table of contents - sanofi€¦ · the sanofi-aventis group (sanofi-aventis and its subsidiaries)...

Table of contents

Free Translation of the French Language Original

I − Condensed half-year consolidated financial statements 2

Consolidated balance sheets – Assets 2

Consolidated balance sheets – Liabilities & Equity 3

Consolidated income statements 4

Consolidated statements of cash flows 5

Consolidated statements of recognized income and expense 6

Notes to the condensed half-year consolidated financial statements 7

A. Basis of preparation of the financial information and accounting policies 7

B. Significant items in the 2008 half-year financial information 8

C. Events subsequent to the balance sheet date (June 30, 2008) 28

II − Half-year management report 29

A. Key figures for the first half of 2008 29

B. Significant events of the first half of 2008 31

C. Events subsequent to the balance sheet date (June 30, 2008) 35

D. Consolidated financial statements for the first half of 2008 36

E. Outlook 51

F. Appendix – Definition of financial indicators 53

III − Statutory Auditors’ review report on the 2008 half-year financial information 54

IV − Responsibility statement of the certifying officer Half-year financial report 55

The condensed half-year consolidated financial statements have been subject to a review by the statutory auditors in accordance with professional standards applicable in France.

2008 half-year financial report sanofi-aventis 2/55

I − Condensed half-year consolidated financial statements

Consolidated balance sheets – Assets

(€ million) Note June 30,

2008 December 31,

2007

Property, plant and equipment B.2. 6,548 6,538

Goodwill B.3. 26,439 27,199

Intangible assets B.3.-B.4. 16,832 19,182

Investments in associates B.5. 2,441 2,493

Financial assets – non-current B.6. 819 1,037

Deferred tax assets B.11. 2,517 2,912

Non-current assets 55,596 59,361

Inventories 3,757 3,729

Accounts receivable 5,168 4,904

Other current assets 1,978 2,126

Financial assets – current 63 83

Cash and cash equivalents B.8. 946 1,711

Current assets 11,912 12,553

TOTAL ASSETS 67,508 71,914

The accompanying notes on pages 7 to 28 are an integral part of the condensed half-year consolidated financial statements.


Consolidated balance sheets – Liabilities & Equity

(€ million) Note June 30,

2008 December 31,

2007

Equity attributable to equity holders of the Company B.7. 41,351 44,542

Minority interests 119 177

Total equity 41,470 44,719

Long-term debt B.8. 4,280 3,734

Provisions and other non-current liabilities B.10. 6,683 6,857

Deferred tax liabilities B.11. 6,115 6,935

Non-current liabilities 17,078 17,526

Accounts payable 2,552 2,749

Other current liabilities 4,149 4,713

Short-term debt and current portion of long-term debt B.8. 2,259 2,207

Current liabilities 8,960 9,669

TOTAL LIABILITIES & EQUITY 67,508 71,914



Consolidated income statements

(€ million) Note 6 months to

June 30, 2008

6 months to June 30,

2007

12 months to December 31,

2007 Net sales 13,626 14,116 28,052

Other revenues 570 547 1,155

Cost of sales (3,615) (3,704) (7,571)

Gross profit 10,581 10,959 21,636

Research and development expenses (2,180) (2,182) (4,537)

Selling and general expenses (3,572) (3,804) (7,554)

Other operating income 316 278 522

Other operating expenses (138) (136) (307)

Amortization of intangibles (1,709) (1,833) (3,654)

Operating income before restructuring, impairment of property, plant and equipment and intangibles, gains and losses on disposals, and litigation

3,298 3,282 6,106

Restructuring costs (207) (50) (137)

Impairment of property, plant and equipment and intangibles

B.4. (126)

5 (58)

Gains and losses on disposals, and litigation − − −

Operating income 2,965 3,237 5,911

Financial expenses B.14. (160) (170) (329)

Financial income B.14. 110 99 190

Income before tax and associates 2,915 3,166 5,772

Income tax expense B.15. (771) (641) (687)

Share of profit/loss of associates 411 351 597

Net income 2,555 2,876 5,682

Net income attributable to minority interests 220 211 419

Net income attributable to equity holders of the Company

2,335

2,665 5,263

Average number of shares outstanding (million)

B.7.5. 1,313.7

1,351.5 1,346.9

Average number of shares outstanding after dilution (million)

B.7.5. 1,315.8

1,359.8 1,353.9

- Basic earnings per share (in euros) 1.78 1.97 3.91

- Diluted earnings per share (in euros) 1.77 1.96 3.89


Consolidated statements of cash flows

(€ million) Note 6 months to

June 30, 2008


2007


2007 Net income attributable to equity holders of the Company 2,335 2,665 5,263

Minority interests, excluding BMS (1) 8 11 16 Share of undistributed earnings of associates (55) (28) 133 Depreciation, amortization and impairment of property, plant and equipment and intangible assets 2,275 2,279 4,664 Gains and losses on disposals of non-current assets, net of tax (2) (33) (37) (64) Net change in deferred taxes (361) (393) (1,476) Net change in provisions 114 (287) (247) Cost of employee benefits (stock options and capital increase) 64 61 134 Unrealized gains and losses (5) (415) (62) (506)

Operating cash flow before changes in working capital 3,932 4,209 7,917

(Increase)/decrease in inventories (71) (226) (89)

(Increase)/decrease in accounts receivable (391) (282) (60)

Increase/(decrease) in accounts payable (149) (244) (156) Net change in other current assets, financial assets (current) and other current liabilities (79) (411) (506) Net cash provided by operating activities (3) 3,242 3,046 7,106

Acquisitions of property, plant and equipment and intangibles B.2. - B.3. (796) (694) (1,610) Acquisitions of investments in consolidated undertakings, net of cash acquired − (198) (214)

Acquisitions of available-for-sale financial assets (2) (1) (221) Proceeds from disposals of property, plant and equipment, intangibles and other non-current assets, net of tax (4) 102 295 329

Net change in loans and other non-current financial assets 4 14 −

Net cash used in investing activities (692) (584) (1,716) Issuance of sanofi-aventis shares 17 104 271 Dividends paid: • to sanofi-aventis shareholders (2,702) (2,364) (2,364) • to minority shareholders, excluding BMS (1) (4) (7) (9) Additional long-term borrowings B.8.1. 586 808 1,639 Repayments of long-term borrowings B.8. (18) (2,009) (2,065) Net change in short-term borrowings B.8. 55 902 (509) Acquisitions of treasury shares B.7.3. (1,225) - (1,806) Disposals of treasury shares, net of tax 4 17 23 Net cash provided by/(used in) financing activities (3,287) (2,549) (4,820) Impact of exchange rates on cash and cash equivalents (28) 17 (12) Net change in cash and cash equivalents (765) (70) 558 Cash and cash equivalents, beginning of period 1,711 1,153 1,153 Cash and cash equivalents, end of period 946 1,083 1,711

(1) Alliance agreements with Bristol-Myers Squibb (BMS), see Note C.1. to the consolidated financial statements for the year ended December 31, 2007.

(2) Including available-for-sale financial assets.

(3) Including: 6 months to

June 30,2008


2007


2007 Income tax paid (1,214) (1,585) (3,030) Interest paid (121) (125) (315) Dividends received 3 1 3 Interest received 60 51 88

(4) Property, plant and equipment, intangible assets, investments in consolidated undertakings and participating interests. (5) Arising primarily on the translation of U.S. dollar surplus cash from American subsidiaries placed with the sanofi-aventis

parent company; see Note B.9.2.




Consolidated statements of recognized income and expense

(€ million) 6 months to

June 30, 2008


2007


2007

Change in fair value of available-for-sale financial assets (142) (11) (5)

Change in fair value of derivatives designated as hedging instruments

4

12

8

Actuarial gains and losses 130 769 282

Tax effect of items recognized directly in equity (24) (274) (119)

Change in cumulative translation difference recognized in equity

(1,654)

(551)

(2,764)

Total income/(expense) recognized directly in equity (1,686) (1) (55) (1) (2,598)

Net income for the period 2,555 2,876 5,682

Total recognized income/(expense) for the period 869 2,821 3,084

Attributable to equity holders of the Company 662 2,606 2,666

Attributable to minority interests 207 215 418

(1) See the statement of changes in shareholders’ equity in Note B.7.2.



Notes to the condensed half-year consolidated financial statements Six months ended June 30, 2008

INTRODUCTION

The sanofi-aventis Group (sanofi-aventis and its subsidiaries) is a leading player in the world pharmaceuticals industry, engaged in the development, manufacture and marketing of healthcare products in seven major therapeutic fields: thrombosis, cardiovascular, metabolic disorders, oncology, central nervous system, internal medicine and vaccines.

Its international R&D effort provides a platform for the Group to develop leadership positions in its markets.

Sanofi-aventis, the parent company, is a société anonyme (a form of limited liability company) incorporated under the laws of France. The registered office is at 174, avenue de France, 75013 Paris, France.

Sanofi-aventis is listed in Paris (Euronext: SAN) and New York (NYSE: SNY).

The half-year consolidated financial information as of June 30, 2008 was reviewed by the sanofi-aventis Board of Directors at the Board meeting held on July 30, 2008.

A. Basis of preparation of the financial information and accounting policies

A.1. Basis of preparation of the financial information and accounting policies

The half-year consolidated financial information has been prepared and presented in condensed format in accordance with IAS 34 (Interim Financial Reporting). The accompanying notes therefore relate to significant items for the period, and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2007.

The consolidated financial information as of June 30, 2008 has been prepared in compliance with standards and interpretations adopted by the European Union and with those issued by the IASB. The new interpretations mandatorily applicable from January 1, 2008 as described in Note B.28. to the consolidated financial statements for the year ended December 31, 2007, some of which have yet to be adopted by the European Union, do not have a material impact on the half-year consolidated financial information as of June 30, 2008. Consequently, the accounting policies applied as of June 30, 2008 are the same as those applied as of December 31, 2007, as described in the notes to consolidated financial statements for the year then ended.

International Financial Reporting Standards as adopted by the European Union as at June 30, 2008 are available under the heading IASs/IFRSs, SICs and IFRICs adopted by the Commission on the following website: http://ec.europa.eu/internal_market/accounting/ias_en.htm

The financial statements for the year to December 31, 2008, and the comparative information for 2007 presented therein, will be prepared in compliance with standards and interpretations applicable at that date. The information contained in this half-year document relating to the periods ended December 31, 2007 and June 30, 2008 may therefore be subject to change if new or amended standards and interpretations are issued by the IASB and adopted by the European Union.

http://ec.europa.eu/internal_market/accounting/ias_en.htm


A.2. Use of estimates

The preparation of financial statements requires management to make estimates and assumptions, based on information available at the date of preparation of the financial statements, that may affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements, and disclosures of contingent assets and liabilities, as of that date. Examples of estimates and assumptions include:

amounts deducted from sales for projected sales returns, rebates and price reductions;

the extent of impairment of accounts receivables and of provisions for product claims;

the impairment of property, plant and equipment and intangible assets;

the amount of provisions for restructuring, litigation, tax exposures and environmental liabilities;

the valuation of goodwill, and the valuation and useful lives of acquired intangible assets;

the amount of post-employment benefit obligations;

the fair values of financial assets and derivative financial instruments.

For the purposes of the half-year financial information, and as allowed under IAS 34, sanofi-aventis has determined income tax expense on the basis of an estimate of the effective tax rate for the full financial year. This rate is applied to Income before tax and associates. The estimated effective tax rate is based on the tax rates that will be applicable to projected pre-tax profits or losses arising in the various tax jurisdictions in which sanofi-aventis operates.

Actual results could vary from these estimates.

A.3. Seasonal trends

The operations of sanofi-aventis are not subject to significant seasonal fluctuations.

B. Significant items in the 2008 half-year financial information

B.1. Effect of changes in the scope of consolidation

There were no significant changes in the scope of consolidation during the first half of 2008.

B.2. Property, plant and equipment

Acquisitions totaled €523 million in the first half of 2008. Of this amount, €371 million related to investments in the Pharmaceuticals business, primarily in industrial facilities (€191 million) and plant and installations at research sites (€159 million). The remaining €152 million related to acquisitions made in the Vaccines business.

B.3. Intangible assets

Intangible assets and goodwill break down as follows:

(€ million)

Trademarkspatents,

licenses andother rights

AcquiredAventis

R&D

Rights tomarketed

Aventisproducts Software

Total Intangible

assets Goodwill

Gross value at December 31, 2007 1,890 2,644 29,011 587 34,132 27,226

Acquisitions and other increases 76 − − 20 96 −

Disposals and other decreases (1) − − (4) (5) (3)

Translation differences (68) (82) (1,052) (14) (1,216) (755)

Transfers (1) − (236) 236 − − −

Gross value at June 30, 2008 1,897 2,326 28,195 589 33,007 26,468

Accumulated amortization and impairment at December 31, 2007 (830) (267) (13,365) (488) (14,950) (27)

Amortization expense (91) − (1,616) (27) (1,734) −

Impairment losses, net of reversals (69) (57) − − (126) −

Disposals 1 − − 4 5 −

Translation differences 35 8 574 13 630 (2)

Transfers − 17 (17) − − −

Accumulated amortization and impairment at June 30, 2008 (954) (299) (14,424) (498) (16,175) (29)

Net book value at December 31, 2007 1,060 2,377 15,646 99 19,182 27,199

Net book value at June 30, 2008 943 2,027 13,771 91 16,832 26,439

(1) During the first half of 2008, some of the acquired Aventis research and development came into commercial use (€236 million); it is being amortized from the date of marketing approval. The main product involved is the Pentacel® vaccine in the United States.

