Aventis Reports Third-Quarter and Nine-Month Results for 2003
Aventis delivers strong core business sales and earnings growth --
Q3 core business sales activity (excluding currency impact)
increases 8.3% to euro 4.259 billion (4.794 billion USD)
STRASBOURG, France, Oct. 30 /PRNewswire-FirstCall/ -- CONSOLIDATED
GROUP RESULTS Aventis consolidated group sales were euro 13.130
billion (14.779 billion USD) for the first nine months of 2003
compared to euro 15.781 billion (17.763 billion USD) for the same
period in 2002. The sales decline was mainly due to the inclusion
in the group's 2002 financial results of sales by Aventis
CropScience and Aventis Animal Nutrition, which were divested
during the first half of 2002, and to the weakening of some
currencies against the euro. Group net income for the first nine
months of 2003 was euro 1.444 billion (1.625 billion USD) compared
to euro 2.061 billion (2.320 billion USD) in the same period of
2002, which included the net gain related to the Aventis
CropScience and Aventis Animal Nutrition divestments. Consolidated
earnings per share (EPS) were euro 1.83 (2.06 USD) compared to euro
2.60 (2.93 USD). (Logo:
http://www.newscom.com/cgi-bin/prnh/20000501/NYM197) CORE BUSINESS
OVERVIEW Sales of the core business (prescription drugs, human
vaccines, 50% equity interest in the animal health joint venture
Merial, and corporate activities) on an activity basis (excluding
currency translation effects) increased 8.3% to euro 4.259 billion
(4.794 billion USD) in the third quarter and rose 6.2% to euro
12.400 billion (13.957 billion USD) for the first nine months of
2003. Core net income rose 14.2% to euro 640 million (720 million
USD) from euro 560 million (630 million USD) in the third quarter
of 2002, while nine-month net income was euro 1.728 billion (1.945
billion USD), an increase of 15.4% from euro 1.498 billion (1.686
billion USD) in the year-ago period. Earnings per share (EPS) in
the third quarter increased 15.5% to euro 0.82 (0.92 USD) from euro
0.71 (0.80 USD) despite the ongoing negative impact of adverse
exchange rate developments. For the first nine months of 2003, EPS
rose 16.1% to euro 2.19 (2.47 USD). Nine Nine Total AVENTIS CORE
BUSINESS Q3 2003 Q3 2002 Total months months variance KEY FIGURES
(1)(2) variance 2003 2002 (in euro million, except EPS) 12,400
13,033 -4.9 % Sales 4,259 4,234 0.6 % 6.2 % Activity variance(3)
8.3 % 1,728 1,498 15.4 % Net income 640 560 14.2 % 2.19 1.89 16.1 %
EPS (in euros) 0.82 0.71 15.5 % (1) Not subject to a review by the
auditors (2) Aventis core business comprises activities that the
Group considers to be strategic and intends to retain. It includes
prescription drugs, human vaccines, a 50% equity interest in the
Merial animal health joint venture and corporate activities. (3)
Excluding currency translation effects Percentages are calculated
before rounding the data in million euros "Our strategy to focus
our pipeline on targeted disease areas -- particularly diabetes,
oncology and vaccines -- is making progress. Earlier this year, we
submitted the fast-acting insulin Apidra for approval in the EU and
U.S. After obtaining positive initial phase III trial results for
the cancer drug Genasense in malignant melanoma the NDA submission
to the FDA was initiated in September. Two other compounds are
slated for regulatory submission by the end of 2003 -- the asthma
therapy Alvesco and the meningococcal meningitis vaccine Menactra,
all of which are expected to help secure our mid-term growth,"
Landau said. Note: Unless otherwise stated, all references below to
sales growth are on an activity basis, i.e. excluding currency
translation effects. In the third quarter core business net sales
rose 8.3% to euro 4.259 billion (4.794 billion USD). Reported core
business sales rose 0.6%, as changes in the valuation of foreign
currencies relative to the euro during the third quarter led to a
7.7 percentage point (p.p.) decline in sales. This was mainly
attributable to the weakness of the U.S. dollar, which accounted
for 5.8 percentage points of the negative impact on sales. Sales of
strategic brands and human vaccines in the third quarter amounted
to euro 2.824 billion (3.179 billion USD), an 18.4% increase from
the year-ago period, and accounted for 66.3% of total core business
sales. Strategic brand sales rose 16.7% to euro 2.272 billion
(2.557 billion USD) in the third quarter, while human vaccines
sales were euro 551 million (620 million USD), a 26.0% increase
over the year-ago period. This increase was due mainly to higher
sales of influenza vaccines in the United States amid early product
availability as well as growth in pediatric combination vaccines.
