Abbreviations

Item 1. Identity of Directors, Senior Management and Advisers

N/A

Item 2. Offer Statistics and Expected Timetable

N/A

Item 3. Key Information

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N/A

Important factors that could cause actual financial, business, research or operating results to differ materially from expectations are disclosed in this annual report, including without limitation the following risk factors. Investors should carefully consider all the information set forth in the following risk factors and elsewhere in this document before deciding to invest in any of the Company’sCompany's securities. In addition to the risks listed below, we may be subject to other material risks that as of the date of this report are not currently known to us or that we deem immaterial at this time.

Product liability is a significant risk for any pharmaceutical company, and our product liability exposure could increase given that liability claims relating to our businessesindustry are unforeseeable by nature. The evolving regulatory environment worldwide (the ever-more stringent regulatory requirements applicable to the pharmaceutical industry, plus more stringent data, quality and supply obligations) clearly impacts our potential liability, and we may differincur different liability claims to what we have handled in the past, with regard to their nature, scope and level, from the types of product liability claims that we have handled in the past.level. Substantial damages have been awarded by some jurisdictions and/or settlements agreed -– notably in the United States and other common law jurisdictions -– against pharmaceutical companies based on claims for injuries allegedly caused by the use of their products. Such claims can also lead to product recalls, withdrawals, or declining sales, and/or be accompanied by consumer fraud claims by customers, or third-party payers seeking reimbursement of the cost of the product.product and/or other claims, including potential civil or criminal governmental actions.

Often, establishingEstablishing the full side effect profile of a pharmaceutical drug goes beyond data derived from preapproval clinical studies which may only involve several hundred to several thousand patients. Routine review and analysis of the continually growing body of post-marketing safety data and clinical trials provide additional information -– for example, potential evidence of rare, population-specific or long-term adverse events or of drug interactions that were not observed in preapproval clinical studies. This may causecauses product labeling to evolve over time following interactions with regulatory authorities, includingwhich may include restrictions of therapeutic indications, new contraindications, warnings or precautions and occasionally even the suspension or withdrawal of a product marketing authorization. Following any of these events, pharmaceutical companies can face significant product liability claims.claims (see Note D.22.a.) to the consolidated financial statements included at Item 18. of this annual report).

Furthermore, we commercialize several devices (some of which use new technologies) which, if they malfunction, could cause unexpected damage and lead to product liability claims (see “- Breaches“Breaches of data security, disruptions of information technology systems and cyber threats could result in financial, legal, business or reputational harm” below).

Although we continue to insure a portion of our product liability with third-party carriers, product liability coverage is increasingly difficult and costly to obtain, particularly in the United States. In the future, it is possible that self-insurance may become the sole commercially reasonable means available for managing the financial risk associated with product liability financial risk ofin our pharmaceuticals and vaccines businesses (see “Item 4. Information on the Company -— B. Business Overview -— B.9. Insurance and Risk Coverage”). In cases where we self-insure, the legal costs that we would bear for handling such claims, and potential indemnifications damage awardawards to be paid to claimants, could have a negative impact on our financial condition. Due to insurance conditions, even when we have insurance coverage, recoveries from insurers may not be totally successful due to market-driven insurance market limitations and exclusions. Moreover, insolvency of an insurer could affect our ability to recover claims on policies for which we have already paid a premium.

Product liability claims, regardless of their merits or the ultimate success of the Company’sour defense, are costly, divert management’s attention, may harm our reputation, and can impact the demand for our products.products and generate speculative news flows and/or rumors relating to such claims. Substantial product liability claims could materially adversely affect our business, results of operations and financial condition.condition, and/or may have an impact on market perception of our company and negatively affect our stock price.

Our industry is heavily regulated. We are obligated to comply with the laws of all countries in which we operate. However,regulated and legal requirements may vary from country to country, and new requirements are imposed on usour industry from time to time. Governments and regulatory authorities around the world have been strengthening implementation and enforcement activities in recent years, including in relation to anti-bribery, anti-corruption and ethical requirements with respect to medical and scientific research, interactions with healthcare professionals and payers, respect of the human rights of workers, and data protection legislation. We also operate in an environment that relies on the collection, processing, analysis and interpretation of large sets of patients’ and other individuals’ personal information, and the operation of our business requires data to flow freely across borders of numerous countries.