Acquisitions of intangible assets other than software during the first half of 2008 amounted to €76 million and related mainly to license agreements, in particular the agreements signed with Dyax Corp. (see Note B.12.1.).

B.4. Impairment of intangible assets

As of June 30, 2008, the results of impairment tests conducted in accordance with IAS 36 (Impairment of Assets) led to the recognition of impairment losses totaling €126 million, primarily on the product Ilepatril (€57 million) and the oral anti-cancer agent S-1 (€51 million).

As of June 30, 2007, the reversal of impairment losses (€5 million) related to a product that had obtained marketing approval in April 2007.

In the year ended December 31, 2007, the results of impairment tests led to the recognition of impairment losses of €69 million, relating to Amaryl® (€46 million) and Ketek® (€23 million). In addition, reversals of impairment losses totaling €11 million were recognized during the year.



B.5. Investments in associates

Associates consist of companies over which sanofi-aventis exercises significant influence, and joint ventures. Sanofi-aventis accounts for joint ventures using the equity method (i.e. as associates), in accordance with the allowed alternative treatment specified in IAS 31 (Financial Reporting of Interests in Joint Ventures).

Investments in associates break down as follows:

(€ million) % interest

June 30, 2008

December 31,2007

Sanofi Pasteur MSD 50.0 439 467

Merial 50.0 1,175 1,151

InfraServ Höchst 30.0 91 97

Zentiva 24.9 362 (1) 346 (2)

Entities and companies managed by Bristol-Myers Squibb (3) 49.9 177 178

Financière des Laboratoires de Cosmétologie Yves Rocher 39.1 110 103

Other investments − 87 151

Total 2,441 2,493

(1) The value of the interest held by sanofi-aventis is €442 million based on the quoted stock market price as of June 30, 2008. On June 18, 2008, sanofi-aventis announced its intention to make a competing bid for the share capital of Zentiva (see Note B.12.2.).

(2) This amount represents the stock market value, based on the quoted market price as of December 31, 2007. The carrying amount was net of an impairment loss of €102 million recognized in 2007.

(3) Under the terms of the agreements with Bristol-Myers Squibb (BMS) (see Note C.1. to the 2007 full-year consolidated financial statements), the Group’s share of the net assets of entities and companies majority-owned by BMS is recorded in Investments in associates.

Transactions with associates

The financial statements include commercial transactions between the Group and certain of its associates that qualify as related parties. The principal transactions of this nature are summarized below:


June 30, 2008


2007


2007

Sales 204 179 404

Royalties (1) 469 430 945

Purchases 145 125 189

(1) This item mainly relates to transactions with entities managed by BMS.


B.6. Financial assets – non-current

The main items included in Financial assets – non-current are:

(€ million) June 30,

2008 December 31,

2007

Available-for-sale financial assets (1) (2) 486 676

Pre-funded pension obligations 7 7

Long-term loans and advances 216 219

Assets recognized under the fair value option 73 85

Derivative instruments (3) 37 50

Total carrying amount 819 1,037

(1) Includes 14.8 million shares representing 19% of the capital of Regeneron Pharmaceuticals, valued at €136 million on the basis of the quoted stock market price as of June 30, 2008 (versus €243 million as of December 31, 2007). Given the specific circumstances of the company, the decline in its share price during the six months ended June 30, 2008 does not constitute objective evidence of impairment. Consequently, the change in the fair value of the investment has been recognized directly in equity, in the statement of recognized income and expense.

(2) Sanofi-aventis tendered its shares in Millennium Pharmaceuticals, Inc. (Millennium) to the public tender offer for Millennium by Takeda Pharmaceuticals Company Ltd. This transaction was priced at €71 million and generated a gain on disposal of €38 million (see Note B.14.).

(3) See Note B.9.

B.7. Equity attributable to equity holders of the Company

B.7.1. Share capital

The share capital of €2,629,481,114 consists of 1,314,740,557 shares with a par value of €2.

Treasury shares are deducted from shareholders’ equity. Gains and losses on disposals of treasury shares are taken directly to equity and are not recognized in net income for the period.

Treasury shares held by sanofi-aventis are as follows:

Date Number of shares (million)

%

June 30, 2008 9.9 0.76%

December 31, 2007 37.7 2.76%

June 30, 2007 8.5 0.62%

January 1, 2007 8.9 0.66%

Acquisitions of treasury shares (€1,225 million in the first half of 2008, see Note B.7.3.) are deducted from shareholders’ equity.

The Board of Directors’ meeting held on April 29, 2008 decided to cancel 51,437,419 treasury shares, including 51,407,169 shares purchased through April 14, 2008 under the share repurchase program (representing 3.77% of the share capital as of that date); see Note B.7.3. These cancellations had no impact on consolidated shareholders’ equity.

A total of 261,332 sanofi-aventis shares were issued under stock subscription option plans during the first half of 2008, compared with 4,950,010 shares in the year to December 31, 2007 and 2,366,412 shares in the six months to June 30, 2007.

B.7.2. Changes in shareholders’ equity

Changes in shareholders’ equity between January 1, 2007 and June 30, 2008 were as follows:

(€ million) Share capital

Additional paid-in

capital & retained earnings

Treasury shares

Stock options

Other Items recognized

directly in equity

Cumulative translation difference

Attributable to equity holders

of the Company

Attributable to minority

interestsTotal

Equity

Balance at January 1, 2007 2,719 44,065 (492) 1,369 (192) (1,869) 45,600 220 45,820

Income/(expense) recognized directly in equity − − − − 495 (554) (59) 4 (55)

Net income for the period − 2,665 − − − − 2,665 211 2,876

Total recognized income/(expense) for the period

− 2,665 − − 495

(554)

2,606 215 2,821

Dividend paid out of 2006 earnings (€1.75 per share)

− (2,364) − − −

−

(2,364) − (2,364)

Payment of dividends and equivalents to minority shareholders − − − − − − − (344) (344)Share-based payment: Exercise of stock options 5 99 − − − − 104 − 104 Proceeds from sale of treasury shares on

exercise of stock options − − 17 − − − 17 − 17 Value of services obtained from

employees

− − − 61 −

−

61 − 61

Tax effect of exercise of stock options − − − (21) − − (21) − (21)Buyout of minority shareholders − − − − − − − (2) (2)Other movements − 18 − − − − 18 − 18

Balance at June 30, 2007 2,724 44,483 (475) 1,409 303 (2,423) 46,021 89 46,110

Income/(expense) recognized directly in equity

− − − − (330)

(2,208)

(2,538) (5) (2,543)

Net income for the period − 2,598 − − − − 2,598 208 2,806 Total recognized income/(expense) for the period

− 2,598 − − (330)

(2,208)

60 203 263

Payment of dividends and equivalents to minority shareholders − − − − −

−

− (115) (115)

Share repurchase program − − (1,806) − − − (1,806) − (1,806)Share-based payment: Exercise of stock options 5 102 − − − − 107 − 107 Proceeds from sale of treasury shares on

exercise of stock options − − 6 − − −

6 − 6 Value of services obtained from

employees − − − 54 − − 54 − 54

Tax effect of exercise of stock options − − − 5 − − 5 − 5 Capital increase reserved for employees (excluding stock option plans)

3 92 − − −

−

95 − 95

Balance at December 31, 2007 2,732 47,275 (2,275) 1,468 (27) (4,631) 44,542 177 44,719

Income/(expense) recognized directly in equity

− − − − (31) (1,642) (1,673) (13) (1,686)

Net income for the period − 2,335 − − − − 2,335 220 2,555 Total recognized income/(expense) for the period

− 2,335 − − (31)

(1,642)

662 207 869

Dividend paid out of 2007 earnings (€2.07 per share)

− (2,702) − − −

− (2,702) − (2,702)

Payment of dividends and equivalents to minority shareholders

− − − − −

−

− (265) (265)

Share repurchase program − − (1,225) − − − (1,225) − (1,225)Reduction in share capital (see Note B.7.1.) (103) (2,843) 2,946 − − − − − − Share-based payment: Exercise of stock options 1 10 − − − − 11 − 11 Proceeds from sale of treasury shares on

exercise of stock options

− − 4 − −

− 4 − 4

Value of services obtained from employees

− − − 64 −

−

64 − 64

Tax effect of exercise of stock options − − − (12) − − (12) − (12)Other movements − 7 − − − − 7 − 7

Balance at June 30, 2008 2,630 44,082 (550) 1,520 (58) (6,273) 41,351 119 41,470



B.7.3. Repurchase of sanofi-aventis shares

The sanofi-aventis Shareholders’ General Meeting of May 31, 2007 authorized a share repurchase program. Under this program, sanofi-aventis repurchased 23,052,169 of its own shares for a total amount of €1,191 million (including transaction costs) during the period from January 1, 2008 through May 6, 2008. Under this same program, sanofi-aventis repurchased 29,366,500 of its own shares for a total amount of €1,806 million (including transaction costs) during the second half of 2007. The Board of Directors’ meeting of April 29, 2008 decided to cancel 51,407,169 treasury shares.

The sanofi-aventis Shareholders’ General Meeting of May 14, 2008 authorized a further share repurchase program. Under this program, sanofi-aventis has repurchased 760,000 of its own shares for a total amount of €34 million (including transaction costs).

B.7.4. Stock option plans

The table below provides summary information about options outstanding and exercisable as of June 30, 2008:

Outstanding Exercisable

Range of exercise prices per share Number of

options

Average residual life

(years)

Weighted average exercise price per share (€)

Number of options

Weighted average exercise price per share (€)

From €1.00 to €10.00 per share 44,370 6.69 7.18 44,370 7.18

From €10.00 to €20.00 per share 68,894 8.46 14.84 68,894 14.84

From €20.00 to €30.00 per share 30,520 9.99 28.38 30,520 28.38

From €30.00 to €40.00 per share 1,149,006 3.46 35.29 1,149,006 35.29

From €40.00 to €50.00 per share 9,055,087 4.47 41.32 9,055,087 41.32

From €50.00 to €60.00 per share 12,098,180 4.08 52.48 12,098,180 52.48

From €60.00 to €70.00 per share 40,914,120 6.30 66.02 17,729,940 67.92

From €70.00 to €80.00 per share 23,734,193 5.44 70.80 9,845,463 71.39

Total 87,094,370 50,021,460

of which stock purchase options 8,138,753

of which stock subscription options 78,955,617

B.7.5. Number of shares used to compute diluted earnings per share

Diluted earnings per share is computed adding the number of shares outstanding and stock options with a potentially dilutive effect.

(million) June 30,

2008June 30,

2007 December 31,

2007

Average number of shares outstanding 1,313.7 1,351.5 1,346.9Adjustment for options with potentially dilutive effect 2.1 8.3 7.0Average number of shares used to compute diluted earnings per share 1,315.8 1,359.8 1,353.9

As of June 30, 2008, a total of 74.1 million stock options were not taken into account in the calculation because they did not have a potentially dilutive effect, compared with 65.4 million as of December 31, 2007 and 51.1 million as of June 30, 2007.


B.8. Debt, cash and cash equivalents

The table below shows changes in the Group’s financial position:

(€ million) June 30, 2008

December 31, 2007

Long-term debt, at amortized cost 4,280 3,734

Short-term debt and current portion of long-term debt 2,259 2,207

Total debt 6,539 5,941

Cash and cash equivalents (946) (1,711)

Debt, net of cash and cash equivalents 5,593 4,230

Trends in the gearing ratio are shown below:


December 31, 2007

Debt, net of cash and cash equivalents 5,593 4,230

Total equity 41,470 44,719

Gearing ratio 13.5% 9.5%

B.8.1. Net debt at value on redemption

A reconciliation of carrying amount to value on redemption is shown below:

(€ million)

Carryingamount:June 30,

2008Amortized

cost

Adjustmentto debt

measuredat fair value

Value on redemption:

June 30, 2008

Value on redemption:

December 31, 2007

Long-term debt 4,280 20 (57) 4,243 3,686

Short-term debt and current portion of long-term debt 2,259 − (19) 2,240 2,187

Total debt 6,539 20 (76) 6,483 5,873

Cash and cash equivalents (946) − − (946) (1,711)

Debt, net of cash and cash equivalents 5,593 20 (76) 5,537 4,162

Debt, net of cash and cash equivalents by type, at value on redemption:

June 30, 2008 December 31, 2007

(€ million) non-current current Total non-current current Total

Bond issues 2,531 1,420 3,951 2,390 1,390 3,780

Credit facility drawdowns 1,000 − 1,000 1,000 1 1,001

Other bank borrowings 673 175 848 257 266 523

Commercial paper − 190 190 − 102 102

Finance lease obligations 23 5 28 25 4 29

Other borrowings 16 2 18 14 1 15

Bank credit balances − 448 448 − 423 423

Total debt 4,243 2,240 6,483 3,686 2,187 5,873

Cash and cash equivalents − (946) (946) − (1,711) (1,711)

Debt, net of cash and cash equivalents 4,243 1,294 5,537 3,686 476 4,162

Undrawn confirmed credit facilities not used to back French and U.S. commercial paper programs were €11.6 billion as of June 30, 2008 and €12.6 billion as of December 31, 2007.