Sales of non-strategic products in the core business portfolio
declined approximately 8% on an activity basis. Sales of this group
of products, many of which do not receive marketing support, have
been declining mainly due to the impact of changes in government
healthcare policies, primarily in Europe, that include
cost-containment measures. In the United States, core business
sales rose 12.2% to euro 1.696 billion in the third quarter,
accounting for 39.8% of total core business sales. Strategic brands
and vaccines accounted for approximately 87% of total U.S. core
business sales. The oncology drug Taxotere and the anti-thrombotic
agent Lovenox/Clexane, along with the once-daily basal insulin
Lantus and the human vaccines business, contributed significantly
to the ongoing double-digit sales expansion in the U.S., helping to
offset the impact of a 7.8% decline in third-quarter sales of the
allergy drug Allegra. In France, third-quarter sales fell 1.5% to
euro 543 million, as higher sales of strategic brands -- led by the
cardiovascular agent Delix/Tritace as well as Lovenox/Clexane and
Taxotere -- failed to offset lower sales of non-strategic products
that have been negatively affected by changes in the country's
healthcare policy. In Germany, sales declined 0.9% to euro 263
million in the third quarter despite robust double-digit sales
growth for Lantus, Taxotere and Lovenox/Clexane due to increasing
pressures from government healthcare cost reduction measures. In
the rest of Europe, all countries in the region recorded steady to
higher sales as Lantus continued its excellent performance in the
United Kingdom and rapid acceptance in Italy, Austria, the
Netherlands and Nordic countries. In Japan, third-quarter sales
were up 0.8% at euro 191 million as sales of the osteoporosis agent
Actonel as well as Allegra, Taxotere and the oral anti- diabetic
agent Amaryl offset lower sales in the rest of the portfolio.
Aventis received regulatory approval for Lantus and the antibiotic
Ketek in this country in October, and intends to launch these
products by the end of 2003 or early 2004 following the completion
of pricing discussions with regulators. SELECTED SALES OF AVENTIS
STRATEGIC BRANDS AND HUMAN VACCINES (1) (in euro million) Nine Nine
Activity Q3 Q3 Activity months months variance(2) 2003 2002
variance(2) 2003 2002 1,324 1,535 2.3 % Allegra/Telfast global
sales 404 485 -6.2 % 1,101 1,302 1.3 % U.S. sales 349 428 -7.8 %
1,209 1,165 19.0 % Lovenox/Clexane global sales 410 356 26.0 % 744
765 16.6 % U.S. sales 254 227 27.3 % 1,021 917 27.0 % Taxotere
global sales 355 321 20.9 % 554 507 31.0 % U.S. sales 191 176 23.4
% 775 669 21.9 % Delix/Tritace global sales 271 224 24.0 % (Not
sold by Aventis in the U.S.) 327 205 84.6 % Lantus global sales 129
82 76.3 % 243 164 77.6 % U.S. sales 90 66 57.3 % 53 26 114.2 %
Ketek global sales 15 11 39.4 % (Not yet sold by Aventis in the
U.S.) 130 80 81.4 % Actonel sales consolidated 49 25 102.0 % by
Aventis(3) (U.S. sales consolidated by P&G) 1,234 1,130 24.4 %
Human vaccines sales 551 487 26.0 % consolidated by Aventis(4) 731
669 31.0 % U.S. sales 346 311 29.3 % (1) Not subject to a review by
the auditors (2) Excluding currency translation effects (3)
Cooperation with Procter & Gamble; Actonel sales as
consolidated by Aventis including sales in Japan (4) Vaccines sales
in Europe through the Aventis Pasteur MSD joint venture are not
consolidated by Aventis N.S. Not significant Allegra/Telfast
(fexofenadine): Sales of the non-sedating allergy medication
declined 6.2% in the third quarter due to a slowdown in the United
States, where sales fell 7.8%. For the first nine months of the
year, worldwide sales were up 2.3%, while sales in the U.S. rose
1.3%. The sales growth for the first nine months of 2003 was
roughly in line with a 2.6% increase in total prescriptions for
Allegra compared to the same period in 2002. Allegra sales in the
third quarter were negatively affected primarily by greater
availability of competing over-the-counter (OTC) branded and
private- label loratadine (Claritin) products in the U.S. during
2003, which reduced overall sales of prescription non-sedating
antihistamines. In this competitive market, Allegra maintained its
leading market share position, on a total prescription basis. The
scheduled trial date for lawsuits filed against five companies
seeking to market generic versions of Allegra currently remains set
for September 2004. All five lawsuits are pending in the U.S.