We have adopted a Code of EthicsConduct that requires employees to comply with applicable laws and regulations, as well as the specific principles and rules of conduct set forth in the Code. We also have policies and procedures designed to help ensure that we, our officers, employees, agents, intermediaries and other third parties comply with applicable laws and regulations (including but not limited to the USU.S. Foreign Corrupt Practices Act (“FCPA”)(FCPA), the UK Bribery Act, the OECD Anti-Bribery Convention, the French Anti-Corruption measures law (“Sapin II”) and, the French duty of vigilance law and other anti-bribery laws and regulations).

Notwithstanding these efforts, failure to comply with laws and regulations (including as a result of a business partner’s breach) may occur and could result in liabilities for us and/or our management.

With respect to data protection, legislation such as the European General Data Protection Regulation (“GDPR”) has created a range(GDPR) in Europe, the Personal Information Protection Law (PIPL) enacted in 2021 in China, or other significant privacy legislation, including in the United States the California Consumer Privacy Act (CCPA), and case law bring legal uncertainty regarding cross border data flows. Such uncertainty could result in an operational risk limiting or preventing the transfer of compliance obligations since 2018, when it came into force. Violationsdata across borders, which may have an impact on our activities (e.g. on clinical trials). The breach of the GDPRthese regulations could also carry financial risks due to penalties for data breach or improper processing of personal data (including a possible fine of up to 4% of total worldwide annual turnover for the preceding financial year for the most serious infringements)sanctions and may also harm our reputation and those of our activities relyingthat rely on personal data processing. Furthermore,In addition, some uncertainty remains with respect to the legal and regulatory environment for these evolving privacy and data protection laws.laws in the absence of clear guidance.

Sanofi and certain of its subsidiaries are under investigation or could become the subject of additional investigations or proceedings by various government entities.entities or could face audits and/or litigation, including allegations of corruption, claims related to employment matters, patent and intellectual property disputes, consumer law claims and tax audits. We are currently defending ourselves in a number of lawsuits relating to pricing and marketing practices (including, for example, “whistleblower” litigation in the United States). We also face litigation and government investigations or audits, including allegations of corruption, claims related to employment matters, patent and intellectual property disputes, consumer law claims and tax audits. With respect to tax issues, due to the complexity of the fiscal environment is such that the ultimate resolution of any tax matter may result in payments that are greater

Unfavorable outcomes in any of these matters, or in similar matters that may arise in the future, could preclude the commercialization of our products, harm our reputation, negatively affect the profitability of existing products and subject us to substantial fines, punitive damages, penalties and injunctive or administrative remedies, potentially leading to the imposition of additional regulatory controls, monitoring or self-reporting obligations, or exclusion from government reimbursement programs or markets, all of which could have a material adverse effect on our business, results of operations or financial condition.

The unpredictability of suchthese proceedings are unpredictable, we may,could lead Sanofi, after consideration of all relevant factors, decide to enter into settlement agreements to settle certain claims. Such settlements may involve significant monetary payments and/or potential criminal penalties, and may include admissions of wrongdoing and may require the conclusion ofentering into a Corporate Integrity Agreement (“CIA”) or a Deferred Prosecution Agreement (in the United States), which is intended to regulate company behaviourbehavior for a specified number of years. For example, on February 28, 2020, Sanofi US entered into a Civil Settlementcivil settlement with the United States Department of Justice and agreed to pay approximately $11.85 million to resolve allegations regarding certain charitable donations Sanofi US made to an independent patient assistance foundation that assisted patients being treated for Multiple Sclerosis. In connection with this settlement, Sanofi US also entered into a Corporate Integrity Agreement (“CIA”)CIA with the Office of the Inspector General for the United States Department of Health and Human Services effective the same day, which will require the Companyus to continuemeet and maintain certain Compliancecompliance requirements in the US.

