Aventis Reports First-Quarter Results for 2004

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Aventis Reports First-Quarter Results for 2004 All Figures Refer to 2004 Group vs 2003 Core Unless Otherwise Stated STRASBOURG, France, April 29 /PRNewswire-FirstCall/ -- Aventis and Sanofi-Synthelabo agree to create Sanofi-Aventis "Our first-quarter results are in line with our full-year targets and guidance. In 2004, supported by the launch of several new key products, Aventis should generate sales growth of six to seven percent with earnings per share growing in the mid-teens," Igor Landau, Chairman of the Management Board, said. (Logo: http://www.newscom.com/cgi-bin/prnh/20000501/NYM197 ) "Regarding the future creation of Sanofi-Aventis, we are pleased to have reached an agreement with Sanofi that recognizes the value of Aventis, our growth potential, and the talent and expertise of our employees. Having a balanced representation in the future management of Sanofi-Aventis, this agreement provides the necessary conditions for the success and development of the new group," Landau added. CONSOLIDATED GROUP RESULTS Aventis consolidated group sales were euro 3.9 billion (4.9 billion USD) in the first quarter of 2004 compared to euro 4.2 billion (5.2 billion USD) in the 2003 first quarter. The 2003 sales figure includes the consolidated sales from the therapeutic proteins business Aventis Behring, which was completely divested on March 31, 2004, and is being treated as a discontinued operation in the 2004 results (and therefore excluded from consolidated sales). Group net income was euro 556 million (695 million USD) in the 2004 first quarter compared to euro 202 million (252 million USD) in the year-ago period, while consolidated earnings per share (EPS) were euro 0.71 (0.89 USD) compared to euro 0.25 (0.31 USD) AVENTIS DELIVERS ON SUBMISSIONS AND APPROVALS PROGRAM Aventis achieved a key approval in the U.S. in the first quarter for antibiotic Ketek, already in use in major European, Latin American and Asian markets, and with an estimated peak global sales potential of more than euro 1.5 billion (1.9 billion USD). Aventis advanced its regulatory submissions program in the first quarter, submitting the blockbuster oncology agent Taxotere for U.S. and EU approval in March for the treatment of early stage breast cancer as well as for hormone refractory prostate cancer earlier this year. A submission for gastric cancer is planned for the second half of 2004. In addition, Aventis, with partner Pfizer Inc., submitted the inhalable insulin Exubera for EU regulatory approval. The companies are working with the U.S. Food and Drug Administration (FDA) to determine the appropriate timing for submission for U.S. approval. Also in the first quarter, Aventis submitted its new OptiClik(TM) reusable pen for administering Lantus for regulatory approval in the U.S. and EU. The cartridge for the pen has also been submitted to the regulatory authorities in Japan. In March, an FDA Advisory Committee voted to recommend, with conditions, the approval of Sculptra, an injectable poly-L-lactic acid product, to correct lipoatrophy in people with human immunodeficiency virus (HIV). In April, the FDA approved rapid-acting insulin analog Apidra, which will complement an expanding diabetes portfolio, and Nasacort HFA Nasal Aerosol, to treat nasal symptoms associated with seasonal and perennial allergic rhinitis. AVENTIS SIMPLIFIES REPORTING STRUCTURE Starting January 1, 2004, the consolidated financial statements are reported at the level of Aventis Group, eliminating the split between core and non-core business activities. For 2004, Aventis as a Group represents the on-going core business activities in prescription drugs, human vaccines, the Merial animal health equity joint venture and corporate activities. It also includes the remaining non-core businesses whose sales are not consolidated (equity stakes in the chemical companies Wacker and DyStar as well as an investment in Rhodia). Any contribution of Aventis Behring to 2004 is treated as discontinued operations. Following the completion of the divestment Aventis Behring on March 31, 2004, the remaining non-core activities are considered to be less material. As a result the performance of Aventis presented as a Group in 2004 is compared with the 2003 Aventis core business results. BUSINESS OVERVIEW -- 2004 GROUP VS 2003 CORE BUSINESS Aventis consolidated Group sales were euro 3.946 billion (4.931 billion USD) in the first quarter of 2004 compared to euro 3.970 billion (4.961 billion USD) of sales for the core business in the year-earlier quarter. Group net income increased by 14.6% to euro 556 million (695 million USD) in the first quarter from euro 485 million (606 million USD) in core net income a year earlier. Consolidated earnings per share (EPS) in the first quarter of this year were euro 0.71 (0.89 USD) compared to core EPS of euro 0.61 (0.76 USD), an increase of 16.5% from the comparable period. Q1 Q1 Total AVENTIS KEY FIGURES (1) Group Core variance (in euro