Main financing and debt reduction transactions during the period

The following refinancing transactions took place during the first half of 2008:

• CHF100 million fixed-rate bond issue, fungible with the CHF300 million bond issue maturing December 2015, raising the total amount of the issue to CHF400 million;

• ¥15 billion floating-rate bond issue, maturing June 2013;

• €150 million bank loan from the European Investment Bank, maturing February 2013;

• €108 million of “Schuldschein” fixed-rate notes and €162 million of “Schuldschein” floating-rate notes, both maturing May 2013.

The financing in place at June 30, 2008 is not subject to covenants regarding financial ratios, and contains no clauses linking credit spreads or fees to the sanofi-aventis credit rating.

B.8.2. Market value of debt, net of cash and cash equivalents

The market value of debt, net of cash and cash equivalents (excluding derivative instruments) as of June 30, 2008 was €5,521 million, compared with a value on redemption of €5,537 million.


B.9. Derivative financial instruments

B.9.1. Currency derivatives used to manage operational risk exposures

The table below shows operational currency hedging instruments in place as of June 30, 2008, with the notional amount translated into euros at the relevant closing exchange rate.

June 30, 2008 Of which derivatives designated

as cash flow hedges

Of which derivatives not eligible for hedge

accounting

(€ million) Notionalamount

Fairvalue

Notionalamount

Fairvalue

Of which Recognized

in equity Notional amount

Fair value

Forward currency sales 2,008 16 379 − − 1,629 16

• of which U.S. dollar 1,322 18 266 4 4 1,056 14

• of which Russian rouble 198 1 − − − 198 1

• of which Polish zloty 66 (5) 18 (1) (1) 48 (4)

• of which Japanese yen 52 4 − − − 52 4

Forward currency purchases 267 5 − − − 267 5

• of which Hungarian forint 179 5 − − − 179 5

Put options purchased 420 (1) 6 − − 414 (1)

• Of which U.S. dollar (knock-out options) 381 (1) − − − 381 (1)

Call options written 807 4 6 − − 801 4

• Of which U.S. dollar (knock-out options) 762 3 − − − 762 3

Call options purchased 6 − − − − 6 −

Total 3,508 24 391 − − 3,117 24

As of June 30, 2008, none of these instruments had an expiry date after December 31, 2008.

These positions hedge:

All material foreign-currency cash flows arising after the balance sheet date in relation to transactions carried out during the six months to June 30, 2008 and recognized in the consolidated balance sheet as of that date. Gains and losses on these hedging instruments (forward contracts and options) have been and will continue to be calculated and recognized in parallel with the recognition of gains and losses on the hedged items.

Forecast foreign-currency cash flows relating to commercial transactions to be carried out in the second half of 2008. As regards the U.S. dollar, this portfolio (forward contracts and options) would cover approximately one-third of the forecast net cash flows in that currency during the second half of 2008, subject to the knock-out level of between $1.60 and $1.66 to the euro not being reached on knock-out options that were in the money as of June 30, 2008.


B.9.2. Currency derivatives used to manage financial foreign exchange risk exposures

Some of the Group’s financing activities, such as U.S. commercial paper issues and the cash pooling arrangements for foreign subsidiaries outside the euro zone, expose certain entities, especially the sanofi-aventis parent company, to financial foreign exchange risk (i.e. the risk of changes in the value of loans and borrowings denominated in a currency other than the functional currency of the lender or borrower).

The net foreign exchange exposure for each currency and entity is hedged by firm financial instruments, usually currency swaps. The table below shows instruments of this type held at June 30, 2008:

June 30, 2008 (€ million)

Notional amount Fair value Expiry

Forward currency purchases 7,101 (69)

• of which U.S. dollar (1) 5,790 (69) 2008

• of which Pound sterling 493 (1) 2008

• of which Swiss franc 294 2 2008

Forward currency sales 1,844 27

• of which U.S. dollar 806 38 2008

• of which Japanese yen 617 (1) 2008

• of which Hungarian forint 161 (5) 2008

Total 8,945 (42)

(1) Includes €5,597 million used to hedge U.S. dollar intragroup deposits placed with the sanofi-aventis parent company.

To limit risk and optimize the cost of its short-term and medium-term debt, sanofi-aventis uses derivative instruments that alter the structure of its debt. The table below shows instruments of this type in place at June 30, 2008.

Notional amounts by expiry date as of June 30, 2008

Of which derivatives designated as fair value

hedges

Of which derivatives designated as

cash flow hedges

(€ million) 2008 2009 2010 2013 2015 Total

Fair value

Notionalamount

Fair value

Notional amount

Fair value

Of which recognized

in equity Interest rate swap, pay floating (€) EONIA + 0.50% 250 − − − − 250 − − − − − −

Cross-currency Swaps

- pay € floating (1) /receive £ 5.50% − − 299 − − 299 (47) 299 (47) − − −

- pay € floating (1) /receive ¥ 0.22% − 116 − − − 116 (2) 116 (2) − − −

- pay € floating (1) /receive ¥ floating(3) (4) − − − 92 − 92 (2) − − − − −

- pay € floating (2) /receive CHF 2.75% − − 122 − − 122 − 122 − − − −

- pay € 4.87% (1) /receive CHF 3.38% − − − − 183 183 − − − 183 − −

- pay € 4.86% (1) /receive CHF 3.38% − − − − 61 61 − − − 61 − −

Total 250 116 421 92 244 1,123 (51) 537 (49) 244 − − (1) Floating: benchmark rate 3-month Euribor (2) Floating: benchmark rate 6-month Euribor (3) Floating: benchmark rate 3-month Libor (4) Instrument not eligible for hedge accounting

B.10. Provisions and other non-current liabilities

(€ million) Provisions forpensions and other

long-term benefits (2)Restructuring

provisionsOther

provisions

Other non-current

liabilities Total

December 31, 2007 3,398 188 3,126 145 6,857

Increase in provisions 161 92 (3) 314 (3) 15 582

Reversals of utilized provisions (193) (9) (52) − (254)

Reversals of unutilized provisions (1) − (161)(4) − (162)

Transfers (1) (19) (24) (68) 13 (98)

Impact of discounting − 1 16 − 17

Translation differences (65) (1) (54) (7) (127)Actuarial gains and losses on defined-benefit plans (2) (132) − − − (132)

June 30, 2008 3,149 247 3,121 166 6,683

(1) This line includes, in particular, transfers between current and non-current provisions. (2) See Note B.10.1. (3) These provisions mainly relate to the adaptation of industrial facilities in France, measures taken by the Group

in response to changes in the economic environment in various European countries, and some tax risks. (4) These reversals relate to settlements of disputes during the period (in particular, tax disputes) where the

outcome was more favorable than originally expected.

B.10.1. Provisions for pensions and other long-term benefits

Sanofi-aventis applies the option allowed by the amendment to IAS19, under which all actuarial gains and losses under defined-benefit plans are recognized in the balance sheet with the matching entry recorded as a component of equity. Under this method, sanofi-aventis reviews the relevant assumptions (in particular discount rates and the fair value of plan assets) at each balance sheet date.

For disclosures about the sensitivity of pension and other long-term employment benefit obligations, and of the assumptions used as of December 31, 2007, refer to Note D.18.1. to the consolidated financial statements for the year ended December 31, 2007.

As of June 30, 2008, the principal assumptions used for the euro zone, the United States and the United Kingdom were reviewed to take account of changes during the six-month period. This review of assumptions generated actuarial gains as of June 30, 2008, the result of which was to reduce the provision for pensions and other long-term benefits by €625 million and the provision for other post-employment benefits (healthcare benefits) by €14 million.

In addition, the fair value of plan assets covering the group’s principal pension plans as of June 30, 2008 resulted in a shortfall of €507 million relative to the expected return, the effect of which was to increase the provision for pensions and other long-term benefits.



B.11. Net deferred tax position

The net deferred tax position breaks down as follows:


2008 December 31,

2007

Deferred tax on: • Consolidation adjustments (intragroup margin on inventory) 777 808

• Provision for pensions and other employee benefits 865 915

• Remeasurement of Aventis intangible assets (5,346) (6,123)

• Recognition of Aventis property, plant and equipment at fair value (72) (77)

• Tax cost of distributions made from reserves (613) (693)

• Stock options 3 48

• Tax losses available for carry-forward 154 266

• Other non deductible provisions and other items 634 833

Net deferred tax liability (3,598) (4,023)

B.12. Commitments

The main changes in commitments during the first half of 2008 are described below.

B.12.1. Commercial commitments under collaboration agreements

The main collaboration agreements in the Pharmaceuticals segment signed during the first half of 2008 are described below:

On February 12, 2008, sanofi-aventis and Dyax Corp. (Dyax) announced that they had entered into agreements under which sanofi-aventis was granted an exclusive worldwide license for the development and commercialization of Dyax’s fully human monoclonal antibody DX-2240 and a worldwide non-exclusive license to use Dyax’s proprietary antibody phage display technology.

Under the terms of the two agreements, Dyax could receive up to $500 million in license fees and milestone payments in the event of full commercial success for the first 5 antibody candidates, including DX-2240 (for which $25 million were paid during the first half of 2008; see Note B.3.). In addition, Dyax will receive royalties on sales of antibody candidates.

On July 18, 2008, sanofi-aventis announced that it was returning to Taiho Pharmaceutical Co., Ltd. its territory rights for the development and commercialization of the oral anticancer agent S-1. With effect from the termination date, the outstanding milestone payments will cease to be commercial commitments of sanofi-aventis. As of December 31, 2007, they represented a commitment of $295 million.


B.12.2. Competing bid for the share capital of Zentiva

On June 18, 2008 sanofi-aventis announced its intention to make a competing bid for all issued and outstanding ordinary shares of Zentiva at an offer price of CZK1,050 in cash per share. The competing bid values Zentiva at CZK40,043 million (€1,655 million), based on the 38,136,230 shares in issue as of end 2007.

On July 11, 2008 sanofi-aventis announced the opening of the offer.

The bid is subject to customary offer conditions, such as obtaining the required clearances from the antitrust authorities. The bid is also subject to a minimum tender condition such that at the closing of the offer, sanofi-aventis would hold over 50.0% of Zentiva’s shares and voting rights on a fully diluted basis, as calculated by aggregating (i) the shares already held by sanofi-aventis prior to the offer and (ii) Zentiva securities tendered to the offer and not validly withdrawn. Sanofi-aventis currently holds 9.5 million shares, representing approximately 24.88% of Zentiva’s share capital and voting rights on an undiluted basis (see Note B.5.).


B.13. Legal and arbitral proceedings

Sanofi-aventis and its subsidiaries and affiliates may be involved in litigation, arbitration or other legal proceedings. These proceedings typically are related to product liability claims, proceedings relating to intellectual property rights (particularly claims by generic product manufacturers seeking to limit the patent protection of sanofi-aventis products), compliance and trade practices, and claims under warranties or indemnification arrangements relating to business divestitures.

The matters discussed below constitute the most significant developments since publication of the disclosures concerning legal proceedings in the Company’s financial statements for the year ended December 31, 2007.

a) Products

• Sanofi pasteur Hepatitis B Vaccine Litigation

On May 22, 2008 the Cour de cassation rendered two decisions with Sanofi Pasteur as defendant. In one case it decided to reject the claims relating to hepatitis B vaccination, ending this case. In the second case it overruled a Court of Appeals decision in favor of Sanofi Pasteur, holding that the lower court’s decision did not contain sufficient grounds to reject plaintiffs claims.

• Other Blood Products Litigation

United States. On June 2, 2008 the United States District Court for the Northern District of Illinois granted sanofi-aventis’ motion to dismiss on jurisdictional ground the cases brought by the Israeli plaintiffs.

United Kingdom. All of the United Kingdom claimants had been dismissed in the U.S. on jurisdictional grounds. Since that decision, approximately 160 HIV/HCV claims have been filed in the United Kingdom.

b) Patents

• Plavix® Patent Litigation

United States. Oral argument before the U.S. Court of Appeals (Federal Circuit) was held on March 3, 2008 in the Plavix® patent litigation case against Apotex.

Germany. On May 28, 2008, sanofi-aventis became aware that the German federal drug agency (BfArM) had reviewed and approved three applications for marketing approval relating to clopidogrel besylate in Germany, ahead of the expiry date of the data exclusivity period for clopidogrel in the European Union (July 15, 2008). The applications relate to a different pharmaceutical salt of clopidogrel from the one used in Plavix®, and the approvals granted cover only some of the indications of Plavix®. Sanofi-aventis believes that these applications – which rely on data from sanofi-aventis and Bristol-Myers Squibb, who developed Plavix®/Iscover® (clopidogrel bisulfate) – should not have been accepted by a regulatory body within the European Union before this date. Starting in May 2008, sanofi-aventis therefore instigated a number of civil, administrative and regulatory actions, which initially led to the suspension of the marketing authorizations pending further review by the BfArM. On July 29, 2008, the German administrative court in Cologne ordered the immediate enforcement of two of these marketing authorizations ending their suspension. Sanofi-aventis and BMS are appealing. There can be no assurance that generics of Plavix® will not appear in other European markets.


• Actonel® Patent Litigation

On February 28, 2008 the United District Court for the District of Delaware held U.S. Patent 5,538,122 owned by Procter and Gamble Pharmaceuticals and claiming the active ingredient of Actonel® to be valid and enforceable. Teva appealed this decision on May 28, 2008.

