Segment Information

6 Months Ended

Jun. 30, 2023

Disclosure of operating segments [abstract]


B.20. SEGMENT INFORMATION

In 2022, Sanofi reported three operating segments (Pharmaceuticals, Vaccines and Consumer Healthcare). The costs of the global support functions (Corporate Affairs, Finance, People & Culture, Legal Affairs, Ethics & Business Integrity, Information Solutions & Technology, Sanofi Business Services, etc.), which are mainly managed centrally at group-wide level, were presented within the “Other” category.

In 2023, Sanofi reviewed the presentation of its segment information following adjustments to its internal reporting systems in order to reflect (i) progress on the “Play to Win” strategy leading to the creation of the standalone Consumer Healthcare Global Business Unit (GBU) which, in addition to integrated research, development and production functions now also has its own dedicated global support functions (including Finance, People & Culture, Legal Affairs, Ethics & Business Integrity, Information Solutions & Technology, Global Business Services, etc.); and (ii) organizational changes to Sanofi’s Manufacturing & Supply global function (previously known as Industrial Affairs).

Consequently, with effect from January 1, 2023, Sanofi reports two operating segments: Biopharma and Consumer Healthcare.

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 Consumer Healthcare GBU.

The Consumer Healthcare 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 Consumer Healthcare 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.


B.20.1. SEGMENT RESULTS

B.20.1.1. Analysis of net sales

The table below sets forth net sales for the six months ended June 30, 2023 and June 30, 2022:


(€ million)		Europe	United States	Other countries	June 30, 2023	Europe	United States	Other countries	June 30, 2022 (a)

Biopharma		4,194	7,366	5,907	17,467	3,986	6,917	6,244	17,147
Specialty Care		1,621	5,622	1,448	8,691	1,535	4,829	1,278	7,642
of which	Dupixent®	587	3,682	609	4,878	450	2,653	474	3,577
	Aubagio®	249	348	38	635	269	689	59	1,017
	Cerezyme®	120	94	163	377	126	94	147	367
	Myozyme/Lumizyme®	181	135	120	436	206	163	118	487
	Fabrazyme®	122	251	123	496	116	221	121	458
	Jevtana®	8	128	40	176	19	142	42	203
	Alprolix®	—	215	45	260	—	198	39	237
	Eloctate®	—	183	65	248	—	232	59	291
General Medicines		2,003	1,087	3,296	6,386	2,130	1,410	3,767	7,307
Core Assets		1,011	762	1,409	3,182	978	773	1,454	3,205
of which	Lovenox®	329	5	273	607	353	7	354	714
	Toujeo®	221	118	241	580	211	128	202	541
	Plavix®	48	4	424	476	52	5	451	508
Non-Core Assets		728	322	1,874	2,924	858	624	2,304	3,786
of which	Lantus®	191	180	429	800	223	425	623	1,271
	Other non-core assets	497	139	1,274	1,910	593	196	1,481	2,270
Industrial sales		264	3	13	280	294	13	9	316
Vaccines		570	657	1,163	2,390	321	678	1,199	2,198
of which	Polio/Pertussis/ Hib Vaccines	148	200	806	1,154	161	224	817	1,202
	Influenza Vaccines	37	19	106	162	37	12	132	181
Consumer Healthcare		840	622	1,258	2,720	781	645	1,217	2,643
of which	Allergy	49	246	151	446	37	249	148	434
	Pain Care	254	89	216	559	261	103	218	582
	Digestive Wellness	285	69	460	814	252	62	412	726
Total net sales		5,034	7,988	7,165	20,187	4,767	7,562	7,461	19,790

(a) 2022 figures have been adjusted to take account of the two new operating segments, Biopharma and Consumer Healthcare, effective from January 1, 2023.

B.20.1.2. Business operating income

Sanofi reports segment results on the basis of “Business operating income”, a non-IFRS financial measure used internally by the 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 relating to business combinations (IFRS 3) or divestments and Other gains and losses, and litigation are eliminated;

•expenses arising from the remeasurement of inventories following a business combination (IFRS 3) 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 for joint ventures and associates with which Sanofi has entered into a strategic partnership agreement; and

•net income attributable to non-controlling interests is deducted.