Obtaining a marketing authorization for a product is a long and highly regulated process requiring us to present extensive documentation and data to the relevant regulatory authorities either at the time of the filing of the application for a marketing authorization or later during its review. Each regulatory authority may impose its own requirements which can evolve over time. Each regulatory authority may also delay or refuse to grant approval even though a product has already been approved in another country. Regulatory authorities are increasingly strengthening their requirements on product safety and risk/benefit profile.profiles. All of these requirements, including post-marketing requirements, have increased the costs associated with maintaining marketing authorizations and achieving reimbursement for our products.authorizations.

In addition, all aspects of our business, including research and development, manufacturing, marketing, reimbursement, pricing and sales, are subject to extensive legislation and governmental regulation. Changes in applicable laws and the costs of compliance with such laws and regulations could have an adverse effect on our business.

In Europe,For example, in response to the implementation of newEuropean Union regulations onfor Medical Devices and In-Vitro Diagnostics (IVDs) that will apply respectively(EU MDR), which entered into force in May 2020 and May 2022, may cause2021, Sanofi created the EU MDR task force. This task force was commissioned to address the risk of potential delays in approvals (for new drug-device combination products, and newfor substantial changes to the design or intended purpose of the device component of already approved drug-device combination products, and newfor medical devices/IVDs),devices) and of product discontinuation (for some legacy medical devices and IVDs)devices), and non-complianceas well as compliance risks for existing products due to increased requirements in terms of approval process,for post-marketing surveillance, clinical evaluations, traceability and transparency. A similar task force was set up in the first quarter of 2021 to examine risks related to the new regulations for In-Vitro Diagnostic Devices (IVDR) implemented in May 2022.

For information regardingabout risks related to changes changes:

Through patent and other proprietary rights, such as data exclusivity or supplementary protection certificates in Europe, we hold exclusivity rights for a number of our research-based products. However, the protection that we are able to obtain varies in its duration and scope. AlsoFurthermore, patents and other proprietary rights do not always provide effective protection for our products. We cannot be certain that we will obtain adequate patent protection for new products and technologies in important markets or that such protections, once granted, will last as long as originally anticipated.

For example, governmental authorities are increasingly looking to facilitate generic and biosimilar competition tofor existing products through new regulatory proposals intended to achieve, or resulting in, changes to the scope of patent or data exclusivity rights and through the use of accelerated regulatory pathways for generic and biosimilar drug approvals. Such regulatory proposals could make patent prosecution for new products more difficult and time consuming or could adversely affect the exclusivity period for our products.

Moreover, manufacturers of generic products or biosimilars are increasingly seeking to challenge patent validity or coverage before the patents expire, and manufacturers of biosimilars or interchangeable versions of the products are seeking to have their version of the product approved before the exclusivity period ends. Furthermore, in an infringement suit against a third-party,third party, we may not prevail and the decision rendered may not conclude that our patent or other proprietary rights are valid, enforceable or infringed. Our competitors may also successfully avoid our patents. Even in cases where we ultimately prevail in an infringement claim, legal remedies available for harm caused to us by infringing products may be inadequate to make us whole. Moreover, a successful result against a competing product for a given patent or in a specific country is not necessarily predictive of our future success against another competing product or in another country because of local variations in the patents and patent laws.

In addition, if we lose patent protection as a result of an adverse court decision or a settlement, we face the risk that government and private third-party payers and purchasers of pharmaceutical products may claim damages alleging they have over-reimbursed or overpaid for a drug. For example, in 2009, in Australia, our patent on clopidogrel was ultimately held invalid. Following this decision, the Australian Government is seekingsought damages for its alleged over-reimbursement of clopidogrel drugs due to the preliminary injunction we had secured against the sale of generic clopidogrel during the course of the litigation. The Australian Government’s claim was dismissed following a decision of the Federal Court of Australia on April 28, 2020. Sanofi is awaiting the judgment to be delivered by the Federal Court of Australia, following the appeal of the first instance decision by the Australian Government on May 26, 2020.

