non-controlling interests | (125) | - | - | (125) | ||||||||||||
| Business operating income | 7,891 | 1,521 | (69) | 9,343 | ||||||||||||
| (a) |
Includes Consumer Healthcare and an allocation of global support function costs. |
| (b) |
Includes an allocation of global support function costs. |
The table below sets forth our segment results for the year ended December 31, 2016, based on our previous segment reporting model:
| December 31, 2016 | ||||||||||||||||
| (€ million) | Pharmaceuticals(a) | Vaccines(b) | Other | Total Sanofi | ||||||||||||
| Net sales | 29,244 | 4,577 | - | 33,821 | ||||||||||||
| Other revenues | 274 | 613 | - | 887 | ||||||||||||
| Cost of sales | (8,349) | (2,353) | - | (10,702) | ||||||||||||
| Research and development expenses | (4,618) | (554) | - | (5,172) | ||||||||||||
| Selling and general expenses | (8,743) | (743) | - | (9,486) | ||||||||||||
| Other operating income and expenses | (1) | (14) | (112) | (127) | ||||||||||||
| Share of profit/(loss) from investments accounted for using the equity method | 129 | 48 | - | 177 | ||||||||||||
| Net income attributable to non-controlling interests | (112) | (1) | - | (113) | ||||||||||||
| Business operating income | 7,824 | 1,573 | (112) | 9,285 | ||||||||||||
| (a) |
Includes Consumer Healthcare and an allocation of global support function costs. Consumer Healthcare net sales were €3,330 million in 2016. |
| (b) |
Includes an allocation of global support function costs. |
The table below sets forth our segment results for the year ended December 31, 2015, based on our previous segment reporting model:
| December 31, 2015 | ||||||||||||||||
| (€ million) | Pharmaceuticals(a) | Vaccines(b)/(c) | Other | Total Sanofi | ||||||||||||
| Net sales | 29,799 | 4,261 | - | 34,060 | ||||||||||||
| Other revenues | 288 | 513 | - | 801 | ||||||||||||
| Cost of sales | (8,788) | (2,131) | - | (10,919) | ||||||||||||
| Research and development expenses | (4,530) | (552) | - | (5,082) | ||||||||||||
| Selling and general expenses | (8,656) | (726) | - | (9,382) | ||||||||||||
| Other operating income and expenses | (121) | 27 | (114) | (208) | ||||||||||||
| Share of profit/(loss) from investments accounted for using the equity method | 146 | 23 | - | 169 | ||||||||||||
| Net income attributable to non-controlling interests | (125) | (1) | - | (126) | ||||||||||||
| Business operating income | 8,013 | 1,414 | (114) | 9,313 | ||||||||||||
| (a) |
Includes Consumer Healthcare and an allocation of global support function costs. Consumer Healthcare net sales were €3,492 million in 2015. |
| (b) |
Includes an allocation of global support function costs. |
| (c) |
Due to a change in accounting presentation, VaxServe sales of non-Sanofi products are included in Other revenues from 2016 onwards. The presentation of prior period Net sales and Other revenues has been amended accordingly (see Note B.13.). |
The table below, presented in compliance with IFRS 8, shows a reconciliation between aggregated “Business operating income” for the segments and Income before tax and investments accounted for using the equity method.
| (€ million) | 2017 | 2016 | 2015 | |||||||||
| Business operating income | 9,343 | 9,285 | 9,313 | |||||||||
| Share of profit/(loss) from investments accounted for using the equity method(a) | (235) | (177) | (169) | |||||||||
| Net income attributable to non-controlling interests(b) | 125 | 113 | 126 | |||||||||
| Amortization and impairment of intangible assets | (2,159) | (1,884) | (2,904) | |||||||||
| Fair value remeasurement of contingent consideration | (159) | (135) | 53 | |||||||||
| Expenses arising from the impact of acquisitions on inventories(c) | (166) | - | - | |||||||||
| Restructuring costs and similar items | (731) | (879) | (795) | |||||||||
| Other gains and losses, and litigation(d) | (215) | 211 | - | |||||||||
| Operating income | 5,803 | 6,534 | 5,624 | |||||||||
| Financial expenses(e) | (420) | (924) | (559) | |||||||||
| Financial income | 147 | 68 | 178 | |||||||||
| Income before tax and investments accounted for using the equity method | 5,530 | 5,678 | 5,243 | |||||||||
| (a) |
Excluding restructuring costs relating to investments accounted for using the equity method and expenses arising from the impact of acquisitions on investments accounted for using the equity method, and after elimination of Sanofi’s share of the business net income of Sanofi Pasteur MSD from the date when Sanofi and Merck announced their intention to end their joint venture (€52 million in 2016). |
| (b) |
Excluding (i) restructuring costs and (ii) other adjustments attributable to non-controlling interests. |
| (c) |
This line records the impact of the workdown of acquired inventories remeasured at fair value at the acquisition date. |
| (d) |
For 2017, this line includes an adjustment to a provision for vendor’s liability guarantees relating to past divestments. |
|
For 2016, it includes the pre-tax gain on divestment of Sanofi’s interest in the Sanofi Pasteur MSD joint venture. |
| (e) |
For 2016, this line includes an impairment loss of €457 million taken against Sanofi’s equity investment in Alnylam Pharmaceuticals, Inc. (see Note D.29.). |
D.35.2. Other segment information
The tables below show the split by operating segment of (i) the carrying amount of associates and joint ventures accounted for using the equity method, (ii) acquisitions of property, plant and equipment, and (iii) acquisitions of intangible assets.