Segment results are shown in the table below:


	June 30, 2023 (6 months)
(€ million)	Biopharma	Consumer Healthcare	Other (a)	Total
Net sales	17,467	2,720	—	20,187
Other revenues	1,331	27	—	1,358
Cost of sales	(5,388)	(949)	(5)	(6,342)
Research and development expenses	(3,082)	(111)	—	(3,193)
Selling and general expenses	(4,248)	(936)	2	(5,182)
Other operating income and expenses	(897)	100	(8)	(805)
Share of profit/(loss) from investments accounted for using the equity method	48	7	—	55
Net income attributable to non-controlling interests	(11)	(8)	—	(19)
Business operating income	5,220	850	(11)	6,059

(a) The “Other” column reconciles segmental results to the total per the consolidated financial statements.


	June 30, 2022 (6 months) (a)
(€ million)	Biopharma	Consumer Healthcare	Other (b)	Total
Net sales	17,147	2,643	—	19,790
Other revenues	975	30	—	1,005
Cost of sales	(5,211)	(925)	9	(6,127)
Research and development expenses	(3,062)	(90)	5	(3,147)
Selling and general expenses	(4,081)	(881)	9	(4,953)
Other operating income and expenses	(884)	114	(18)	(788)
Share of profit/(loss) from investments accounted for using the equity method	47	8	—	55
Net income attributable to non-controlling interests	(8)	(9)	—	(17)
Business operating income	4,923	890	5	5,818

(a) 2022 figures have been adjusted to take account of the two new operating segments, Biopharma and Consumer Healthcare, effective from January 1, 2023.

(b) The “Other” column reconciles segmental results to the total per the consolidated financial statements.


	December 31, 2022 (12 months) (a)
(€ million)	Biopharma	Consumer Healthcare	Other (b)	Total
Net sales	37,812	5,185	—	42,997
Other revenues	2,330	62	—	2,392
Cost of sales	(11,793)	(1,903)	4	(13,692)
Research and development expenses	(6,503)	(205)	2	(6,706)
Selling and general expenses	(8,736)	(1,761)	5	(10,492)
Other operating income and expenses	(1,679)	148	17	(1,514)
Share of profit/(loss) from investments accounted for using the equity method	76	12	—	88
Net income attributable to non-controlling interests	(17)	(16)	—	(33)
Business operating income	11,490	1,522	28	13,040

(a) 2022 figures have been adjusted to take account of the two new operating segments, Biopharma and Consumer Healthcare, effective from January 1, 2023.

(b) The “Other” column reconciles segmental results to the total per the consolidated financial statements.

The table below, presented in compliance with IFRS 8, shows a reconciliation between “Business operating income” and Income before tax and investments accounted for using the equity method:


(€ million)	June 30, 2023 (6 months)	June 30, 2022 (6 months)	December 31, 2022 (12 months)
Business operating income	6,059	5,818	13,040
Share of profit/(loss) from investments accounted for using the equity method	(55)	(55)	(88)
Net income attributable to non-controlling interests	19	17	33
Amortization and impairment of intangible assets (a)	(1,050)	(997)	(1,599)
Fair value remeasurement of contingent consideration	(26)	(17)	27
Expense arising from the impact of acquisitions on inventories (b)	(5)	(3)	(3)
Restructuring costs and similar items	(547)	(792)	(1,336)

Other gains and losses, and litigation	(73)	(142)	(370)
Income from out-licensing (c)	—	—	952
Operating income	4,322	3,829	10,656
Financial expenses	(370)	(189)	(440)
Financial income	286	34	206
Income before tax and investments accounted for using the equity method	4,238	3,674	10,422

(a)For the year ended December 31, 2022, this line includes a reversal of €2,154 million on Eloctate® franchise products following the FDA approval of ALTUVIIIOTM on February 22, 2023, partly offset by an impairment of €1,586 million relating to SAR444245 (non-alpha interleukin-2).