In certain cases, to terminate or avoid patent litigation we or our collaboration partners may be required to obtain licenses from the holders of third-party intellectual property rights. Any payments under these licenses may reduce our profits from such products and we may not be able to obtain these licenses on favorable terms or at all.

Furthermore, some countries may consider granting a compulsory license to a third party to use patents protecting an innovator’s product, which limits the value of the patent protection granted to such products.

We have increased the proportion of biological therapeutics in our pipeline relative to traditional small molecule pharmaceutical products. Typically, the development, manufacture, sale and distribution of biological therapeutics is complicated by third-party intellectual property rights (otherwise known as freedom to operate (FTO) issues), to a greater extent than for the development, manufacture, sale and distribution of small molecule therapeutics, because of the types of patents allowed by national patent offices. Further, our ability to successfully challenge third-party patent rights is dependent on the lawslegal interpretation and case law of national courts. In addition, we expect to face increasing competition from biosimilars in the future. With the accelerated regulatory pathways provided in the USUnited States and Europe for biosimilar drug approval, biosimilars can be a threat to the exclusivity of any biological therapeutics we sell or may market in the future and can pose the same issues as the small molecule generic threat described above. If a biosimilar version of one of our products were to be approved, it could reduce our sales and/or profitability of that product.

If our patents and/or proprietary rights to our products were limited or circumvented, our financial results could be adversely affected.

Epidemics and other public health crises, such as the ongoing novel coronavirus which has emerged since December 2019 in China,COVID-19 pandemic, expose us to the risks of a slowdown or temporary suspension in the production of our active pharmaceutical ingredients (API),APIs, raw materials, and some of our products. A certain number of our API and raw materials are produced in China. We also have a production site for pharmaceutical products in Hangzhou (China) and a production site for API in Singapore. Any prolonged restrictive measures put in place in order to control an outbreak of contagious disease or other adverse public health development, in China or any of our principal production sites, may have a material and adverse effect on our manufacturing operations. Any of these factors could adversely affect our business, operating results or financial condition (see “Item 4. Information on the Company -— B. Business Overview -— B.8. Production and Raw Materials” for a description of these outsourcing arrangements)arrangements and “The extent to which the COVID-19 pandemic and related developments, including measures implemented in response thereto, may adversely impact our business, operations and financial performance remains uncertain” below).

The complexity of theseour production processes, as well as standards required for the manufacture of our products, subject us to risks because the investigation and remediation of any identified or suspected problems can cause production delays, substantial expense, product recalls or lost sales and inventories, and delay the launch of new products; this could adversely affect our operating results and financial condition, and cause reputational damage and the risk of product liability (see - “Product“– Product liability claims could adversely affect our business, results of operations and financial condition” above). In addition, some of our production sites, and some of our suppliers' and/or contractors’ sites, are located in areas exposed to natural disasters such as floods, earthquakes and hurricanes. Such disasters could be exacerbated by climate change. In the event of a major disaster, we could experience severe destruction or interruption of our operations and production capacity at these sites.

When manufacturing disruptions occur, we may not have alternate manufacturing capacity, particularly for certain biologics. In the event of manufacturing disruptions, our ability to use backup facilities or set up new facilities is more limited because biologics are more complex to manufacture and generally require dedicated facilities. Even though we aim to have backup sources of supply whenever possible, including by manufacturing backup supplies of our principal active ingredients at additional facilities when practicable, we cannot be certain they will be sufficient if our principal sources become unavailable. Switching sources and manufacturing facilities requires significant time and prior approval by health authorities.

Supply shortages generate even greater negative reactions when they occur with respect to life saving medicines with limited or no viable therapeutic alternatives. Shortages of specific products can have a negative impact on the confidence of patients, customers and professional healthcare providers and the image of Sanofi and may lead to lower product revenues.

More generally, an expiration of effective intellectual property protections for our products typically results in the market entry of one or more lower-priced generic competitors, often leading to a rapid and significant decline in revenues on those products (for information regarding ongoing patent litigation see Note D.22.b)D.22.b.) to the consolidated financial statements included at Item 1818. of this annual report).