District Court for New Jersey. Aventis has been notified that one
of these companies, Dr. Reddy's Laboratories, has recently filed a
Section 505(b)(2) application with the FDA seeking authorization to
produce and market versions of Allegra 30, 60, and 180 mg tablets,
as well as an ANDA seeking authorization to market a generic
version of Allegra-D. A Section 505(b)(2) application is a type of
New Drug Application (NDA) in which the full reports of
investigations showing safety and efficacy that are required for
approval are supplied through reference to clinical studies that
the applicant did not conduct and for which the applicant has not
obtained a right of reference or use. This type of application is
not used to seek approval of traditional, generically substitutable
versions of brand-name drugs. The notice Aventis received regarding
Dr. Reddy's application did not reveal how this filing differs from
Dr. Reddy's previous ANDA filings. However, a Section 505(b)(2)
application may be used to seek approval for, among other things,
combination products, products that do not demonstrate
bioequivalence to a listed drug, or OTC versions of prescription
drugs. Aventis, which holds multiple method of use, formulation,
process and composition patents with respect to Allegra, has filed
a patent infringement lawsuit against Dr. Reddy's in response to
Dr. Reddy's 505(b)(2) filing and intends to vigorously protect and
enforce its intellectual property rights. Under current law, the
FDA is now prevented from approving Dr. Reddy's Section 505(b)(2)
application for 30 months, or until an earlier court decision
adverse to Aventis in the patent litigation lawsuit. With regard to
the ANDA filing for Allegra-D, Aventis is currently reviewing its
legal options. Lovenox/Clexane (enoxaparin sodium): Sales of the
anti-thrombotic agent rose 27.3% in the U.S. in the third quarter,
while global sales rose 26.0%. Increased sales and marketing
efforts aimed at replacing unfractionated heparin was the primary
driver of the improved U.S. performance. Lovenox has steadily
increased its market share for use in medical patients at risk of
deep vein thrombosis (DVT) as well as in patients with acute
coronary syndrome, its two key growth-driver indications. Taxotere
(docetaxel): The world's leading chemotherapy agent, based on
sales, recorded a 20.9% increase in worldwide sales for the third
quarter, while U.S. sales advanced 23.4%. New clinical data
presented at the ECCO 2003 congress in September, which
demonstrated a significant survival benefit for metastatic breast
cancer patients receiving Taxotere over paclitaxel, is expected to
help accelerate sales growth. More importantly, clinical data will
be presented at the San Antonio Breast Cancer Symposium at the Late
Breaking Clinical Trial Session (December 5, 2003) that reports on
the second interim analysis of the TAX 316 study evaluating the use
of Taxotere in adjuvant breast cancer. Data from these two studies
are expected to fuel Taxotere's growth in the breast cancer market.
New indications for Taxotere for adjuvant breast cancer, prostate
cancer and gastric cancer are also expected to be submitted for
U.S. and EU regulatory approval in late 2003 or early 2004.