• Lovenox® Patent Litigation

United States. On May 15, 2008 the U.S. Court of Appeals for the Federal Circuit affirmed the February 8, 2007 decision by the U.S. District Court for the Central District of California in the sanofi-aventis Lovenox® patent infringement suit against Amphastar and Teva. As a result of the Court of Appeals’ ruling, the U.S. Lovenox® patent is deemed to be unenforceable. On June 27, 2008 sanofi-aventis petitioned for an en banc review of this decision.

Further to this ruling, Hospira has requested the District Court to adopt the Teva/Amphastar decision (that Court having stayed any action until the Court of Appeals ruling). The District Court has not entered judgment yet.

In the Sandoz case, the judge and the parties have agreed to a stay of the case until the earlier of September 8, 2008, or the date on which the Federal Circuit rules on the petition for rehearing in the Teva/Amphastar case.

• Taxotere® Patent Litigation

In July 2008, sanofi-aventis was notified that a second 505 (b) (2) application had been filed by Apotex with the U.S. Food and Drug Administration (FDA), seeking authorization to produce and market a version of Taxotere® (docetaxel) in the United States. Sanofi-aventis is currently in the statutory 45 day windows for bringing a patent infringement suit under the Hatch-Waxman Act.

• Eloxatine® Patent Litigation

All suits are currently pending before the U.S. District Court for the District of New Jersey and are presently in the fact discovery period. The New Jersey court has permitted one generic filer, Mayne Pharma Limited, to submit a motion for a summary judgment, concerning one allegation of invalidity of the ‘874 patent. Resolution of that motion is expected in 2009.


• Nasacort® AQ Patent Litigation

The U.S. District Court of Delaware trial took place in May 2008 in the patent infringement lawsuit regarding triamcinolone acetonide 55 microgram nasal spray (Nasacort® AQ) against Barr Laboratories. The decision is scheduled for September 2008.

• SoloSTAR® Patent Litigation

United States. On February 19, 2008 the United States District Court for the District of New Jersey denied Novo Nordisk’s request for a preliminary injunction against sanofi-aventis, and refused to enjoin the making, using, selling, offering to sell and/or importation of Lantus® SoloSTAR® in the United States during the pendency of the patent litigation. On July 30, 2008, this ruling was confirmed on appeal.

Germany. On May 20, 2008, the Court of Mannheim dismissed Novo Nordisk’s suit based on infringement of its German Utility Model by the Lantus® SoloSTAR® disposable insulin pen. Novo Nordisk has appealed. The other suit remains pending in Germany.

On April 18, 2008 sanofi-aventis and Ypsomed agreed to settle all currently pending patent disputes and other litigations in Germany and Switzerland between these companies regarding the new Lantus® SoloSTAR® and Apidra® SoloSTAR® disposable insulin pens. Those cases were dismissed in May 2008.

• Xyzal® Tablets ANDA

Sanofi-aventis has a co-marketing agreement with UCB Inc with respect to Xyzal®. Sanofi-aventis is aware that UCB has received three paragraph IV certifications since February 2008. All the generic manufacturers have been sued by UCB for patent infringement.

All cases are pending before the U.S. District Court of North Carolina.

c) Government Investigations, Competition Law and Regulatory Claims

• Civil Suits – Pricing and Marketing Practices

AWP Class Actions. A group of eleven defendants, including API, reached a tentative global settlement of the claims of the insurers and consumers, for a total of $125 million. This settlement was granted preliminary approval by the U.S. District Court in Boston in early July, 2008. Subject to the final approval hearing set for December 16, 2008 all the class actions suits before the U.S. District Court in Boston will be ended further to this settlement.

AWP Public Entity Suits. U.S. subsidiaries of the Group had been sued by the State of New York and several individual New York State counties and the City of New York, in proceedings alleging violations of state laws concerning pricing and marketing practices. A settlement of all claims with the State of New York and its counties and the city of New York was completed in April 2008.

• European Commission Fines

On June 18, 2008, the European Court of First Instance, reduced from €99 million to €74.25 million the fine imposed against Hoechst GmbH in 2003 by the European Commission in connection with Hoechst’s involvement in anti-competitive activity in the Sorbates sector. Pursuant to the 1999 Demerger Agreement between Hoechst and Celanese, all fines, costs, and expenses relating to Sorbates cartel matters are to be shared in a 80/20 ratio between Hoechst GmbH and Celanese AG.


• European Commission proceeding in connection with the pharmaceuticals Sector Inquiry

On May 15, 2008, the European Commission opened a formal investigation into whether sanofi-aventis had obstructed illegally an inspection of its premises in mid-January 2008 in relation to the pharmaceuticals Sector Inquiry launched at that time. The controversy with the Commission centers on a question of procedure concerning the handing over of a single document requested by the European Commission and in fact delivered by sanofi-aventis during the inspection.

Sanofi-aventis considers it cooperated in good faith with Commission representatives during the course of the inspection.

d) Other litigation and arbitration

• Zimulti® (rimonabant) class action

An amended complaint was filed by the plaintiffs on April 29, 2008. On June 30, 2008 sanofi-aventis filed a response including a motion for summary judgment.

e) Contingencies arising from certain business divestitures

• Rhodia

In May 2008, the Paris Court of Appeals rejected the action initiated by Rhodia to nullify the 2006 arbitral award in favor of sanofi-aventis.

• Albemarle Arbitration

In April 2008, sanofi-aventis and International Chemical Investors agreed to settle the ongoing dispute for an amount of €19 million to be paid by sanofi-aventis. This settlement was approved by the arbitral tribunal on June 4, 2008.


B.14. Financial income and expenses

The main components of financial income and expenses are as follows:


June 30, 2008


2007


2007

Cost of debt (148) (161) (297)

Interest income 60 58 88

Cost of debt net of cash and cash equivalents (88) (103) (209)

Foreign exchange gains (non-operating) 10 26 87

Fair value gains/(losses) on other derivatives − 6 4

Unwinding of discounting (1) (18) (20) (38)

Net gains/(losses) on disposals of financial assets 38 (2) 4 7

Impairment losses on financial assets, net of reversals (5) 2 (14)

Other items 13 14 24

Net financial income/(expenses) (50) (71) (139)

comprising: Financial expenses (160) (170) (329)

Financial income 110 99 190

(1) Excluding provisions for pensions and similar obligations. (2) See Note B.6.

B.15. Income tax expense

The difference between the effective tax rate and the standard corporate income tax rate applicable in France is explained as follows:

(as a percentage)


2008 (1)


2007 (1)


2007

Standard tax rate applicable in France 34 34 34

Impact of reduced-rate income tax on royalties in France (8) (6) (8)

Impact of the reduction in deferred tax liabilities as a result of changes in tax rates − − (9)(2)

Other − (8) (5)

Effective tax rate 26 20 12

(1) Rate calculated on the basis of the effective tax rate for the full financial year (see Note A.2.). (2) Primarily Germany in 2007: reduction from 40% to 31.3%.

As of June 30, 2007 and December 31, 2007, the “Other” line mainly included the impact of reassessing certain of the Group’s tax exposures.

B.16. Segment information

Sanofi-aventis has two business segments: Pharmaceuticals and Vaccines. Investments in all associates and joint ventures are included in the Pharmaceuticals segment with one principal exception, the Sanofi Pasteur MSD joint venture, which is included in the Vaccines segment.

Results by business segment

The table below shows key income statement indicators by business segment:

6 months to June 30, 2008 6 months to June 30, 2007 12 months to December 31, 2007

(€ million) Pharma-

ceuticals VaccinesSanofi-aventis

consolidatedPharma-


consolidatedPharma-


consolidated

Net sales 12,421 1,205 13,626 12,930 1,186 14,116 25,274 2,778 28,052

Other revenues 552 18 570 519 28 547 1,085 70 1,155

Research and development expenses (1,993) (187) (2,180) (1,979) (203) (2,182) (4,108) (429) (4,537)

Selling and general expenses (3,329) (243) (3,572) (3,549) (255) (3,804) (7,032) (522) (7,554)

Amortization of intangibles (1,587) (122) (1,709) (1,695) (138) (1,833) (3,383) (271) (3,654)

Operating income before restructuring, impairment of property, plant and equipment and intangibles, gains/losses on disposals, and litigation 3,091 207 3,298 3,116 166 3,282 5,509 597 6,106

Impairment of property, plant & equipment and intangibles (126) − (126) 5 − 5 (58) − (58)

Operating income 2,758 207 2,965 3,071 166 3,237 5,314 597 5,911

Financial expenses (155) (5) (160) (163) (7) (170) (326) (3) (329)

Financial income 108 2 110 87 12 99 179 11 190

Income tax expense (716) (55) (771) (600) (41) (641) (518) (169) (687)

Share of profit/loss of associates 419 (8) 411 383 (32) 351 621 (24) 597

Net income 2,414 141 2,555 2,778 98 2,876 5,270 412 5,682

Attributable to minority interests 220 − 220 211 − 211 419 − 419

Attributable to equity holders of the company 2,194 141 2,335 2,567 98 2,665 4,851 412 5,263

Inter-segment transactions are not material.

Adjusted net income

“Adjusted net income”, reported in segment information, is an internal performance indicator defined as net income attributable to equity holders of the company, adjusted for the material impacts of the application of purchase accounting to acquisitions (primarily the acquisition of Aventis) and for certain restructuring costs associated with acquisitions.

Management uses adjusted net income as an internal performance indicator, as a significant factor in determining variable compensation, and as a basis for determining dividend policy.



The main adjustments between net income attributable to equity holders of the company and adjusted net income are:

• elimination of expenses arising on the workdown of acquired inventories remeasured at fair value, net of tax;

• elimination of amortization and impairment of intangible assets acquired in business combinations (acquired in-process R&D and acquired product rights), net of tax (portion attributable to equity holders of the Company);

• elimination of charges arising from the impact of acquisitions on equity investees (workdown of acquired inventories, amortization and impairment of intangible assets, and impairment of goodwill);

• elimination of any impairment of goodwill.

Sanofi-aventis also excludes from adjusted net income integration and restructuring costs (net of tax) incurred specifically in connection with acquisitions.

Adjusted net income breaks down as follows:


June 30, 2008


2007


2007

Net income attributable to equity holders of the Company 2,335 2,665 5,263

Material accounting adjustments related to business combinations 1,133 1,130 1,847 ▪ elimination of expenses arising from workdown of acquired inventories

remeasured at fair value, net of tax − − − ▪ elimination of amortization and impairment of intangible assets, net of

tax (portion attributable to equity holders of the Company) 1,093 1,112 1,684(1) ▪ elimination of charges arising from the impact of acquisitions on

associates (workdown of acquired inventories, amortization and impairment of intangible assets, and impairment of goodwill) 40(3) 18(3) 163(2)

▪ elimination of impairment of goodwill − − −

Elimination of acquisition-related integration and restructuring costs, net of tax − − −

Adjusted net income 3,468 3,795 7,110

▪ Of which Pharmaceuticals 3,236 3,597 6,501

▪ Of which Vaccines 232 198 609

(1) Includes a gain of €566 million due to the effect of tax reductions, primarily in Germany, on deferred tax liabilities recognized in 2004 on the remeasurement of acquired intangible assets of Aventis.

(2) Includes the impact of the acquisition of Zentiva (€108 million, including an impairment loss of €102 million).

(3) Includes the impact of the acquisition of Zentiva: €3 million as of June 30, 2008 and June 30, 2007.


C. Events subsequent to the balance sheet date (June 30, 2008)

▪ On July 21, 2008, sanofi-aventis announced that it had entered into a binding agreement with Primary Health Care Limited (Primary) to acquire Symbion CP Holdings Pty Limited (Symbion Consumer) in Australia. Symbion Consumer manufactures, markets and distributes nutraceuticals (vitamins & mineral supplements) and over the counter brands throughout Australia and New Zealand, and has a strong portfolio of premium brands including Natures Own, Cenovis, Bio-organics, Golden Glow and Microgenics.

In 2007, Symbion Consumer generated sales of approximately AUD190 million. Symbion Consumer is the leader in its field, with an estimated 21% market share. The transaction is valued at AUD560 million and completion, subject to certain conditions, is expected to occur on August 31, 2008.

▪ On July 25, 2008, sanofi-aventis announced that Sanofi Pasteur Holding (the parent company of its sanofi pasteur vaccines division) has reached an agreement to acquire Acambis plc on the terms of a recommended cash offer. Acambis plc is an LSE-listed UK vaccines company, developing novel vaccines that address significant unmet medical needs or substantially improve upon current standards of care. Sanofi Pasteur and Acambis plc have enjoyed a long and successful relationship for more than 10 years and the Acambis plc group is currently partnered with sanofi pasteur for three of its key projects (see Note D.21. to the consolidated financial statements for the year ended December 31, 2007).

The offer price is 190 pence in cash for each share of Acambis plc, or a total of about GBP276 million. It is expected that the Scheme Document will be posted to Shareholders in early August 2008 and that the Scheme will become effective by the end of September 2008, subject to the requisite shareholder approval being obtained and satisfaction of other closing conditions including, amongst others, U.S.anti-trust review and a condition that two key projects remain unpartnered.