million, except EPS) 2004 2003 (3) euro 3,946 euro 3,970 -0.6 Sales +6.4% Activity variance(2) euro 556 euro 485 +14.6% Net income euro 0.71 euro 0.61 +16.5% EPS (in euro) (1) Unaudited (2) Excluding currency translation effects (3) Percentages are calculated before rounding the data Note: Unless otherwise stated, all references below to sales activity growth are on a constant exchange rate basis. Sales activity rose 6.4% to euro 3.946 billion (4.931 billion USD) in the first quarter of 2004, while reported sales fell 0.6% due mainly to the negative impact of the value of the euro against other currencies. Sales of strategic products, which comprise strategic brands(1) and human vaccines, amounted to euro 2.308 billion (2.884 billion USD) in the first quarter of 2004, an activity increase of 21.1% from a year earlier, and accounted for 58.5% of total Group sales. Strategic brand sales activity rose 22.6% to euro 1.942 billion (2.427 billion USD) in the first quarter, while human vaccines sales activity increased 13.8% to euro 366 million (457 million USD). (1) The Aventis strategic brands are Actonel, Lovenox/Clexane, Ketek, Lantus, Taxotere, Amaryl, Arava, Campto, Copaxone, Insuman, Nasacort, Targocid, Tavanic and Delix/Tritace. As of January 1, 2004, Allegra has been reclassified as no longer being a strategic brand and its sales will be reported independently. Sales activity of the seasonal allergy drug Allegra declined 11.9% worldwide to euro 325 million (406 million USD), while U.S. sales activity fell 12.0% to euro 241 million (301 million USD). The performance of Allegra in the U.S. has been affected primarily by competing over-the-counter (OTC) branded and private-label products as well as changes in reimbursement for prescription antihistamines by managed care organizations. Sales activity of other prescription drugs, which generally do not receive marketing and promotional support, fell 10.3% in the first quarter, due mainly to the ongoing negative impact of healthcare cost-containment measures in many European countries. On a like-to-like basis, excluding divested products, sales activity for this group of products declined 7.8%. Bulk and toll manufacturing, which includes the production of active pharmaceutical ingredients for third parties, reported a sales activity decrease of 6.4% to euro 133 million (166 million USD) in the first quarter. Q1 2004 Q1 2003 Activity % share % share Group Core variance (1) Group Core sales sales sales sales (in euro mln) (in euro mln) 2004 2003 euro 2,308 euro 2,055 +21.1% Strategic brands 58.5% 51.8% and human vaccines euro 325 euro 418 -11.9% Allegra / 8.2% 10.5% Telfast euro 133 euro 148 -6.4% Bulk and toll 3.4% 3.7% manufacturing euro 1,165 euro 1,350 -10.3% Other prescrip- 29.5% 34.1% tion drugs (1) At constant exchange rates In the United States, sales activity rose 8.7% to euro 1.355 billion in the 2004 first quarter due to strong sales growth of the long-acting insulin Lantus and the anti-thrombotic Lovenox/Clexane, which helped to offset lower sales of Allegra. In Europe, sales activity rose 2.1% as the ongoing expansion of strategic brands (up 15.7% on an activity basis) was largely offset by the sustained impact of governmental cost-containment efforts to curb healthcare spending. France reported record sales of oncology products, particularly the chemotherapy agent Taxotere, as well as continued strong sales of Lantus following its launch in this market in 2003. In Germany, oncology and thrombosis products also performed well, helping to offset lower sales of the cardiovascular drug Delix/Tritace following the start of generic competition in late 2003. Strategic brands accounted for 56.2% of total sales in Europe compared to 49.6% in the year-ago period. In Japan, first-quarter sales activity advanced 3.3% to euro 205 million, due mainly to the excellent launch of the antibiotic Ketek in December 2003 and the continued success of Actonel in gaining market share. However, Allegra reported a decline in first-quarter sales after the country experienced one of its weakest allergy seasons within the last decade. SELECTED SALES OF AVENTIS STRATEGIC BRANDS AND HUMAN VACCINES (1) (in euro million) Q1 Q1 Activity 2004 2003 variance(2) 440 389 25.3% Lovenox/Clexane global sales 261 242 25.7% U.S. sales 334 324 12.2% Taxotere global sales 152 178 -0.5% U.S. sales 224 241 -6.5% Delix/Tritace global sales (Not sold by Aventis in the U.S.) 168 89 108.9% Lantus global sales 106 70 76.0% U.S. sales 46 26 80.4% Ketek global sales (Not yet launched in the U.S.) 219 160 59.9% Actonel total Alliance sales(3) 62 33 89.6% Actonel sales consolidated by Aventis(4) 366 350 13.8% Human vaccines sales consolidated by Aventis(5) 188 203 7.5% U.S. sales (1) Unaudited (2) Excluding currency translation effects (3) Cooperation with Procter & Gamble (4) Actonel sales as consolidated by Aventis, including sales in Japan (5) Vaccines sales in Europe through the Aventis Pasteur MSD joint venture are not consolidated by Aventis N.S. Not significant Lovenox/Clexane (enoxaparin sodium): The anti-thrombotic agent recorded a global sales activity increase of 25.3% in the first quarter, while U.S. sales activity rose 25.7% due to increasing penetration in key geographic markets against unfractionated heparin, the main competitor, in the treatment of medical patients at risk for deep vein thrombosis (DVT) as well as in patients with acute coronary syndrome. U.S. growth has been driven by the doubling of the U.S. sales force in 2003 to nearly 700 sales representatives and increased marketing efforts to increase awareness about DVT. Aventis has received the first official response from the U.S. Patent and Trademark Office (USPTO) regarding Aventis' application for the reissuance of U.S. Patent 5,389,618 (the '618 patent) covering Lovenox. The agency's response, which is neither final nor unexpected, was a routine "office action" advising Aventis of the initial rejection of the application and indicating why it was not approved. An initial rejection is not unusual in reissuance proceedings, which may include a number of rejections and responses before an application is ultimately approved or denied. Aventis intends to respond to the USPTO's comments in due course, and expects the reissuance proceeding to continue. Aventis remains committed to moving the reissuance process forward and continues to believe that, if the application is ultimately approved, the '618 patent could be reissued in an amended version prior to year-end 2004. Taxotere (docetaxel): Global sales activity of the chemotherapy agent rose 12.2% in the first quarter of 2004 from a year earlier. U.S. sales remained robust, in spite of temporary challenges related to the less than favorable U.S. Medicare Reimbursement policy currently in place. Compelling clinical data in breast cancer that was presented in late 2003 helped to fuel Taxotere sales in Europe. Aventis expects the sales growth of Taxotere accelerate due to the two recent regulatory submissions in the U.S. and EU for adjuvant breast cancer and hormone refractory prostate cancer. A third submission for Taxotere in gastric cancer is expected to be submitted in the second half of the year. Delix/Tritace (ramipril): The cardiovascular drug recorded a sales activity decline of 6.5% in the first quarter, due mainly to the introduction of generic versions of the drug in Germany and the United Kingdom. However, other European markets and Canada showed strong growth rates, reflecting the benefits of the ACE inhibitor in treating patients with hypertension and/or diabetes seeking to reduce the risk of cardiovascular events. Lantus (insulin glargine): Sales activity of the 24-hour insulin analog remained strong, rising 108.9% worldwide in the first quarter of 2004 and advancing 76% in the U.S., where the product remains the leading branded insulin in terms of total prescriptions. Lantus is the largest brand in the total insulin market (value) in France. In Germany, Lantus currently holds a 50% market share in the basal (long-acting) insulin market. Ketek (telithromycin): Worldwide sales of the antibiotic, which specifically targets upper respiratory tract infections, rose 80.4% due to its launch in several new markets during 2003 and its use in more than seven million patients to date. Ketek received FDA approval in April, and Aventis is preparing to launch it in the U.S. in time for the start of the fall 2004 respiratory tract infection season. Actonel (risedronate): Worldwide sales of the osteoporosis treatment marketed through the Alliance for Better Bone Health with Procter & Gamble totaled euro 219 million, a sales activity increase of 59.9% over the 2003 first quarter. Sales consolidated by Aventis were euro 62 million, an activity increase of 89.6%. Aventis reported co-promotion income related to Actonel of euro 75.3 million in the first quarter compared to euro 55.9 million in the prior year, an activity increase of 53.2%. The vaccines business, Aventis Pasteur, generated sales of euro 366 million, an increase of 13.8% over the first quarter of 2003 on an activity basis. This growth was derived from strong sales of pediatric vaccines, which rose 20%, and adult booster vaccines, which advanced 60%, due to higher demand from the public sector, especially in the U.S. and Canada. Sales in the international zone were strong, growing 10% over the same period in 2003 due to higher sales of polio and influenza vaccines. In Europe, sales by the joint venture Aventis Pasteur MSD, which are not consolidated by Aventis, reached euro 122 million, an increase of 9% due to the launches of new adult booster vaccines in the UK and France. In March, the American Academy of Pediatrics expanded its influenza immunization recommendations to include healthy children between the ages of six and 24 months. This is already having an impact on U.S. influenza vaccine sales for the 2004 flu season. FIRST-QUARTER PROFITABILITY ANALYSIS - 2004 Group vs. 2003 Core Business Total revenues (which includes co-promotion income from Actonel and other prescription drugs) rose 