1. Research and Development Sanofi-Aventis BS4 Danil+Eric+Karim+Andrew+David

2. What is R&D for you?

3. Telecom

4. Pharmacy

5. Car maintenance

6. Construction

7. Agriculture

8. Main R&D ratios in Accounting

9. R&D Intensity R&D expenses / Sales R&D per employee R&D expenses / N of employees R&D growth rate R&D expenses Year 2/ R&D expenses Year 1

10. = R&D investments Market Value Lev and Sougiannis, 1996, Studies Outcome for US & UK

11. R&D Intensity for different businesses R&D Scorecard – UK DTI

12. Sanofi-AventisCase Study

13. French Pharmacy Founded in 1976 by Elf Number of acquisitions Sanofi

14. Sanofi

15. French Pharmacy Therapeutic proteins Founded 1999 Aventis

16. Aventis

17. Sanofi 2001 Net Sales R&D expenses R&D intensity R&D growth

18. Sanofi 2001 2002 Net Sales R&D expenses R&D intensity R&D growth 6448 (1253) 16%

19. Sanofi 2001 2002 2003 Net Sales R&D expenses R&D intensity R&D growth 6448 (1253) 16% 7448 (1378) 16% 18%

20. Sanofi 2001 2002 2003 2004 Net Sales R&D expenses R&D intensity R&D growth 6448 (1253) 16% 7448 (1378) 16% 18% 8048 (1428) 16% 8%

21. Sanofi 2001 2002 2003 2004 Net Sales R&D expenses R&D intensity R&D growth 6448 (1253) 16% 7448 (1378) 16% 18% 8048 (1428) 16% 8% 2001 Aventis

22. Sanofi 2001 2002 2003 2004 Net Sales R&D expenses R&D intensity R&D growth 6448 (1253) 16% 7448 (1378) 16% 18% 8048 (1428) 16% 8% 22941 (3481) 15% Net Sales R&D expenses R&D intensity R&D growth 2002 2001 Aventis

23. Sanofi 2001 2002 2003 2004 Net Sales R&D expenses R&D intensity R&D growth 6448 (1253) 16% 7448 (1378) 16% 18% 8048 (1428) 16% 8% 20622 (3420) 17% -2% 22941 (3481) 15% Net Sales R&D expenses R&D intensity R&D growth 2003 2002 2001 Aventis

24. Sanofi 2001 2002 2003 2004 Net Sales R&D expenses R&D intensity R&D growth 6448 (1253) 16% 7448 (1378) 16% 18% 8048 (1428) 16% 8% 20622 (3420) 17% -2% 22941 (3481) 15% 17815 (2924) 16% -15% Net Sales R&D expenses R&D intensity R&D growth 2003 2002 2001 2004 Aventis

25. Sanofi 2001 2002 2003 2004 Net Sales R&D expenses R&D intensity R&D growth 6448 (1253) 16% 7448 (1378) 16% 18% 8048 (1428) 16% 8% 20622 (3420) 17% -2% 22941 (3481) 15% 17815 (2924) 16% -15% Net Sales R&D expenses R&D intensity R&D growth 2003 2002 2001 2004 Aventis

26. Sanofi-Aventis 2004

27. Sanofi-Aventis 15043 (7455) 50% Net Sales R&D expenses R&D intensity 2004

28. 2001 2002 2003 2004 Net Sales R&D expenses R&D intensity 6448 (1253) 16% 7448 (1378) 16% 8048 (1428) 16% 15043 (7455) 50% 20622 (3420) 17% 22941 (3481) 15% 17815 (2924) 16% Net Sales R&D expenses R&D intensity 2003 2002 2001 2004

29. Paradox

30. ? One Manager Banker 2003 2004 (thank you prof. Capkun) 8048 (1428) 16% 15043 (7455) 50% 17815 (2924) 16% 320 pages

31. Aventis Sanofi-Aventis R&D expenses 20622 (3420) 17% 22941 (3481) 15% 17815 (2924) 16% + 2003 2002 2001 2004 …. ($5046) ($2409) ($7455) R&D expenses Net Sales R&D intensity 15043 50%

32. Sanofi-Aventis 2004 2006 2007 2008 15043 (7455) 50% 28052 (4537) 16% 27568 (4575) 16% 28373 (4430) 16% Net Sales R&D expenses R&D intensity

33. Class QUIZ ?

34. Class QUIZ ? What are the three main ratio used in accounting for analysing R&D expenditure? R&D Intensity R&D per employee R&D growth rate

35. Class QUIZ ? Name three industries with high R&D intensity. Pharmacy Electronics Software

36. Class QUIZ ? How should R&D expenses be treated in accounting while merging two companies? Estimate Market value of R&D of acquired company up to date Add it to current yearly R&D expenses of acquiring company