Furthermore, in general, if one or more of our flagship products were to encounter problems (such as material product liability litigation, unexpected side effects, product recalls, non-approval by the health authorities of a new indication for a marketed product, pricing pressure and manufacturing or product recalls)supply issues), the adverse impact on our business, results of operations and financial condition could be significant.

Our industry is both highly collaborative and competitive, whether in the discovery and development of new products, in-licensing, the marketing and distribution of approved products, or manufacturing activities. We expect that we will continue to rely on third parties for key aspects of our business and we need to ensure our attractiveness as a potential partner.

As regards products recently launched or under development for which we have a collaboration agreement with partners, the terms of the applicable alliance agreement may require us to share profits and losses arising from commercialization of such products with our partners. This differs from the treatment of revenue and costs generated by other products for which we have no alliance agreement, and such profit sharing may deliver a lower contribution to our financial results.

We could also be subject to the risk that we may not properly manage the decision-making process with our partners. Decisions may also be under the control ofcontrolled by, or subject to the approval of our collaboration partners, who may have views that differ from ours. We are also subject to the risk that our partners may not perform effectively, which could have a detrimental effect when our collaboration partners are responsible for the performance of certain key tasks or functions, is the responsibility of our collaboration partners. Failuresfor example related to manufacturing. Any such failures in the development process or differing priorities may adversely affect our business, including the activities conducted through theour collaboration arrangements. We also cannot guarantee that third-party manufacturers will be able to meet our near-term or long-term manufacturing requirements. For instance, following the completion of the spin-off of EUROAPI in May 2022, EUROAPI became a third-party manufacturer and will continue to manufacture a certain number of APIs for Sanofi. We are also subject to the risk that contract research organizations or other vendors (for instance regarding digital activities) retained by us or our collaboration partners may not perform effectively.

Any conflicts or difficulties with theseour partners during the course of these agreements or at the time of their renewal or renegotiation. All these eventsrenegotiation, or any disruption in the relationships with our partners, may affect the development, themanufacturing, launch and/or the marketing of certain of our products or product candidates and may cause a decline in our revenues or otherwise negatively affect our results of operations.

We run the risk of delayed payments or even non-payment by our customers, which consist principally of wholesalers, distributors, pharmacies, hospitals, clinics and government agencies. This risk is accentuated by recent concentrations among distributors and retailers, as well as by uncertainties around global credit and economic conditions, in particular in emerging markets. As a result, we may be affected by fluctuations in the buying patterns of such customers. The United States poses particular customer credit risk issues because of the concentrated distribution system: our three main customers represented respectively 8%12%, 5%8% and 3%7% of our consolidated net sales in 2019.2022. We are also exposed to large wholesalers in other markets, particularly in Europe. Although we assign some of our receivables to factoring companies or banks, anAn inability of one or more of these wholesalers to honor their debts to us could adversely affect our financial condition (see Note D.34. to our consolidated financial statements included at Item 1818. of this annual report).

In some countries, some customers are public or subsidized health systems. The economic and credit conditions in these countries may lead to an increase in the average length of time needed to collect on accounts receivable or the ability to collect 100% of receivables outstanding. Because of this context, we may need to reassess the recoverable amount of our debts in these countries during future financial years (see also “Item 5. Operating and Financial Review and Prospects - Liquidity and Capital Resources - Liquidity.”).years.

Over the past several years, growth of the global pharmaceutical market has become increasingly tied to global economic growth. In this context, a substantial and lasting slowdown of the global economy, major national economies or emerging markets could negatively affect growth in the global pharmaceutical market and, as a result, adversely affect our business. For example, unpredictable political conditions that currently exist in various parts of the world could have a material negative impact on our business. In particular, armed conflict between Russia and Ukraine escalated in 2022. The degree of impact of the war between Russia and Ukraine is difficult to predict and will depend on developments outside Sanofi’s control, including, but not limited to the duration and severity of the conflict, and the consequences of the ongoing and additional financial and economic sanctions imposed by governments in response. Other related issues have arisen or are arising such as regional instability; geopolitical uncertainties; adverse effects on fuel and energy costs, supply chains, macroeconomic conditions, inflation, and currency exchange rates in various regions of the world; and exposure of third parties to gas shortages. Collectively, such unstable conditions could, among other things, disturb the international flow of goods and increase the costs and difficulties associated with international transactions.