7.1% on activity growth to euro 4.025 billion. Net sales totaled euro 3.946 billion compared to euro 3.970 billion (up 6.4% on an activity basis). Gross margin as a percentage of total revenues decreased to 73.7% in the first quarter of 2004 from 74.5% in the first quarter of 2003, due mainly to the negative currency translation impact. On a constant exchange rate basis, gross margin was at substantially the same level as the prior year. Selling, general and administrative expenses and other operating income (expenses) were euro 1.312 billion in the first quarter (32.6% of total revenues) compared to euro 1.304 billion (32.4% of total revenues) a year earlier. Excluding currency translation effects, SG&A and other operating income (expenses) increased 7.0%. Most of the increase came from higher selling and distribution expenses, especially in the U.S. due to intensive promotional investments in Lovenox and Lantus as well as higher costs related to a sales force information systems project aimed at improving effectiveness. Research and development spending totaled euro 594 million (14.8% of total revenues) compared to euro 702 million in the first quarter of 2003 (17.4% of total revenues). Excluding currency translation effects, R&D expenses were down 9.6% compared to the first quarter of 2003. This decrease was mainly due to the completion of major studies on Allegra and Ketek in 2003 and for which a significant amount was expensed in the first quarter of 2003. In addition, spending on Exubera and Apidra in the first quarter of 2003 was partly offset by higher development costs related to VEGF Trap (developed in cooperation with Regeneron Pharmaceuticals, Inc.), Lantus and Lovenox in the first quarter of 2004. Restructuring expenses amounted to euro 53 million in the first quarter of 2004 compared to euro 19 million in the year-ago period. This increase reflects the costs related to the productivity enhancement initiatives launched in 2003 and 2004 in the prescription drugs business, which relates to the reorganization of research and development activities, the continued rationalization of industrial sites and the enhancement of operational effectiveness in commercial operations. Equity in earnings of affiliated companies amounted to euro 41 million in the first quarter of 2004 compared with euro 39 million in the first quarter of 2003, an increase of 7.9% excluding currency translation effects. EBITA (operating income and equity in earnings of affiliated companies before goodwill amortization) was euro 1.048 billion in the first quarter of 2004, versus euro 1.014 billion in the year-earlier period. At constant exchange rates, EBITA rose by 15.3%. As a percentage of total revenues, the EBITA margin rose 0.8 percentage points to 26.0% from 25.2% in the year-ago period. Miscellaneous non-operating income and expenses -- net amounted to a loss of euro 38 million in the first quarter of 2004 compared to a loss of euro 77 million in the year-ago period. The first quarter 2004 amount includes marked-to-market adjustments for an investment in Rhodia. Income (loss) from discontinued operations (net of income taxes) amounted to a loss of euro 4 million and relates to the therapeutic proteins business Aventis Behring, which has been accounted for as a discontinued operation in the first quarter of 2004 following the completion of its divestiture to CSL Limited on March 31, 2004. Net income rose 14.6% to euro 556 million in the first quarter from euro 485 million in the year-earlier quarter, while earnings per share (EPS) rose 16.5% to euro 0.71 from euro 0.61 in the first quarter of 2003. Costs incurred in relation to the tender offer initiated by Sanofi-Synthelabo impacted EPS negatively by euro 0.04. Excluding this impact, the EPS growth would have been 23.5%. Before goodwill amortization, EPS rose 11.7% to euro 0.86 from euro 0.77 in the year-ago period. Aventis generated free cash flow of euro 673 million in the first quarter of 2004 compared to euro 87 million in the year-ago period. Free cash flow benefited from a reduced demand for industrial working capital, which was euro 253 million compared to euro 471 million in the first quarter in 2003, and fewer non-recurring cash-inflows. The free cash flow included one-time payments related to the non-core business (euro 111 million) and the negative free cash flow provided by Aventis Behring (euro 67 million). Aventis net debt at the end of March 2004 was euro 2.935 billion, reflecting a decrease of euro 1.025 billion compared to the end of 2003. The main cash transactions that led to the reduction were the strong free cash flow, proceeds received from the divestment of Aventis Behring, which amounted to euro 440 million and the divestiture of Azmacort for euro 160 million. The decrease in net debt includes a payment of euro 327 million to Bayer related to the adjustment of the original purchase price for Aventis CropScience, which was divested in June 2002. AVENTIS AND SANOFI TO CREATE LEADING PHARMA GROUP On April 25, 2004, Aventis and