The principal investments accounted for using the equity method are: for the Pharmaceuticals segment, Regeneron Pharmaceuticals, Inc. (see Note D.2.2.), the entities majority owned by BMS (see Note C.2.), and Infraserv GmbH & Co. Höchst KG; and for the Vaccines segment, Sanofi Pasteur MSD (until March 8, 2016; see Notes B.1. and D.2.3.).
Acquisitions of intangible assets and property, plant and equipment correspond to acquisitions paid for during the period.
| 2017 | ||||||||||||||||
| (€ million) | Pharmaceuticals | Consumer Healthcare |
Vaccines | Total Sanofi | ||||||||||||
| Investments accounted for using the equity method | 2,831 | 19 | 13 | 2,863 | ||||||||||||
| Acquisitions of property, plant and equipment | 1,033 | 9 | 346 | 1,388 | ||||||||||||
| Acquisitions of other intangible assets | 367 | 9 | 192 | 568 | ||||||||||||
| 2017 | ||||||||||||
| (€ million) | Pharmaceuticals | Vaccines | Total Sanofi | |||||||||
| Investments accounted for using the equity method | 2,850 | 13 | 2,863 | |||||||||
| Acquisitions of property, plant and equipment | 1,042 | 346 | 1,388 | |||||||||
| Acquisitions of other intangible assets | 376 | 192 | 568 | |||||||||
| 2016 | ||||||||||||
| (€ million) | Pharmaceuticals | Vaccines | Total Sanofi | |||||||||
| Investments accounted for using the equity method | 2,886 | 4 | 2,890 | |||||||||
| Acquisitions of property, plant and equipment | 904 | 315 | 1,219 | |||||||||
| Acquisitions of other intangible assets | 807 | 57 | 864 | |||||||||
| 2015 | ||||||||||||
| (€ million) | Pharmaceuticals | Vaccines | Total Sanofi | |||||||||
| Investments accounted for using the equity method | 2,422 | 254 | 2,676 | |||||||||
| Acquisitions of property, plant and equipment | 945 | 258 | 1,203 | |||||||||
| Acquisitions of other intangible assets | 1,533 | 36 | 1,569 | |||||||||
D.35.3. Information by geographical region
The geographical information on net sales provided below is based on the geographical location of the customer. In accordance with IFRS 8, the non-current assets reported below exclude financial instruments, deferred tax assets, and pre-funded pension obligations.
| 2017 | ||||||||||||||||||||||||
| (€ million) | Total Sanofi | Europe | of which France |
North America |
of which United States |
Other countries |
||||||||||||||||||
| Net sales | 35,055 | 9,525 | 2,330 | 12,460 | 11,855 | 13,070 | ||||||||||||||||||
| Non-current assets: | ||||||||||||||||||||||||
|
∎ property, plant and equipment |
9,579 | 5,969 | 3,180 | 2,560 | 2,142 | 1,050 | ||||||||||||||||||
|
∎ goodwill |
40,264 | |||||||||||||||||||||||
|
∎ other intangible assets |
13,080 | 6,171 | 5,210 | 1,699 | ||||||||||||||||||||
| 2016 | ||||||||||||||||||||||||
| (€ million) | Total Sanofi | Europe | of which France |
North America |
of which United States |
Other countries |
||||||||||||||||||
| Net sales | 33,821 | 8,679 | 2,206 | 12,963 | 12,391 | 12,179 | ||||||||||||||||||
| Non-current assets: | ||||||||||||||||||||||||
|
∎ property, plant and equipment |
10,019 | 6,068 | 3,413 | 2,850 | 2,447 | 1,101 | ||||||||||||||||||
|
∎ goodwill |
40,287 | |||||||||||||||||||||||
|
∎ other intangible assets |
10,879 | 3,612 | 5,430 | 1,837 | ||||||||||||||||||||
| 2015 | ||||||||||||||||||||||||
| (€ million) | Total Sanofi | Europe | of which France |
North America |
of which United States |
Other countries |
||||||||||||||||||
| Net sales(a) | 34,060 | 9,861 | 2,248 | 12,369 | 11,764 | 11,830 | ||||||||||||||||||
| Non-current assets: | ||||||||||||||||||||||||
|
∎ property, plant and equipment |
9,943 | 5,956 | 3,480 | 2,879 | 2,498 | 1,108 | ||||||||||||||||||
|
∎ goodwill |
39,557 | |||||||||||||||||||||||
|
∎ other intangible assets |
12,026 | 3,719 | 5,980 | 2,327 | ||||||||||||||||||||
| (a) |
Following a change in accounting presentation in 2016, VaxServe sales of non-Sanofi products are included in Other revenues. The presentation of 2015 Net sales and Other revenues has been amended accordingly (see Note B.13.). |
As stated in Note D.5., goodwill is not allocated by geographical region.