Unfavorable economic conditions have reduced the sources of funding for national social security systems, leading to austerity measures including heightened pressure on drug prices, increased substitution of generic drugs, and the exclusion of certain products from formularies.formularies among others (see “— The pricing and reimbursement of our products is negatively affected by increasing cost containment pressures and decisions of governments and other third parties” above).

Further, our net sales may be negatively impacted by the continuing challenging global economic environment, as high unemployment, increases in cost-sharing, and lack of developed third-party payer systems in certain regions may lead some patients to switch to generic products, delay treatments, skip doses or use other treatments to reduce their costs. In the United States there has been a significant increase in the number of beneficiaries in the Medicaid program, under which sales of pharmaceuticals are subject to substantial rebates and, in many US states, to formulary restrictions limiting access to brand-name drugs, including ours. Also, employers may seek to transfer a greater portion of healthcare costs to their employees due to rising costs.costs, which could lead to further downward price pressure and/or lower demand.

Our Consumer Healthcare business could also be adversely impacted by difficult economic conditions, that limitas the financial resources of our customers.customers may be reduced as a result of the economic situation.

If economic conditions worsen, or in the event of default or failure of major players including wholesalers or public sector buyers financed by insolvent states, our financial situation, the profitability and results of our operations and the distribution channels of our products may be adversely affected. See also “We“— We are subject to the risk of non-payment by our customers” above.

We are unable to predict the move of the headquarters of the European Union’s health authority, the EMA, from the United Kingdom to the Netherlands has impaired the work of the EMA and could also delay new drug approvals in the European Union. However, our internal Brexit Task Force has developed and deployed, and is continuing to develop and deploy, contingency measures aiming at avoiding interruption of supply to patients. As a result, we currently do not believe that these effects will have a material impact on our business, operations and financial situationresults that the COVID-19 pandemic would have if it continued or the resultsresumed with force, including insofar it could lead to lower sales and reduced patient demand and usage of certain of our operations. Asproducts.

In an increasingly budget-constrained healthcare environment as economic disruption have continued due to the pandemic, we expect to see a higher pressure on drug prices worldwide and, in the longer term, a reallocation of funding across therapeutic areas, driven in particular by evolving public health priorities, which could negatively impact our business operations (see “— The pricing and reimbursement of our consolidated netproducts is negatively affected by increasing cost containment pressures and decisions of governmental authorities and other third parties” above). For example, the pandemic may reduce our sales in targeted markets due to lower healthcare spending on other diseases and fewer promotional activities.

The global COVID-19 pandemic has also exposed us to a disruption or temporary suspension in production of APIs, raw materials and some of other products. A revival of the 2019 fiscal yearCOVID-19 pandemic or any other pandemic could expose us to a revival of this risk. Extension of the restrictive measures put in place in order to control the pandemic may lead to manufacturing delays or disruptions and less than 1%supply chain interruptions (including to the extent those measures apply to our third-party suppliers) and may have an adverse effect on our business (see “— The manufacture of our total assets.products is technically complex, and supply interruptions, product recalls or inventory losses caused by unforeseen events may reduce sales, adversely affect our operating results and financial condition, delay the launch of new products and negatively impact our image” above). Also, a sudden increase in demand for selected medicinal products can result in short-term unavailability or shortages of raw materials.