Delix/Tritace (ramipril): The ACE inhibitor remains on track to
achieve blockbuster status in 2003 after sales increased 24.0% in
the third quarter. Increasing use among people with hypertension
and/or diabetes seeking to reduce the risk of cardiovascular events
has been the primary reason for the ongoing growth. Lantus (insulin
glargine): Sales of the long-acting insulin remained strong, rising
76.3% worldwide in the third quarter. Supported by activities at
the International Diabetes Foundation (IDF) meeting in August,
marketing of Lantus has begun in more than 20 countries, including
France, since the start of 2003. Lantus has expanded its position
as the leading insulin brand in the United States, claiming 20.4%
of new prescriptions and 19.6% of total prescriptions in the total
U.S. insulin market in August 2003, according to IMS Health. Ketek
(telithromycin): Sales of the world's first ketolide antibiotic
rose 39.4% in the third quarter, helped by a renewed marketing
effort with emphasis on comparison to first-line therapy agents
that highlights Ketek's targeted spectrum of activity for mild to
moderate respiratory tract infections. In October 2003, Aventis
submitted a response to a second "approvable letter" issued by the
FDA in January 2003. Assuming a standard period of regulatory
review from this point forward, Aventis currently anticipates
gaining U.S. regulatory approval for Ketek by the end of the second
quarter 2004. Actonel (risedronate): An ongoing improvement in
sales of the once-weekly version in the U.S. and Europe helped to
advance overall sales of the osteoporosis treatment. Total Alliance
sales with partner Procter & Gamble Pharmaceuticals were euro
197 million in the third quarter, an increase of 68% from the same
period in 2002. Sales consolidated by Aventis amounted to euro 49
million in the third quarter, doubling from the year-ago period and
helped primarily by the rapid growth of Actonel in Japan following
its launch in September 2002. Human vaccines sales rose 26.0% in
the third quarter, as the early availability of influenza vaccines
positively impacted performance. Among the other key drivers was
the ongoing strong sales of the trivalent pediatric vaccine
Daptacel in the U.S. due to its synergies with the country's
immunization schedule and increased sales of adult booster vaccines
due to the availability of larger supplies earlier than in 2002.
International sales were higher as strong sales of influenza
vaccines in Asia helped offset reduced sales of vaccines for
endemic regions and meningitis vaccines. Sales in Europe by the
Aventis Pasteur MSD joint venture, which are not consolidated by
Aventis, were euro 209 million in the third quarter, after euro 210
million in the same period in 2002. AVENTIS SET FOR WAVE OF NEW
PRODUCT SUBMISSIONS IN LATE 2003 Aventis plans to complete the
regulatory submissions for three new products before the end of
2003 following the submission of Apidra, a rapid- acting insulin,
in the U.S. and EU during the second quarter. Alvesco (ciclesonide)
is an inhaled corticosteriod that is anticipated to offer excellent
efficacy and improved safety compared to existing medications for
the treatment of asthma. Aventis is co-developing this compound
with Altana Pharma in the U.S. for use in both adults and children,
and Aventis is responsible for the U.S. regulatory filing.
Genasense (oblimersen sodium) is the first targeted pro-apoptotic
agent specific to Bcl-2, a critical protein in the pathway of cell
death (apoptosis). Genasense enhances the effectiveness of
anticancer therapy in solid and liquid tumors by blocking the
production of Bcl-2, facilitating cell death by anticancer
therapies. Based upon data from the phase III pivotal trial, in
patients with metastatic melanoma who received Genasense plus
dacarbazine , Aventis and Genta have begun submission of a new drug
application (NDA) to the FDA for approval of Genasense for use in
the treatment of metastatic melanoma. The formal scientific
presentation of these results will be made at the 6th Annual
Perspectives in Melanoma Meeting in Miami, Florida, on November 14,
2003. Additional phase III clinical trials studying the efficacy of
Genasense in combination with chemotherapy in chronic lymphocytic
leukemia (CLL) and multiple myeloma have completed accrual.