(b)This line records the impact of the workdown of acquired inventories remeasured at fair value at the acquisition date.

(c)For the year ended December 31, 2022, this line includes an upfront payment of $900 million and a regulatory milestone payment of $100 million related to the out-licensing of Libtayo® following the restructuring of the Immuno-Oncology Collaboration and License Agreement with Regeneron (see Note C.1. to the consolidated financial statements for the year ended December 31, 2022).


B.20.2. OTHER SEGMENT INFORMATION

The tables below show the split by operating segment of (i) the carrying amount of investments accounted for using the equity method for which Sanofi has entered into a strategic partnership agreement, (ii) acquisitions of property, plant and equipment, and (iii) acquisitions of intangible assets.

Investments accounted for using the equity method in the Biopharma segment mainly comprise MSP Vaccine Company and Infraserv GmbH & Co. Höchst KG (see Note B.5.).

Acquisitions of intangible assets and property, plant and equipment correspond to acquisitions paid for during the period.


	June 30, 2023 (6 months)
(€ million)	Biopharma	Consumer Healthcare	Total
Investments accounted for using the equity method	231	10	241
Acquisitions of property, plant and equipment	751	31	782
Acquisitions of other intangible assets	132	16	148


	June 30, 2022 (6 months) (a)
(€ million)	Biopharma	Consumer Healthcare	Total
Investments accounted for using the equity method	253	42	295
Acquisitions of property, plant and equipment	664	29	693
Acquisitions of other intangible assets	274	7	281

(a) 2022 figures have been adjusted to take account of the two new operating segments, Biopharma and Consumer Healthcare, effective from January 1, 2023.


	December 31, 2022 (12 months) (a)
(€ million)	Biopharma	Consumer Healthcare	Total
Investments accounted for using the equity method	248	37	285
Acquisitions of property, plant and equipment	1,529	77	1,606
Acquisitions of other intangible assets	574	21	595

(a) 2022 figures have been adjusted to take account of the two new operating segments, Biopharma and Consumer Healthcare, effective from January 1, 2023.


B.20.3. 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, pre-funded pension obligations, and right-of-use assets as determined under IFRS 16.


	June 30, 2023 (6 months)
(€ million)	Total	Europe	of which France	North America	of which United States	Other countries
Net sales	20,187	5,034	1,174	8,264	7,988	6,889
Non-current assets:
•property, plant and equipment	9,804	5,462	2,921	3,268	2,364	1,074
•goodwill	49,243	—	—	—	—	—
•other intangible assets	24,590	5,961	—	17,598	—	1,031


	June 30, 2022 (6 months)
(€ million)	Total	Europe	of which France	North America	of which United States	Other countries
Net sales	19,790	4,767	1,105	7,875	7,562	7,148
Non-current assets:
•property, plant and equipment	9,767	5,391	2,935	3,246	2,414	1,130
•goodwill	50,555	—	—	—	—	—
•other intangible assets	21,978	6,467	—	14,505	—	1,006


	December 31, 2022 (12 months)
(€ million)	Total	Europe	of which France	North America	of which United States	Other countries
Net sales	42,997	9,999	2,296	18,984	18,275	14,014
Non-current assets:
•property, plant and equipment	9,869	5,365	2,875	3,284	2,457	1,220
•goodwill	49,892	—	—	—	—	—
•other intangible assets	21,640	6,257	—	14,178	—	1,205

As stated in Note D.5. to the consolidated financial statements for the year ended December 31, 2022, goodwill is not allocated by geographical region.


B.20.4. PRINCIPAL CUSTOMERS AND CREDIT RISK

Sales generated by Sanofi with its biggest customers, in particular certain wholesalers in the United States, represented 27% of net sales in the first half of 2023. Sanofi’s three largest customers respectively accounted for approximately 11%, 9% and 7% of consolidated net sales in the first half of 2023, mostly in the Biopharma segment (versus approximately 12%, 8% and 7% in the first half of 2022).