II − Half-year management report

A. Key figures for the first half of 2008

We believe that the concept of “adjusted net income”(1) gives investors a better understanding of our operational performance. Adjusted net income is a non-GAAP financial measure, which we define as net income attributable to equity holders of the Company adjusted to exclude (i) the material impacts of the application of purchase accounting to acquisitions, primarily the acquisition of Aventis, and (ii) certain acquisition-related restructuring costs.


June 30, 2008

6 mJunonths to

e 30,2007

Net income attributable to equity holders of the Company 2,335 2,665

Material accounting adjustments related to business combinations 1,133 1,130

elimination of expenses arising from workdown of acquired inventories remeasured at fair value, net of tax − −

tangible assets, net of tax (portion elimination of amortization and impairment of inattributable to equity holders of the Company) 1,093 1,112

mortization and impairment of intangible elimination of charges arising from the impact of acquisitions on associates

(workdown of acquired inventories, aassets, and impairment of goodwill) 40 18

elimination of impairment of goodwill − −

Elimination of acquisition-related integration and restructuring costs, net of tax − −

Adjusted net income (1) 3 3,468 ,795

Adjusted earnings per share (1) (in euros) 2.64 2.81

A.1. Consolidated financial statements

% relative to the first half of 2007 on a reported basis and up 2.9% on a comparable basis(2 .

first half of 2008 was €2,965 million, compared with €3,237 million r the first half of 2007.

f of 2008 amounted €2,335 million, compared with €2,665 million for the first half of 2007.

standing of 1,313.7 million in the first half of 2008 and 1,351.5 million in the first half of 2007.

In the first half of 2008, sanofi-aventis generated net sales of €13,626 million, down 3.5)

Operating income for thefo Net income attributable to equity holders of the Company for the first halto Earnings per share (EPS) for the first half of 2008 was €1.78, against €1.97 for the first half of 2007, based on an average number of shares out

(1) See definition in the Appendix, section F. (2) Excluding the impact of changes in Group structure and exchange rate movements; see definition in the Appendix, section F.


A.2. Adjusted net income (1)

Adjusted net income for the first half of 2008 was €3,468 million, 8.6% lower than the 2007 first-half figure of €3,795 million. The decrease was mainly due to restructuring costs recognized in the first half of 2008 (€146 million net of tax), as compared with the first half of 2007 when adjusted net income was favorably impacted by net reversals of provisions totaling €223 million arising from the settlement of tax disputes.

Adjusted earnings per share (adjusted EPS(1)) was €2.64, 6.0% lower than the 2007 first-half figure of €2.81.

Definitions of our financial indicators are provided in the Appendix (Section F). Unless otherwise stated, all financial information in this Management Report is presented in accordance with International Financial Reporting Standards (IFRS).

(1) See definition in the Appendix, Section F.


B. Significant events of the first half of 2008

B.1. Pharmaceuticals

B.1.1. Publication of clinical trial results

The first half of 2008 included some impressive clinical trial results, in particular the findings from the landmark ATHENA study, announced in May. These findings showed that Multaq® (dronedarone), a potential therapy for the treatment of patients with atrial fibrillation or atrial flutter, decreased the risk of cardiovascular hospitalizations or death by 24%, meeting the study’s primary endpoint. For the first time in twenty years of clinical drug trials in atrial fibrillation, a medicine in development has shown a significant decrease in the risk of cardiovascular death of 30% on top of standard therapy, including rate control and antithrombotic drugs. Multaq® also significantly decreased the risk of arrhythmic death by 45% and there were numerically fewer deaths (16%) from any cause in the dronedarone group. First cardiovascular hospitalization was reduced by 25% in the dronedarone group compared to placebo.

In April 2008, sanofi-aventis announced that the GEMS phase III study showed that the 5-HT2A antagonist eplivanserin, in development for the treatment of insomnia characterized by sleep maintenance difficulties/night-time awakenings, significantly reduces WASO (Wake time After Sleep Onset) and the number of night-time awakenings reported by the patient at 6 and 12 weeks of treatment, versus placebo. An improvement of the quality of sleep was also observed in the study. These results confirm those of the EPLILONG study (phase III study conducted in similar conditions), which also showed that eplivanserin significantly reduces WASO and the number of night-time awakenings reported by the patient at 6 and 12 weeks versus placebo and improves sleep quality. The results of the GEMS study also confirmed the product’s good tolerance profile versus placebo, with no residual effect on waking and with no rebound phenomenon or withdrawal symptoms after treatment cessation, as already demonstrated in EPLILONG and EPOCH.

Many results were published from clinical studies involving other sanofi-aventis compounds and products such as Eloxatine® (EPOC in colorectal cancer, March); saredutant (INDIGO, April); Taxotere® (GEICAM 9805/Target-0, May); aflibercept (phase II study in advanced ovarian cancer and symptomatic malignant ascites, May); AVE0010 (phase IIb study, June); TroVax® (phase II study in metastatic renal cancer, June; phase III study, July); Apidra® (non-inferiority study, June); Lantus® (TULIP, June); Acomplia® (ARPEGGIO, June).

Extensive phase III programs were launched in the first half of 2008, involving products such as AVE5026 (an ultra low molecular weight heparin) in thrombosis, AVE0010 (a novel injectable ant-diabetic in the GLP-1 receptor agonist class) and AVE5530 (a cholesterol absorption inhibitor) in metabolic disorders, and AVE8062 (an agent that induces rapid destruction of intra-tumoral micro-vessels) in oncology.

The ongoing portfolio rationalization program continued during the period, with the aim of targeting resources on the most promising projects.

As part of this process, some projects judged to have an inadequate risk/reward profile were discontinued, including the ACE/NEP inhibitor ilepatril (AVE7688) and the 5-HT1b/5-HT2a antagonist SL65.0472 in cardiovascular, and the ß3 receptor agonist amibegron and the V1b antagonist SSR 149415 in the central nervous system field.


The agreement with Taiho Pharmaceutical for the development and commercialization of the oral anticancer agent S-1 was terminated in July 2008.

This termination follows the announcement by Taiho Pharmaceutical of results from phase III trials which evaluated the efficacy and safety of the oral anti-cancer agent S-1 in a multicentric trial in patients with locally advanced gastric cancer.

B.1.2. Filings for marketing approval with the U.S., European and Japanese authorities and new product launches

▪ In January 2008, the anticoagulant Clexane® (enoxaparin sodium) was approved for marketing in Japan by the Ministry of Health, Labour and Welfare for the prevention of venous thromboembolism in patients undergoing orthopedic surgery of the lower limbs such as total hip replacement, total knee replacement and hip fracture surgery.

▪ In February 2008, the U.S. Food and Drug Administration (FDA) approved a New Drug Application (NDA) for Xyzal® (levocetirizine dihydrochloride) 0.5 mg/ml oral solution, a prescription antihistamine indicated for the relief of allergy symptoms and the treatment of chronic idiopathic urticaria. Xyzal® tablets received FDA approval in May 2007, and both formulations are now approved for use in adults and children 6 years and older.

▪ In March 2008, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Evaluation Agency (EMEA) issued a positive opinion recommending approval of the 300mg tablet of the antiplatelet Plavix® (clopidogrel bisulfate). This positive opinion from the CHMP needs to be ratified by the European Commission in the coming months before final approval of this new formulation.

▪ In May 2008, the FDA approved a supplemental new drug application (sNDA) to include six-year overall survival analysis from the MOSAIC trial in the Eloxatine® (oxaliplatin injection) prescribing information. The new prescribing information also reports five-year disease free survival data in stage III colon cancer patients treated following surgery to remove the primary tumor.

▪ In June 2008, sanofi-aventis submitted an application for approval of Multaq® in Europe and the United States.

B.1.3. Defense of our products

We continue to defend our patent rights vigorously whenever our products are under threat.

Defense of the Plavix® patent in the United States and in Europe

▪ On June 19, 2007, the U.S. District Court for the Southern District of New York upheld the validity and enforceability of U.S. patent 4.847.265 covering clopidogrel bisulfate, the active ingredient of Plavix®, maintaining the main patent protection for this product in the United States until November 2011. The Court also ruled that Apotex’s generic clopidogrel bisulfate infringed the sanofi-aventis patent, and enjoined Apotex from marketing this product in the United States until the patent expires. Apotex appealed this decision to the Court of Appeals for the Federal Circuit. Oral arguments before this Court took place on March 3, 2008.


▪ On May 28, 2008, sanofi-aventis became aware that the German federal drug agency (BfArM) had reviewed and approved three applications for marketing approval relating to clopidogrel besylate in Germany, ahead of the expiry date of the data exclusivity period for clopidogrel in the European Union (July 15, 2008). The applications relate to a different pharmaceutical salt of clopidogrel from the one used in Plavix®, and the approvals granted cover only some of the indications of Plavix®. Sanofi-aventis believes that these applications – which rely on data from sanofi-aventis and Bristol-Myers Squibb, who developed Plavix®/Iscover® (clopidogrel bisulfate) – should not have been accepted by a regulatory body within the European Union before this date. Starting in May 2008, sanofi-aventis therefore instigated a number of civil, administrative and regulatory actions, which initially led to the suspension of the marketing authorizations pending further review by the BfArM. On July 29, 2008, the German administrative court in Cologne ordered the immediate enforcement of two of these marketing authorizations ending their suspension. Sanofi-aventis and BMS are appealing. There can be no assurance that generics of Plavix® will not appear in other European markets.

Defense of the Lovenox® patent in the United States

▪ On May 15, 2008, sanofi-aventis announced that the U.S. Court of Appeals for the Federal Circuit had affirmed the February 8, 2007 decision by the U.S. District Court for the Central District of California in the sanofi-aventis Lovenox® patent infringement suit against Amphastar and Teva. As a result of the Court of Appeals’ ruling, the U.S. Lovenox® patent was deemed to be unenforceable. On June 27, 2008 sanofi-aventis petitioned for an en banc review of this decision.

While several generic manufacturers have requested marketing approval from the FDA for products they allege to be generic versions of Lovenox®, sanofi-aventis is not aware of any FDA approval of these requests.

B.1.4. Divestments, acquisitions and alliances

▪ On February 12, 2008, sanofi-aventis and Dyax Corp. announced that they had entered into agreements under which sanofi-aventis was granted an exclusive worldwide license for the development and commercialization of Dyax’s fully human monoclonal antibody DX-2240, and a worldwide non-exclusive license to use Dyax’s proprietary antibody phage display technology.

Under the terms of the two agreements, Dyax could receive up to $500 million in license fees and milestone payments in the event of full commercial success for the first 5 antibody candidates, including DX-2240 (for which $25 million was paid during the first half of 2008). In addition, Dyax will receive royalties on sales of antibody candidates.

▪ On June 18, 2008, sanofi-aventis announced its intention to make a competing bid for all issued and outstanding ordinary shares (including shares held in the form of Global Depositary Receipts – GDRs) of Zentiva at an offer price of CZK1,050 in cash per share. The offer price represents a 14.6% premium to Zentiva’s April 30, 2008 closing price of CZK916.60.


The offer, made by sanofi-aventis Europe, opened on July 11, 2008 for a period of 10 weeks ending September 19, 2008, which may be extended, subject to the agreement of the Czech National Bank, if additional time is required to meet the offer conditions.

The bid is subject to customary offer conditions, such as obtaining the required clearances from the antitrust authorities. It is also subject to a minimum tender condition of 10,339,203 shares (including shares held in the form of GDRs), such that at the closing of the offer sanofi-aventis Europe would be in a position to hold over 50.0% of Zentiva’s shares and voting rights on a fully diluted basis, as calculated by aggregating (i) the shares already held by sanofi-aventis Europe prior to the offer and (ii) Zentiva securities tendered to the offer and not validly withdrawn. Sanofi-aventis Europe currently holds 9.5 million shares, representing approximately 24.88% of Zentiva’s shares and voting rights on an undiluted basis.

B.2. Human Vaccines

B.2.1. Influenza Vaccine

▪ In February 2008, sanofi pasteur filed a centralized marketing authorization application with the EMEA for the first influenza vaccine delivered by an innovative intradermal microinjection system. This file was accepted for review by the EMEA.

▪ In April 2008, the U.S. Department of Health and Human Services (HHS) accepted a new batch of H5N1 bulk vaccine sufficient to produce over 38.5 million doses of vaccine to protect against a new strain of avian influenza. Sanofi pasteur received a payment of $192.5 million for this shipment, which was made under a multi-year contract with the HHS as part of its pandemic program. This payment was recognized by sanofi-aventis in the second quarter of 2008.

B.2.2. Diphtheria, Tetanus, Pertussis, Polio and Haemophilus Influenzae Type B (Hib) Vaccines

▪ In March 2008, the FDA licensed Daptacel® (Diphtheria and Tetanus Toxoids and Acellular Pertussis Vaccine Adsorbed) to be administered as a fifth recommended vaccination for children 4 years through 6 years of age for the prevention of diphtheria, tetanus, and pertussis in the United States.

▪ In June 2008, the FDA licensed Pentacel®, indicated for the active immunization of children 6 weeks through 4 years of age against diphtheria, tetanus, pertussis, polio and invasive haemophilus influenzae type b (Hib) infections. Pentacel® is the first and only four-dose diphtheria, tetanus, and acellular pertussis (DTaP)-based combination vaccine for pediatric use in the United States that includes both polio and Hib antigens.