Genasense is currently the subject of over 20 additional studies
sponsored by the U.S. National Cancer Institute (NCI). Menactra,
the first quadrivalent conjugate vaccine for the prevention of
meningococcal meningitis (four serogroups), is planned to be
submitted for U.S. regulatory approval for use in children age 11
and older as well as adults by the end of 2003. A submission for
use in children ages 2-11 is planned for 2004, while a submission
for ages 2-55 in the EU is also planned for 2004. Menactra is
expected to offer a longer-lasting immune response against
meningococcal meningitis, considered the most deadly form of the
three main types of meningitis. CORE BUSINESS PROFITABILITY
ANALYSIS Gross margin as a percentage of core business sales
declined to 73.5% in the third quarter from 73.6% in the year-ago
period. Excluding the impact of currencies, the gross margin would
have risen 0.8 percentage points to 74.4% for the third quarter due
to increased sales of higher-margin human vaccines and prescription
drugs. Selling, general and administrative expenses and other
revenues net related to the core business were euro 1.219 billion
in the third quarter (28.6% of sales) compared to euro 1.254
billion (29.6% of sales) in the year- ago period. Excluding
currency translation effects, SG&A and other revenues net
increased 3.7%. Foreign exchange gains and losses accounted for a
loss of euro 20 million in the third quarter compared to a gain of
euro 33 million in the year-ago period. Research and development
spending in the core business totaled euro 718 million (16.9% of
sales) compared to euro 736 million (17.4% of sales) in the third
quarter of 2002, an increase of 5.4% excluding currency translation
effects. R&D expenses included euro 87 million of milestone
payments made in the third quarter in connection with new product
inlicensing and development collaborations, including an agreement
with Regeneron, for a targeted anti- cancer therapy. Restructuring
expenses related to the core business amounted to euro 84 million
in the third quarter compared to euro 4 million in the year-ago
period. Equity in earnings of affiliated core business companies
amounted to euro 75 million in the third quarter compared to euro
63 million in the year-ago period. Sales by the Merial animal
health joint venture (with Merck & Co.) were euro 470 million
in the third quarter, up 12% from the year-ago period on an
activity basis. EBITA (operating profit before goodwill
amortization plus equity in earnings of affiliated companies) for
the core business amounted to euro 1.184 billion in the third
quarter compared to euro 1.182 billion in the year-ago period. This
includes euro 95 million in costs related to an ongoing
productivity enhancement plan and the euro 87 million in milestone
payments in connection with new product inlicensing and development
collaborations. Excluding the currency translation impact, EBITA
growth would have been 14.6%. The EBITA margin as a percentage of
sales decreased 0.1 percentage points to 27.8% in the third quarter
from 27.9% in the year-ago period. Miscellaneous non-operating
income and expenses related to the core business amounted to a loss
of euro 26 million compared to a loss of euro 76 million in the
year-ago period due to lower impairments for biotechnology
investments and legal provisions taken in the 2002 third quarter
for previously divested products. Net income of the core business
increased 14.2% to euro 640 million from euro 560 million in the
third quarter of 2002, while earnings per share (EPS) rose 15.5% to
euro 0.82 from euro 0.71 in the year-ago period. Before goodwill
amortization, EPS rose 10.9% to euro 0.97 from euro 0.87 in the
year-ago period. Costs related to the productivity enhancement plan
initiated at the start of 2003 negatively impacted EPS by euro 0.08
in the third quarter of 2003. NON-CORE BUSINESS PROFITABILITY
ANALYSIS Non-core business sales were euro 254 million in the third
quarter of 2003 compared to euro 250 million in the year-ago
period. The therapeutic proteins business Aventis Behring achieved
third-quarter sales of euro 249 million, which were flat compared
to the year-ago period. Sales for the first nine months of 2003
were down 1% to euro 712 million, due mainly to pricing pressures
on some products offered by Aventis Behring. Aventis is continuing
exclusive negotiations with CSL Ltd. of Australia concerning the
divestment of this business. Non-core EBITA in the third quarter
was a gain of euro 27 million compared to a gain of euro 46 million
in the year-ago period. Non-core net income was a loss of euro 9
million in the third quarter compared to a gain of euro 13 million
in the year-ago period. AVENTIS ACCELERATING SHARE REPURCHASE
PROGRAM During the first nine months of 2003, Aventis had
repurchased 13.2 million of its shares, or 1.9% of the trading
volume, including approximately 8 million shares during the third
quarter. Aventis held approximately 20.1 million of its own shares
at the end of the third quarter, representing 2.5% of the company's
share capital of 799,474,490 shares. The average number of
outstanding shares in the third quarter of 2003 was 784.1 million.