We increasingly rely on social media, new technologies and digital tools to communicate about our products and about diseases or to provide health services. The use of these media requires specific attention, monitoring programs and moderation of comments. Political and market pressures may be generated by social media because of rapid news cycles. This may result in commercial harm, overly restrictive regulatory actions and erratic share price performance. In addition, unauthorized communications, such as press releases or posts on social media, purported to be issued by Sanofi, may contain information that is false or otherwise damaging and could have an adverse impact on our image and reputation and on our stock price. Negative or inaccurate posts or comments about Sanofi, our business, directors or officers on any social networking website could seriously damage our reputation. In addition, our employees and partners may use social media and mobile technologies inappropriately, which may give rise to liability for Sanofi, or which could lead to breaches of data security, loss of trade secrets or other intellectual property or public disclosure of sensitive information. Such uses of social media and mobile technologies could have an adverse effect on our reputation, business, financial condition and results of operations.

We pursue a strategy of selective acquisitions, in-licensing and collaborations in order to reinforce our pipeline and portfolio. We are also proceeding to selective divestments to focus on key business areas. The implementation of this strategy depends on our ability to identify transaction opportunities, mobilize the appropriate resources in order to enter into agreements in a timely manner, and execute these transactions on acceptable economic terms. Moreover, entering into in-licensing or collaboration agreements generally requires the payment of significant “milestones” well before the relevant products reach the market, without any assurance that such investments will ultimately become profitable in the long term (see Note D.21.1. to the consolidated financial statements included at Item 1818. of this annual report and also - “We“— We rely on third parties for the discovery, manufacture, marketing and marketingdistribution of some of our products” above). Once a strategic transaction is agreed upon with a third party, we may not be able to complete the transaction in a timely manner or at all.

For newly acquired activities or businesses, our growth objectives could be delayed or ultimately not realized, and expected synergies could be adversely impacted if:if, for example:

We may also miscalculate the risks associated with business development transactions at the time they are made or not havemay lack the resources or ability to access all the relevant information to evaluate themsuch risks properly, including with regard to the potential of research and development pipelines, manufacturing issues, tax or accounting issues, compliance issues, or the outcome of ongoing legal and other proceedings. It may also take a considerable amount of time and be difficult to implement a risk analysis and risk mitigation plan after the acquisition of an activity or business is completed due to lack of historical data. Acquired businesses may not always be in full compliance with legal, regulatory or Sanofi standards, including, for example, current Good Manufacturing Practices (cGMP), which can be costly and time consuming to remedy. As a result, risk management and coverage of such risks, particularly through insurance policies, may prove to be insufficient or ill-adapted.

Because of the active competition among pharmaceutical groups for such business development opportunities, there can be no assurance of our success in completing these transactions when such opportunities are identified.

Emerging markets represented 30.2% of our sales in 2019. As part of the presentation of our strategy in December 2019, we identified our strong presence in China among our core drivers, with revenue amounting to 7.5%7.3% of our net sales in 2019.2022.

Nevertheless, the difficulties in operating in emerging markets, a significant decline in the anticipated growth rate or an unfavorable movement of the exchange rates of currencies against the euro could impair our ability to take advantage of growth opportunities and could adversely affect our business, results of operations or financial condition. For instance, while it is not possiblecontinues to be impossible as of the date of this report to predict the economic impact and the magnitude of the ongoing coronavirus epidemic which started in China in December 2019,COVID-19 pandemic, if a long-lasting epidemic and prolonged or repeated restrictive measures to control the outbreak were to result in an economic slowdown in any of our targeted markets, such as China, it would reduce our sales due to lower healthcare spending on other diseases and fewer promotional activities, and could significantly impact our business operations. Such epidemics or other public health crises could also pose risks to the health and safety of our employees. Furthermore, it is not possible to predict if or how the current health crisis will impact the Chinese healthcare system, or that of any otherparticular affected jurisdiction, or to what extent (see also “-“— Global economic conditions and an unfavorable financial environment could have negative consequences for our business” and “The extent to which the COVID-19 pandemic and related developmental authorities, including measures implemented in response thereto, may impact our business, operations and financial performance remains uncertain” above).