B.2.3. Acquisitions and alliances

▪ Sanofi pasteur announced on April 15, 2008 that it was investing CAD100 million in a new research facility in Canada, to boost innovation in vaccine research for the benefit of global health. The Government of Ontario is partnering sanofi pasteur in this project by contributing CAD13.9 million.

▪ In June 2008, sanofi pasteur inaugurated a new, state-of-the-art vaccine production facility in north-western France to respond to soaring demand worldwide. This new €100 million facility, located in Val de Reuil, uses the very latest technology to produce vaccines to the highest quality standards, and is part of the €600 million of investment undertaken by sanofi pasteur in France between 2005 and 2008.


B.3. Other significant events

▪ Under the share repurchase program authorized by the Annual General Meeting of May 31, 2007, sanofi-aventis repurchased 23,052,169 of its own shares for a total amount of €1,191 million (including transaction costs) during the period from January 1, 2008 through May 6, 2008. Under this same program, sanofi-aventis repurchased 29,366,500 of its own shares for a total amount of €1,806 million (including transaction costs) during the second half of 2007. The Board of Directors’ meeting of April 29, 2008 decided to cancel 51,407,169 treasury shares. These cancellations had no impact on consolidated shareholders’ equity.

▪ The Board of Directors, at its meeting held following the Annual General Meeting of May 14, 2008, authorized the company to repurchase its own shares up to a maximum amount of €3 billion during a period expiring at the next Annual General Meeting.

The Annual General Meeting of May 14, 2008 also approved the distribution of a net dividend of €2.07 per share, 18.3% higher than the dividend paid in 2007. The dividend was paid on May 21, 2008.

Finally, the Annual General Meeting approved the appointment of thirteen directors on the expiry of the mandates of existing directors whose terms of office expired at the end of the meeting. Four of these existing directors (René Barbier de La Serre, Jürgen Dormann, Hubert Markl and Bruno Weymuller) did not seek reappointment, and the shareholders appointed four new directors to replace them (Claudie Haigneré, Uwe Bicker, Patrick de la Chevardière and Gunter Thielen).

C. Events subsequent to the balance sheet date (June 30, 2008)

▪ On July 21, 2008, sanofi-aventis announced that it had entered into a binding agreement with Primary Health Care Limited (Primary) to acquire Symbion CP Holdings Pty Limited (Symbion Consumer) in Australia. Symbion Consumer manufactures, markets and distributes nutraceuticals (vitamins and mineral supplements) and over the counter brands throughout Australia and New Zealand, and has a strong portfolio of premium brands including Natures Own, Cenovis, Bio-organics, Golden Glow and Microgenics. In 2007, Symbion Consumer generated sales of approximately AUD190 million. Symbion Consumer is the leader in its field, with an estimated 21% market share. The transaction is valued at AUD560 million and completion, subject to certain conditions, is expected to occur on August 31, 2008.

▪ On July 25, 2008, sanofi-aventis announced that Sanofi Pasteur Holding (the parent company of its sanofi pasteur vaccines division) has reached an agreement to acquire Acambis plc on the terms of a recommended cash offer. Acambis plc is an LSE-listed UK vaccines company, developing novel vaccines that address significant unmet medical needs or substantially improve upon current standards of care. Sanofi Pasteur and Acambis plc have enjoyed a long and successful relationship for more than 10 years and the Acambis plc group is currently partnered with sanofi pasteur for three of its key projects (see Note D.21. to the consolidated financial statements for the year ended December 31, 2007).

The offer price is 190 pence in cash for each share of Acambis plc, or a total of about GBP276 million. It is expected that the Scheme Document will be posted to Shareholders in early August 2008 and that the Scheme will become effective by the end of September 2008, subject to the requisite shareholder approval being obtained and satisfaction of other closing conditions including, amongst others, U.S.anti-trust review and a condition that two key projects remain unpartnered


D. Consolidated financial statements for the first half of 2008

D.1. Consolidated results of operations for the first half of 2008

First-half consolidated income statements for the six months ended June 30, 2008 and June 30, 2007

(€ million) 6 months toJune 30, 2008

as % of net sales

6 months to June 30, 2007

as % of net sales

Net sales 13,626 100.0% 14,116 100.0%

Other revenues 570 4.2% 547 3.9%

Cost of sales (3,615) (26.5%) (3,704) (26.3%)

Gross profit 10,581 77.7% 10,959 77.6%

Research and development expenses (2,180) (16.0%) (2,182) (15.5%)

Selling and general expenses (3,572) (26.2%) (3,804) (26.9%)

Other operating income 316 2.3% 278 2.0%

Other operating expenses (138) (1.0%) (136) (1.0%)

Amortization of intangibles (1,709) (12.6%) (1,833) (12.9%)

Operating income before restructuring, impairment of property, plant & equipment and intangibles, gains and losses on disposals, and litigation 3,298 24.2% 3,282 23.3%

Restructuring costs (207) (1.5%) (50) (0.4%)

Impairment of property, plant & equipment and intangibles (126) (0.9%) 5 0.0%

Gains and losses on disposals, and litigation − − − −

Operating income 2,965 21.8% 3,237 22.9%

Financial expenses (160) (1.2%) (170) (1.2%)

Financial income 110 0.8% 99 0.7%

Income before tax and associates 2,915 21.4% 3,166 22.4%

Income tax expense (771) (5.6%) (641) (4.5%)

Share of profit/loss of associates 411 3.0% 351 2.5%

Net income 2,555 18.8% 2,876 20.4%

Net income attributable to minority interests 220 1.7% 211 1.5%

Net income attributable to equity holders of the Company 2,335 17.1% 2,665 18.9%

D.1.1. Net sales

Net sales for the first half of 2008 were €13,626 million, a rise of 2.9% on a comparable basis(1) compared with the first half of 2007. Exchange rate movements had an unfavorable impact of 5.5 points, more than three-quarters of which related to the U.S. dollar. Changes in Group structure had an unfavorable impact of 0.9 of a point. After these effects, net sales were down by 3.5% on a reported basis.

Reconciliation of 2007 first-half reported net sales to comparable net sales

(€ million) 2007 first half

2007 first-half reported net sales 14,116

Impact of changes in Group structure (114)

Impact of exchange rates (763)

2007 first-half comparable net sales 13,239

D.1.1.1. Net sales by business segment

Net sales reported by sanofi-aventis are generated by two businesses: Pharmaceuticals and Human Vaccines (Vaccines).

a) Pharmaceuticals

Net sales for the pharmaceuticals business in the first half of 2008 were €12,421 million, up 2.3% on a comparable basis but down 3.9% on a reported basis.

Net sales of the top 15 products advanced by 3.7% on a comparable basis to €8,349 million and represented 67.2% of pharmaceuticals net sales, against 66.3% for the comparable period of 2007. Excluding the impact of the arrival of generics of Ambien® IR in the United States and of Eloxatine® in Europe (i.e. excluding net sales of Ambien® IR in the United States and net sales of Eloxatine® in Europe), the top 15 products would have achieved first-half growth of 9.6% on a comparable basis.

Net sales of other pharmaceutical products fell slightly by 0.5% on a comparable basis to €4,072 million, compared with €4,094 million for the first half of 2007.


(1) Excluding the impact of changes in Group structure and exchange rate movements; see definition in the Appendix, section F.


(€ million)

Product Indication 6 months to

June 30,2008

6 months toJune 30,

2007reported


2007 comparable

on a reported

basis

on acomparable

basis

Lovenox® Thrombosis 1,354 1,305 1,199 +3.8% +12.9%

Plavix® Atherothrombosis 1,326 1,201 1,169 +10.4% +13.4%

Lantus® Diabetes 1,133 961 879 +17.9% +28.9%

Taxotere® Breast cancer, lung cancer, prostate cancer 987 923 868 +6.9% +13.7%

Eloxatine® Colorectal cancer 668 773 707 -13.6% -5.5%

Aprovel® Hypertension 600 536 522 +11.9% +14.9%

Copaxone® Multiple sclerosis 420 596 351 -29.5% +19.7%

Stilnox®/Ambien®

/Ambien CR® Insomnia

401 858 803 -53.3% -50.1%

Allegra® Allergic rhinitis 375 399 369 -6.0% +1.6%

Delix®/Tritace® Hypertension 275 378 377 -27.2% -27.1%

Amaryl® Diabetes 187 197 192 -5.1% -2.6%

Xatral® Benign prostatic hyperplasia 168 167 158 +0.6% +6.3%

Depakine® Epilepsy 163 157 152 +3.8% +7.2%

Actonel® Osteoporosis, Paget’s disease 162 160 156 +1.3% +3.8%

Nasacort® Allergic rhinitis 130 166 149 -21.7% -12.8%

Sub-total: top 15 products 8,349 8,777 8,051 -4.9% +3.7%

Other pharmaceutical products 4,072 4,153 4,094 -2.0% -0.5%

Total Pharmaceuticals 12,421 12,930 12,145 -3.9% +2.3%

Net sales of Lovenox®, the leading low molecular weight heparin on the market, rose by 12.9% on a comparable basis in the first half of 2008.

In the United States, following a surge in sales in the first quarter (due partly to wholesalers buying buffer stocks in response to the withdrawal of some unfractionated heparins), net sales of Lovenox® rose by a more modest 6.5% in the second quarter to €379 million.

In Europe, sanofi-aventis was unable to fully meet demand for the product in the second quarter due to the withdrawal of some batches in which low levels of impurities were detected. Shipments are expected to return to normal levels in the third quarter.

In the first half of 2008, net sales of Lantus®, the world’s leading insulin brand, were up by 28.9% on a comparable basis at €1,133 million. In the United States, sales rose by 30.7% on a comparable basis to €655 million, Lantus® SoloSTAR® being the main growth driver.

Taxotere® reported double-digit sales growth during the first half of 2008 in all three regions. In the United States, net sales rose by 14.9% on a comparable basis to €348 million, boosted by use of the product as an adjuvant treatment of breast cancer.


Ambien CR® posted first-half net sales of $335 million in the United States, compared with $385 million for the first half of 2007. Net sales of Ambien® IR, which went off patent in the United States on April 20, 2007, totaled $72 million in the first half, against $622 million for the comparable period of 2007. In Japan, sales of Myslee®, which have been consolidated by sanofi-aventis since January 1, 2008, amounted to €61 million for the first half of 2008, an increase of 12.3% (on a comparable basis).

In the United States, sales of Eloxatine® – the market-leading colorectal cancer treatment as adjuvant and in the metastatic phase – rose by 4.9% in the first half (on a comparable basis) to €449 million. The ongoing introduction of generic versions in Europe again depressed total net sales, which fell by 5.5% (on a comparable basis) to €668 million in the first half of 2008. In the “Other Countries” region, the product recorded strong first-half growth of 28.8% (on a comparable basis), to €94 million.

Net sales of Acomplia® in the first half of 2008 totaled €54 million. Acomplia® was launched in Brazil and Italy during the second quarter.

Xyzal®, a new prescription oral antihistamine launched in the United States at the start of October 2007 by sanofi-aventis under a co-promotion agreement with UCB, generated net sales of €44 million in the first half of 2008.

Geographical split of 2008 first-half sales of the top 15 pharmaceutical products

(€ million) Europe

Change on a comparable

basis United States


basis Other

countries


basis

Lovenox® 407 +8.8% 803 +14.7% 144 +15.2%

Plavix® 884 +5.4% 99 +15.1% 343 +40.6%

Lantus® 346 +18.1% 655 +30.7% 132 +55.3%

Taxotere® 447 +11.8% 348 +14.9% 192 +16.4%

Eloxatine® 125 -39.3% 449 +4.9% 94 +28.8%

Aprovel® 452 +9.2% − − 148 +37.0%

Copaxone® 185 +17.1% 210 +19.3% 25 +47.1%

Stilnox®/Ambien®/Ambien CR® 42 -2.3% 270 -60.1% 89 +6.0%

Allegra® 26 -23.5% 175 -3.3% 174 +13.0%

Delix®/Tritace® 186 -22.8% 0 -100.0% 89 -34.1%

Amaryl® 52 -18.8% 3 -25.0% 132 +6.5%

Xatral® 81 -4.7% 54 +14.9% 33 +26.9%

Depakine® 110 3.8% − − 53 +15.2%

Actonel® 106 +3.9% − − 56 +3,7%

Nasacort® 23 -11.5% 95 -13.6% 12 -7.7%


b) Human Vaccines (Vaccines)

In the first half of 2008, the Vaccines business generated net sales of €1,205 million, an increase of 10.1% on a comparable basis and of 1.6% on a reported basis.

Net sales of Influenza Vaccines rose by 38.9% (on a comparable basis) in the first half of 2008 to €200 million, including the supply of a new batch of H5N1 vaccine to the U.S. Department of Health and Human Services for $192.5 million (compared with $113 million in the first half of 2007).

In the first half of 2008, Adult Booster Vaccines reported comparable-basis growth of 1.5% over the same period, net sales of the AdacelTM (adult and adolescent tetanus-diphtheria-pertussis booster vaccine) totaled €125 million, an increase of 19.1% on a comparable basis.

In the first half of 2008, Menactra® achieved net sales growth of 21.6% (on a comparable basis) to €191 million. After an excellent first quarter, net sales of Menactra® rose by a more modest 1.9% (on a comparable basis) in the second quarter to €92 million. Sales were impacted by the timing of public sector orders that are expected to occur in the third quarter.