Shares are purchased on the open market or in privately negotiated
transactions, from time to time, based on market conditions. The
repurchased shares, which are being used for general corporate
purposes, are booked against stockholders' equity and are excluded
from earnings per share (EPS) calculations. OUTLOOK: AVENTIS ON
TRACK TO ACHIEVE CORE EPS GROWTH OBJECTIVES For the full year,
Aventis expects core business earnings per share growth in the mid
to high-teens. Due to a slowdown in the overall U.S. pharmaceutical
market, including antihistamines, and coupled with healthcare
reform initiatives in Europe, sales growth is expected to be around
6% on a full-year basis. About Aventis Aventis is dedicated to
treating and preventing disease by discovering and developing
innovative prescription drugs and human vaccines. In 2002, Aventis
generated sales of euro 17.6 billion, invested euro 3.1 billion in
research and development and employed approximately 71,000 people
in its core business. Aventis corporate headquarters are in
Strasbourg, France. For more information, please visit:
http://www.aventis.com/. The press releases, IR presentation and
links to live and on-demand audiocasts are available
athttp://www.aventis.com/2003Q3. PLEASE NOTE: Aventis will report
its full-year 2003 results on February 5, 2004. Definition of EBITA
EBITA is an unaudited non-GAAP measure that we define as operating
income (loss), excluding goodwill amortization, plus equity in
earnings from affiliated companies. We have included EBITA
information because it is one of the measurements we use to assess
our financial performance. Our EBITA may not be comparable to EBITA
as defined by other companies. We believe EBITA is a measure
commonly used by financial analysts and others in the
pharmaceutical industry. Definition of EPS Basis EPS before
goodwill amortization is an unaudited non-GAAP measure that we
define as basic earnings per share(EPS) excluding goodwill
amortization. We have included basic EPS before goodwill
amortization since we consider this measurement to be relevant to
an understanding of the performance of our activities. Statements
in this news release containing projections or estimates of
revenues, income, earnings per share, capital expenditures, capital
structure, or other financial items; plans and objectives relating
to future operations, products, or services; future economic
performance; or assumptions underlying or relating to any such
statements, are forward-looking statements subject to risks and
uncertainties. Actual results could differ materially depending on
factors such as the timing and effects of regulatory actions, the
results of clinical trials, the company's relative success
developing and gaining market acceptance for new products, the
outcome of significant litigation, and the effectiveness of patent
protection, the effects of currency exchange fluctuations, and
other factors. Estimates of future product sales can be
particularly subject to uncertainty due to the multitude of factors
that could cause actual results to differ materially. Such factors
include, but are not limited to, adverse outcomes in patent
infringement litigation; entry into the market of new products, or
of generic or over-the-counter versions of Aventis' products or of
competing products; undesirable or untimely regulatory or
legislative actions, such as forced conversion of prescription
drugs to over- the-counter status; inability to obtain regulatory
approval to market drugs for certain indications; and limitations
on revenues imposed by volume purchasers, government entities, and
by operation of law. Aventis disclaims any obligation to revise or
update any such forward-looking statement. . Additional information
regarding risks and uncertainties is set forth in the current
Annual Report on Form 20-F of Aventis on file with the Securities
and Exchange Commission and in the current Annual Report --
"Document de Reference" -- on file with the "Commission des
Operations de Bourse" in France. Brand names appearing in italics
throughout this document are trademarks of Aventis, and/or its
affiliates, with the exception of trademarks that may be used under
license by Aventis and/or its affiliates, such as Actonel, a
trademark of Procter & Gamble Pharmaceuticals; Alvesco, a
trademark of ALTANA Pharma AG; Genasense, a trademark of Genta Inc.
Complete financial tables are available on our website at:
http://www.aventis.com/ or by calling 917-965-1413. NOTE TO
EDITORS: This press release was issued earlier today in France by
Aventis S.A. . This version contains key figures converted from
euros into U.S. dollars (USD) at the exchange rate of 1 euro =
1.1256 USD (AVE)
http://www.newscom.com/cgi-bin/prnh/20000501/NYM197DATASOURCE:
Aventis CONTACT: Patti Munzer, Aventis Global Media Relations (NY),
+1-917-965-1411, , Tony Roddam, Aventis Global Media Relations,
+33-3-88-99-11-38, , Nathalie Jecker, Aventis Global Media
Relations, +33-3-88-99-11-16, Web site: http://www.aventis.com/
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