Sanofi-Synthelabo agreed on the terms and conditions of a substantially improved offer, including a balanced governance structure for the new group, to be called Sanofi-Aventis. After reviewing this new offer, the Management Board and the Supervisory Board decided to recommend it to Aventis shareholders. This decision will pave the way for the creation of Europe's number one and the world's number three pharmaceuticals group by sales. Under the revised offer terms, Sanofi-Synthelabo has offered 0.8333 of a newly issued Sanofi-Synthelabo ordinary share and cash compensation of euro 20 for each Aventis ordinary share tendered (2003 dividend attached), and 1.6667 newly issued Sanofi-Synthelabo ADSs and a cash compensation of euro 20 for each Aventis ADS. In the aggregate, the offer consideration consists of 71% Sanofi-Synthelabo shares and 29% cash and would value one Aventis share at euro 68.93 based on the unaffected share price of Sanofi-Synthelabo (one month-average) prior to the launch of their initial offer on January 26, 2004, which valued Aventis with euro 60.43 per share. The improved offer values Aventis in total at euro 55.3 billion compared to euro 48.5 billion for the initial offer, with the entire price increase being offered in cash. DIVIDEND RECORD AND PAYMENT DATES TO BE RESCHEDULED As announced on April 26, Aventis has decided to postpone the Annual General Meeting of Shareholders previously scheduled for May 19. No new date for this meeting has been scheduled. As a result, the proposed record and payment dates for the 2003 dividend are no longer valid and will be rescheduled in accordance with the new date for the AGM. A public announcement will be made once a new date has been chosen for the AGM. OUTLOOK Aventis expects to generate sales activity growth of six to seven percent in 2004, with earnings per share growth in the mid-teens before defense costs. About Aventis Aventis is dedicated to treating and preventing disease by discovering and developing innovative prescription drugs and human vaccines. In 2003, Aventis generated sales of euro 16.79 billion, invested euro 2.86 billion in research and development and employed approximately 69,000 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 at http://www.aventis.com/2004Q1. Conference calls Patrick Langlois, Vice Chairman and Chief Financial Officer of Aventis will be available for a media conference call at 9:00 a.m. CET. An analysts conference call will follow at 10:00 a.m. and 16:30 p.m. CET. The press releases and a live and replay webcast of the press and analyst conference calls will be available on the Internet at: http://www.aventis.com/2004Q1. Definition of Basic Earnings Per Share (EPS) before goodwill amortization: Basic EPS before goodwill amortization is an unaudited non-GAAP financial measure that we define as our consolidated net income excluding goodwill amortization divided by the unaudited number of our shares outstanding (at year end). We have included basic EPS before goodwill amortization in addition to the corresponding GAAP measure EPS which includes non-cash charges for goodwill amortization, because we consider this non-GAAP measurement to more closely reflect the underlying business performance of our operations. Definition of EBITA: EBITA is an unaudited non-GAAP financial measure that we define as operating income and equity in earnings of affiliated companies before goodwill amortization. We have included EBITA in addition to the corresponding GAAP measure operating income, which includes non-cash charges for goodwill amortization because we consider this non-GAAP measurement to more closely reflect the underlying business performance of our operations. Additionally, we use this measure to assess our financial performance Definition of Free Cash Flow: Free Cash Flow is defined as Cash from operational activities net of capital expenditures. 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. 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 "Autorite des marches financiers" in France. Aventis shareholders are urged to read Aventis' Solicitation/Recommendation Statement on Schedule 14D-9 filed by Aventis with the Securities and Exchange Commission, as it contains important information. The Solicitation/Recommendation Statement and other public filings made from time to time by Aventis with the Securities and Exchange Commission are available without charge from the SEC's website at http://www.sec.gov/. 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. Pursuant to Article 7 of the COB Regulation no. 2002-04, this press release was transmitted to the Autorite des marches financiers before its release. http://www.newscom.com/cgi-bin/prnh/20000501/NYM197DATASOURCE: Aventis CONTACT: Patricia Munzer of Aventis Global Media Relations US, +1-908-243-2298, , or Tony Roddam of Aventis Global Media Relations, + +33-3-88-99-11-38, , or Nathalie Jecker of Aventis Global Media Relations, +33-3-88-99-11-16, Web site: http://www.aventis.com/

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