Pentacel®, the first-ever 5-in-1 pediatric combination vaccine to protect against diphtheria, tetanus, pertussis, polio and haemophilus influenzae type b, was licensed in the United States at end June 2008 and launched there at the start of July 2008.

(€ million) 6 months toJune 30,

2008

6 months toJune 30,

2007reported

6 months toJune 30,

2007comparable

Reported basis

growth

Comparablebasis

growth

Polio/Pertussis/Hib Vaccines 355 371 351 -4.3% +1.1%

Adult Booster Vaccines 200 219 197 -8.7% +1.5%

Influenza Vaccines* 200 156 144 +28.2% +38.9%

Travel & Other Endemics Vaccines 157 163 155 -3.7% +1.3%

Meningitis/Pneumonia Vaccines 225 207 184 +8.7% +22.3%

Other Vaccines 68 70 63 -2.9% +7.9%

Total Human Vaccines 1,205 1,186 1,094 +1.6% +10.1%

* Seasonal and pandemic influenza vaccines.

2008 first-half sales at Sanofi Pasteur MSD, the joint venture with Merck & Co in Europe, rose by 60.1% on a reported basis to €552 million, boosted by the performance of Gardasil®, the first vaccine against papillomavirus infections (which cause cervical cancer). Net sales of Gardasil® for the period were €311 million, compared with €81 million in the first half of 2007.

Sales generated by Sanofi Pasteur MSD are not consolidated by sanofi-aventis.


D.1.1.2. Net sales by geographic region

(€ million) 6 months toJune 30,

2008

6 months toJune 30,

2007reported

6 months toJune 30,

2007comparable

Reported basis

growth

Comparable basis

growth

Europe 6,132 6,150 6,126 -0.3% +0.1%

United States 4,149 4,844 4,089 -14.3% +1.5%

Other countries 3,345 3,122 3,024 7.1% +10.6%

Total 13,626 14,116 13,239 -3.5% +2.9%

In Europe, after a slight fall in the first quarter, sales rose by 1.0% in the second quarter (on a comparable basis), largely because the rate of decline in German sales slowed. Overall, first-half net sales rose by 0.1% (on a comparable basis). The impact of Eloxatine® generics pared approximately 1.4% off growth for the first half (on a comparable basis).

In the United States, sales rose by 1.5% in the first half (on a comparable basis), boosted by dynamic performances from Lantus (+30.7%), Taxotere (+14.9%), and vaccines (+15.7%). Excluding the impact of generics of Ambien® IR, first-half sales growth would have reached 10.7% on a comparable basis.

Net sales in the “Other countries” region rose by 10.6% on a comparable basis in the first half of 2008.

D.1.1.3. Worldwide presence of Plavix® and Aprovel®

Two of our leading products, Plavix® and Aprovel®, were discovered by sanofi-aventis and jointly developed with Bristol-Myers Squibb (BMS) under an alliance agreement. Sales of these products are made by either sanofi-aventis or BMS under the terms of the alliance (1).

Worldwide sales of these two products are a useful indicator of the global market presence of these sanofi-aventis products. We believe that this information facilitates the understanding and analysis of our income statement, of our profitability, and of the results of our research and development efforts. Disclosure of sales of these two products made by BMS gives a better understanding of trends in certain items in our income statement, in particular “Other revenues”, where we recognize royalties received on these sales; “Share of profit/loss of associates”, where we recognize our share of the profits or losses generated by alliance entities in territories managed by BMS; and “Net income attributable to minority interests”, where we recognize the BMS share of the profits or losses generated by alliance entities in territories managed by sanofi-aventis.

(1) See Note C.1 to the consolidated financial statements published in the 2007 Annual Report on Form 20-F,

pages F-29 through F-31, available on our website: www.sanofi-aventis.com.

http://www.sanofi-aventis.com/


Worldwide reported-basis sales of Plavix® and Aprovel® for the six months ended June 30, 2008 and June 30, 2007, split by geographic region

(€ million) June 30, 2008 June 30, 2007

sanofi-aventis(2) BMS(3) Total sanofi-aventis(2) BMS(3) Total

Change on areported

basis

Plavix®/Iscover® (1)

Europe 820 110 930 789 111 900 +3.3%

United States − 1,552 1,552 − 1,362 1,362 +14.0%

Other Countries 343 116 459 260 128 388 +18.3%

Total 1,163 1,778 2,941 1,049 1,601 2,650 +11.0%

(€ million) June 30, 2008 June 30, 2007

sanofi-aventis(5) BMS(3) Total sanofi-aventis(5) BMS(3) Total

Change on areported

basis

Aprovel®/Avapro®/Karvea®(4)

Europe 411 89 500 375 85 460 +8.7%

United States − 236 236 − 250 250 -5.6%

Other Countries 147 88 235 118 81 199 +18.1%

Total 558 413 971 493 416 909 +6.8%

(1) Plavix® is sold under the Plavix® and Iscover® trademarks.

(2) Net sales of Plavix® consolidated by sanofi-aventis, excluding sales to BMS (€163 million for the 6 months to June 30, 2008, €152 million for the 6 months to June 30, 2007).

(3) Translated into euros by sanofi-aventis using the method described in Note B.2 to the consolidated financial statements included in the Annual Report on Form 20-F for 2007, page F-11; this document is available on our website at www.sanofi-aventis.com.

(4) Aprovel® is sold under the Aprovel®, Avapro® and Karvea® trademarks.

(5) Net sales of Aprovel® consolidated by sanofi-aventis, excluding sales to BMS (€41 million for the 6 months to June 30, 2008, €43 million for the 6 months to June 30, 2007).

Worldwide comparable-basis sales of Plavix® and Aprovel® for the six months ended June 30, 2008 and June 30, 2007, split by geographic region


June 30, 2007

reported

June 30, 2007

comparable


basis

Plavix®/Iscover®

Europe 930 900 885 +5.1%

United States 1,552 1,362 1,190 +30.4%

Other Countries 459 388 365 +25.8%

Total 2,941 2,650 2,440 +20.5%

Aprovel®/Avapro®/Karvea®

Europe 500 460 456 +9.6%

United States 236 250 219 +7.8%

Other Countries 235 199 184 +27.7%

Total 971 909 859 +13.0%


In the United States, sales of Plavix® (consolidated by BMS) totaled $2,350 million in the first half of 2008, compared with $1,809 million in the first half of 2007 when the product was still affected by the presence of a generic version, mainly at the start of the period.

In Europe, first-half net sales of Plavix® were up 5.1% at €930 million on a comparable basis, though sales are still being affected by adverse trends in Germany.

In the “Other Countries” region, the product recorded an acceleration in sales growth in the second quarter, taking 2008 first-half net sales to €459 million (up 25.8% on a comparable basis). This growth was largely driven by Japan, where first-half net sales of Plavix® totaled €70 million (versus €16 million in the first half of 2007).

First-half worldwide sales of Aprovel®/Avapro®/Karvea® were €971 million, an increase of 13.0% on a comparable basis.

D.1.2. Other revenues

Other revenues, mainly comprising royalty income under licensing agreements contracted in connection with ongoing operations, totaled €570 million, compared with €547 million in the first half of 2007.

License revenues from the worldwide alliance with Bristol-Myers Squibb (BMS) on Plavix® and Aprovel® totaled €458 million in the first half of 2008, against €414 million in the first half of 2007. These revenues were boosted by the strong rise in U.S. sales of Plavix® (up 30.4% on a comparable basis in the first half of 2008), but were adversely affected by the unfavorable trend in the dollar/euro exchange rate.

D.1.3. Gross profit

Gross profit for the six months to June 30, 2008 was €10,581 million (77.7% of net sales), compared with €10,959 million (77.6% of net sales) for the first half of 2007.

The 0.1-point increase in the gross margin ratio was mainly due to an increase in royalty income (impact: +0.3 of a point), offset by an increase in the ratio of cost of sales to net sales (impact: +0.2 of a point).

The main reasons for the higher ratio of cost of sales to net sales were the introduction of generics of Ambien® IR in the United States from April 1, 2007 and the weakening of the U.S. dollar against the euro. These effects were partly offset by a favorable product mix plus, from April 1, 2008, the discontinuation by sanofi-aventis of North-American sales of Copaxone®, a product that generated a lower level of contractual gross margin than the average for the portfolio.

D.1.4. Research and development expenses

Research and development expenses totaled €2,180 million, compared with €2,182 million in the first half of 2007. Excluding the effect of exchange rates, research and development expenses rose by 3.7%.

The research and development program is progressing broadly in line with the objectives announced at the sanofi-aventis “R&D day” held on September 17, 2007.


D.1.5. Selling and general expenses

Selling and general expenses totaled €3,572 million, compared with €3,804 million in the first half of 2007. This represents a reduction of 6.1% (or 1.3% after excluding the effect of exchange rates). The ratio of selling and general expenses to net sales was 26.2% (versus 26.9% in the first half of 2007), reflecting the impact of the Group’s selective cost adaptation policy.

D.1.6. Other operating income and expenses

In the first half of 2008, other operating income totaled €316 million (versus €278 million in the first half of 2007), and other operating expenses €138 million (versus €136 million in the first half of 2007).

Consequently, net other operating income for the first half of 2008 was €178 million, against €142 million for the comparable period of 2007.

In accordance with the terms of its agreement with sanofi-aventis, Teva Pharmaceutical Industries took over the selling of Copaxone® in the United States and Canada from sanofi-aventis with effect from April 1, 2008. In return, sanofi-aventis will receive a fee equal to 25% of sales of the product in these two countries over a two-year period, recognized in “Other operating income”.

The 2007 first-half figure included a €61 million expense relating to the harmonization of the Group’s welfare and healthcare plans for retirees and their named beneficiaries in France.

D.1.7. Amortization of intangibles

Amortization charged against intangible assets totaled €1,709 million for the first half of 2008, compared with €1,833 million for the comparable period of 2007. The reduction was mainly due to the weakening of the U.S. dollar against the euro.

This item mainly relates to Aventis intangible assets remeasured at fair value on acquisition (€1,626 million for the first half of 2008, versus €1,766 million for the first half of 2007).


D.1.8. Operating income before restructuring, impairment of property, plant & equipment and intangibles, gains and losses on disposals, and litigation

This indicator amounted to €3,298 million for the six months to June 30, 2008, compared with €3,282 million for the six months to June 30, 2007.

Split by business segment


2008 June 30,

2007

Pharmaceuticals 3,091 3,116

Human Vaccines 207 166

Total 3,298 3,282

D.1.9. Restructuring costs

Restructuring costs for the first half of 2008 were €207 million, against €50 million for the first half of 2007. The 2008 figure relates to costs incurred on the adaptation of industrial facilities in France and measures taken in response to the changing economic environment in Europe (primarily France, Italy and Spain). In 2007, restructuring costs related to the ongoing adaptation plan initiated in France in 2006.

D.1.10. Impairment of property, plant & equipment and intangibles

The impairment loss of €126 million recognized in the first half of 2008 reflects the results of impairment tests conducted further to the discontinuation of research projects, primarily the oral anti-cancer agent S-1 (termination of the agreement with Taiho Pharmaceutical for the development and commercialization of S-1) and the anti-hypertensive Ilepatril (recognized as an asset on the acquisition of Aventis in 2004).

In the first half of 2007, this item showed an impairment reversal of €5 million taken against intangible assets.

D.1.11. Gains and losses on disposal and litigation

The group did not make any major disposals during the first half of either 2007 or 2008.

D.1.12. Operating income

Operating income for the first half of 2008 came to €2,965 million, compared with €3,237 million for the first half of 2007.


D.1.13. Financial income and expenses

Net financial expense came to €50 million, €21 million lower than the 2007 first-half figure of €71 million.

Interest expense on net debt (short-term debt plus long-term debt, less cash and cash equivalents) was €88 million, versus €103 million in the first half of 2007. This reduction reflected two contrasting factors: a reduction in the average level of debt over the period, partly offset by unfavorable interest rate trends.

Sanofi-aventis tendered its shares in Millennium Pharmaceuticals, Inc. (Millennium) to the public tender offer for Millennium by Takeda Pharmaceuticals Company Ltd. This transaction generated a gain of €38 million, recognized in May 2008.

Net foreign exchange gains were €10 million in the first half of 2008, versus €30 million in the first half of 2007.

D.1.14. Income before tax and associates

Income before tax and associates totaled €2,915 million in the first half of 2008, compared with €3,166 million in the first half of 2007.

D.1.15. Income tax expense

Income tax expense for the six months to June 30, 2008 was €771 million, compared with €641 million for the comparable period of 2007.

In 2007, this line included a €223 million gain from reversals of provisions for tax exposures, relating mainly to the settlement of disputes arising from tax inspections.

D.1.16. Share of profit/loss of associates

The net share of profits from associates in the six months to June 30, 2008 was €411 million, against €351 million in the comparable period of 2007. This item mainly includes the sanofi-aventis share of after-tax profits from territories managed by BMS under the Plavix® and Avapro® alliance (€291 million, versus €235 million in the first half of 2007). The increase in this profit share was directly related to the increase in Plavix® sales, partly offset by the unfavorable trend in the exchange rate of the U.S. dollar against the euro.

In addition, Sanofi Pasteur MSD made a positive contribution in the first half of 2008, having contributed a loss in the comparable period of 2007 due to promotional expenses incurred on the launch of the Gardasil® vaccine.

D.1.17. Net income

Net income (before minority interests) for the first half of 2008 was €2,555 million, compared with €2,876 million for the first half of 2007.


D.1.18. Net income attributable to minority interests

Net income attributable to minority interests totaled €220 million in the first half of 2008, versus €211 million in the first half of 2007. This line includes the share of pre-tax profits paid to BMS from territories managed by sanofi-aventis (€212 million, versus €200 million in the first half of 2007).

D.1.19. Net income attributable to equity holders of the Company

Net income attributable to equity holders of the Company was €2,335 million for the first half of 2008, compared with €2,665 million for the first half of 2007.



2008 June 30,

2007



Total net income attributable to equity holders of the Company 2,335 2,665

Earnings per share (EPS) was €1.78, compared with the 2007 first-half figure of €1.97, based on an average number of shares outstanding of 1,313.7 million in the first half of 2008 and 1,351.5 million in the first half of 2007.


D.2. Adjusted net income (1)

D.2.1. Reconciliation of net income attributable to equity holders of the Company to adjusted net income (1)


June 30, 2008

6 months toJune 30,

2007

Net income attributable to equity holders of the Company 2,335 2,665

Material accounting adjustments related to business combinations 1,133 1,130

elimination of expense arising from workdown of acquired inventories remeasured at fair value, net of tax − −

elimination of amortization and impairment of intangible assets, net of tax (portion attributable to equity holders of the Company) 1,093 1,112

elimination of charges arising from the impact of acquisitions on associates (workdown of acquired inventories, amortization and impairment of intangible assets, and impairment of goodwill) 40 18

elimination of impairment of goodwill − −

Elimination of acquisition-related integration and restructuring costs, net of tax − −

Adjusted net income (1) 3,468 3,795

Adjusted earnings per share (1) (in euros) 2.64 2.81

D.2.2. Adjusted net income (1)

Adjusted net income for the first half of 2008 was €3,468 million, 8.6% lower than the 2007 first-half figure of €3,795 million. The decrease was mainly due to restructuring costs recognized in the first half of 2008 (€146 million net of tax), as compared with the first half of 2007 when adjusted net income was favorably impacted by net reversals of provisions totaling €223 million arising from the settlement of tax disputes.

Adjusted net income represented 25.5% of net sales, versus 26.9% for the first half of 2007.



June 30, 2008


2007



Adjusted net income (1) 3,468 3,795

D.2.3. Adjusted earnings per share(1) (adjusted EPS)

We also report adjusted EPS, a non-GAAP financial measure that we define as adjusted net income divided by the weighted average number of shares outstanding.

Adjusted EPS was €2.64, 6.0% lower than the 2007 first-half figure of €2.81, based on an average number of shares outstanding of 1,313.7 million for the first half of 2008 and 1,351.5 million for the first half of 2007.



D.3. Consolidated statement of cash flows

Net cash provided by operating activities in the first half of 2008 was €3,242 million, compared with €3,046 million in the first half of 2007.

Operating cash flow before changes in working capital in the six months to June 30, 2008 was €3,932 million, compared with €4,209 million for the comparable period of 2007.

Working capital needs increased by €690 million over the period, against €1,163 million in the first half of 2007.

Investing activities generated a net cash outflow of €692 million in the first half of 2008, compared with €584 million in the first half of 2007.

Acquisitions of property, plant and equipment and intangible assets amounted to €796 million (versus €694 million in the first half of 2007); they mainly comprised investments in industrial and research sites, plus payments for intangible rights (€178 million) relating primarily to the buyout of rights to Myslee® in Japan agreed at the end of 2007.

There were no major acquisitions of investments in the first half of 2008. In the first half of 2007, acquisitions of investments (€198 million) mainly comprised €186 million on the buyout of preferred shares issued by the sanofi-aventis subsidiary Carderm Capital LP.

After-tax proceeds from disposals (€102 million) related mainly to the sale of Millennium shares in May 2008. In the first half of 2007, after-tax proceeds from disposals totaled €295 million, the main item being the additional purchase consideration received from CSL.

Net cash used in financing activities amounted to €3,287 million in the first half of 2008, compared with €2,549 million in the first half of 2007. The 2008 figure included the dividend payout of €2,702 million (versus €2,364 million in the first half of 2007), and the repurchase of 23.8 million of the company’s own shares (€1,225 million) under the share repurchase programs authorized by the Annual General Meetings of May 31, 2007 and May 14, 2008.

After the impact of exchange rates, the net change in cash and cash equivalents in the first half of 2008 was a reduction of €765 million, against a reduction of €70 million in the first half of 2007.


D.4. Consolidated balance sheet

Total assets stood at €67,508 million at June 30, 2008, €4,406 million lower than the figure as of December 31, 2007 (€71,914 million). This decrease was mainly due to the net change in the cumulative translation difference arising from the weakening of various currencies against the euro (€2,112 million, primarily relating to the U.S./euro exchange rate), and to the amortization of acquired Aventis intangible assets (€1,626 million).

Debt, net of cash and cash equivalents stood at €5.6 billion at June 30, 2008, compared with €4.2 billion at December 31, 2007. We define debt, net of cash and cash equivalents as short-term debt plus long-term debt, minus cash and cash equivalents.

The gearing ratio (debt, net of cash and cash equivalents, to total equity) rose from 9.5% to 13.5%. For an analysis of our debt at June 30, 2008 and December 31, 2007, refer to Note B.8 of this document.

Other key movements in balance sheet items are summarized below.

Total equity was €41,470 million at June 30, 2008, against €44,719 million at December 31, 2007. This net reduction reflected the following main factors:

- reductions: distributions to shareholders (payment of the 2007 dividend: €2,702 million), repurchase of the company’s own shares (€1,225 million), and the net change in the cumulative translation difference due to the weakening of various currencies against the euro (€1,654 million, mainly on the US dollar);

- increases: net income attributable to equity holders for the first half of 2008 (€2,335 million).

Goodwill and intangible assets fell by €3,110 million, due to exchange rate movements (€1.3 billion) and to amortization and impairment charges (€1.8 billion over the period).

Provisions and other non-current liabilities decreased by €174 million, due mainly to a reduction of €249 million in the provision for pensions and other employee benefits (of which €132 million arose from the recognition of actuarial gains on defined-benefit plans).

Net deferred tax liabilities (€3,598 million) fell by €425 million, largely as a result of reversals of deferred tax liabilities associated with the amortization and impairment of intangible assets (reduction of €590 million in the net liability), partly offset by a reduction in deferred tax assets due to the recognition of actuarial gains on defined-benefit pension plans (increase of €45 million in the net liability).

At June 30, 2008, sanofi-aventis held 9.9 million of its own shares (representing 0.76% of the share capital), recognized as a deduction from shareholders’ equity.

The financing in place during the first half of 2008 is not subject to covenants regarding financial ratios, and contains no clause linking credit spreads or fees to the sanofi-aventis credit rating.


E. Outlook

Barring major adverse events, sanofi-aventis expects now 2008 full-year adjusted earnings per share (adjusted EPS(1)) excluding selected items to grow by approximately 8%, based on the 2007 average exchange rate of €1 = $1.371.

Sensitivity to the euro/dollar exchange rate is estimated at 0.5% of the adjusted EPS(1) growth for a 1-cent movement in the exchange rate. On the basis of the actual average exchange rate for the first half of 2008 (€1 = $1.531), the adjusted EPS(1) excluding selected items would be flat in 2008 relative to the 2007 figure (€5.17).

In 2007, selected items represented a net after-tax gain of €149 million, comprising:

restructuring costs: -€95 million, net of tax;

tax exposures and settlement of tax disputes: +€337 million;

effect of the reduction in deferred taxes arising from changes in enacted tax rates, primarily in Germany: -€51 million;

harmonization of welfare and healthcare plans for retirees: -€42 million, net of tax.

This guidance has been prepared using accounting methods consistent with those used in the preparation of our historical financial information. It draws upon assumptions defined by sanofi-aventis and its subsidiaries, in particular regarding the following factors:

trends in exchange rates and interest rates;

growth in the national markets in which we operate;

healthcare reimbursement policies, pricing reforms, and other governmental measures affecting the pharmaceutical industry;

developments in the competitive environment, in terms of innovative products and the introduction of generics;

the respect of the Group intellectual property rights;

progress on our research and development programs;

the impact of our operating cost control policy, and trends in our operating costs;

the average number of sanofi-aventis shares outstanding, taking account of our share repurchase program.

Some of the information, assumptions and estimates concerned are derived from or based on, in whole or in part, judgments and decisions made by sanofi-aventis management that may be liable to change or adjustment in future.



Forward-Looking Statements

This financial document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future events, operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expect,” “anticipates,” “believes,” “intends,” “estimates,” “plans” and similar expressions. Although sanofi-aventis management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of sanofi-aventis, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

These risks and uncertainties include those discussed or identified in this report and those discussed or identified in the public filings with the SEC and the AMF made by sanofi-aventis, including those listed under “Risk Factors” (1) and “Cautionary Statement Regarding Forward-Looking Statements” in the sanofi-aventis Annual Report on Form 20-F for the year ended December 31, 2007 filed with the SEC. An update on litigation is provided in Note B.13 to the half-year consolidated financial information as of June 30, 2008.

Other than as required by applicable law, sanofi-aventis does not undertake any obligation to update or revise any forward-looking information or statements.

(1) See pages 3 through 13 of the Annual Report on Form 20-F, available on our website: www.sanofi-aventis.com.

http://www.sanofi-aventis.com/


F. Appendix – Definition of financial indicators

F.1. Comparable-basis net sales

When we refer to the change in our sales on a “comparable” basis, we mean that we exclude the impact of exchange rate movements and changes in Group structure (due to acquisitions and divestments of interests in entities and rights to products, and changes in consolidation method for consolidated entities).

We exclude the impact of exchange rates by recalculating sales for the prior period on the basis of exchange rates used in the current period.

We exclude the impact of acquisitions by including sales from the acquired entity or product rights for a portion of the prior period equal to the portion of the current period during which we owned them, based on sales information we receive from the party from whom we make the acquisition.

Similarly, we exclude sales in the relevant portion of the prior period when we have sold an entity or rights to a product.

For a change in consolidation method, the prior period is recalculated on the basis of the consolidation method used for the current period.

F.2. Adjusted net income

Adjusted net income is a non-GAAP financial measure, which we define as net income attributable to equity holders of the Company adjusted to exclude (i) the material impacts of purchase accounting for acquisitions, principally the Aventis acquisition, and (ii) certain acquisition-related restructuring costs.

We view adjusted net income as an internal performance indicator, as a significant factor in establishing the variable portion of employee remuneration, and as the basis for determining dividend policy.

The main adjustments between consolidated net income and adjusted net income are:

elimination of expenses arising from the workdown of acquired inventories remeasured at fair value, net of tax;

elimination of amortization and impairment of intangible assets acquired through business combinations (acquired in-process research and development and acquired product rights), net of tax (portion attributable to equity holders of the Company);

elimination of charges due to the effect of acquisitions on associates (workdown of acquired inventories, amortization and impairment of intangible assets, and impairment of goodwill);

elimination of any impairment of goodwill.

We also eliminate from adjusted net income integration and restructuring costs (net of tax) incurred specifically in connection with acquisitions.

We also report adjusted earnings per share (adjusted EPS), a non-GAAP financial measure that we define as adjusted net income divided by the weighted average number of shares outstanding.


III − Statutory Auditors’ review report on the 2008 half-year financial information

Period as from January 1 to June 30, 2008

This is a free translation into English of the Statutory Auditor’s review report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

To the Shareholders,

In compliance with the assignment entrusted to us by your Shareholders' annual general meetings and in accordance with the requirements of articles L. 232-7 of the French Commercial Code (Code de commerce) and L. 451-1-2 III of the French Monetary and Financial code (Code monétaire et financier), we hereby report to you on:

• the review of the accompanying condensed half-year consolidated financial statements of sanofi-aventis, for the period from January 1 to June 30, 2008;

• the verification of the information contained in the half-year management report.

These condensed half-year consolidated financial statements are the responsibility of the board of directors. Our role is to express a conclusion on these financial statements based on our review.

I – Conclusion on the financial statements

We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently can only provide moderate assurance that the financial statements, taken as a whole, do not contain any material misstatements. Accordingly we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that these condensed half-year consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 – standard of the IFRSs as adopted by the European Union applicable to interim financial information.

II – Specific verification

We have also verified the information given in the half-year management report on the condensed half-year consolidated financial statements subject to our review.

We have no matters to report as to its fair presentation and consistency with the condensed half-year consolidated financial statements.

Neuilly-sur-Seine and Paris-La-Défense, July 31, 2008

The Statutory Auditors

French original signed by

PricewaterhouseCoopers Audit Ernst & Young Audit

Catherine Pariset Philippe Vogt Gilles Puissochet Jacques Pierres


IV − Responsibility statement of the certifying officer Half-year financial report

“I hereby certify that, to the best of my knowledge, the condensed half-year consolidated financial statements have been prepared in accordance with the applicable accounting standards and present fairly the assets, the liabilities, the financial position and the profit of the Company and the entities included in the scope of consolidation, and that the half-year management report in page 29 provides an accurate overview of the significant events of the first six months of the financial year with their impact on the half-year consolidated financial statements, together with the major transactions with related parties and a description of the main risks and uncertainties for the remaining six months of the financial year.”

Paris, July 31, 2008

Gérard Le Fur Chief Executive Officer

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