Emerging markets also expose us to more volatile economic conditions, political instability (including a backlash in certain areas against free trade), competition from multinational or locally based companies that are already well established in these markets, the inability to adequately respond to the unique characteristics of emerging markets (particularly with respect to their underdeveloped judicial systems and regulatory frameworks), difficulties in recruiting qualified personnel or maintaining the necessary internal control systems, potential exchange controls, weaker intellectual property protection, higher crime levels (particularly with respect to counterfeit products), and compliance issues including corruption and fraud (see particularly “-“— Claims and investigations relating to compliance, ethics and business integrity, competition law, marketing practices, pricing, human rights of workers, data protection and other legal matters could adversely affect our business, results of operations and financial condition” above).

We may fail to develop or take advantage of digitalization.digitalization and prioritizing data as an organizational asset

We have undertaken a number of digital initiatives (such asinitiatives. Examples include the opening in October 2019March 2022 of our Framingham digitallyAccelerator, an internal unit that functions like a startup within Sanofi to develop products and solutions that will support our mission to transform the practice of medicine with the use of digital, data and artificial intelligence; the Future4Care initiative of June 2021, where we joined a startup incubator along with other CAC40 companies to help nurture the latest and greatest in health tech; our enabled manufacturing facility in the USUS; and our Darwin our real-world data platform).platform. Our success in these efforts will depend on many factors including data quality; technology architecture; entering into successful partnerships and alliances with technology companies; a profound transformation of the organization, including a cultural change among our employees and the development of relevant skills; attracting and retaining employees with appropriate skills and mindsets in a tight labor market; and successfully innovating across a variety of technology fields. The COVID-19 pandemic has accelerated our digital transformation, including in the ways we engage and interact with our stakeholders. However, there is no guarantee that our efforts toward a digital transformation will succeed. More generally, we may fail to capture the benefits of digitaldigitalization and valuing data as an enterprise asset at an appropriate cost and/or in a timely manner, and/or enter into appropriate collaborations.partnerships. Competitors, including new entrants such as tech companies, may outpace us in this fast-moving area. If we fail to adequately integrate digitalizationdigital capabilities into our organization and business model, we could lose patients and market share. This could have an adverse impact on our business, prospects and results of operations.

We may fail to accelerate our efficiency.operational efficiency

As part of our strategy, we announced our intent to improve our operating efficiencies to fund growth and expand our business operating income margin. We have also announced savings initiatives that we expect will generate €2 billion of savings by 2022 to fund investment in our key growth drivers, to accelerate priority pipeline projects and to support the expansion of our BOI margin. Nevertheless, there is no guarantee that we will be able to fully deliver these operating efficiencies within the targeted timeline or generate the expected benefits.

We dependOur success depends on the expertise of our senior management team and other key employees. In 2019,2022, there were 2,0662,361 “Senior Leaders” within Sanofi, including Executive Committee members and other executives.Sanofi. In addition, we rely heavily on recruiting and retaining talented people to help us meet our strategic objectives. We face intense competition for qualified individuals for senior management positions, or in specific geographic regions or in specialized fields such as clinical development, biosciences and devices, or digital and artificial intelligence. Our ability to hire qualified personnel also depends in part on our ability to reward performance, incentivize our employees and to pay competitive compensation. Laws and regulations on executive compensation may restrict our ability to attract, motivate and retain the required level of talented people. The inability to attract, integrate and/or retain highly skilled personnel, in particular those in leadership positions, may weaken our succession plans, may materially adversely affect the implementation of our strategy and our ability to meet our strategic objectives, and could ultimately adversely impact our business or results of operations.

Manufacturing activities, such as the chemical manufacturing of the active ingredients in our products and the related storage and transportation of raw materials, products and waste, expose us to the risks of industrial accidents that may lead to discharges or releases of toxic or pathogenpathogenic substances or other events that can cause personal injury, property damage and environmental contamination, and may result in additional operational constraints, including the shutdown of affected facilities and/or the imposition of civil, administrative, criminal penalties and/or civil damages.damages, and affect Sanofi's reputation.

The occurrence of an industrial accident may significantly reduce the productivity and profitability of a particular manufacturing facility and adversely affect our operating results and reputation. Although we maintain property damage, business interruption and casualty insurance that we believe is in accordance with customary industry practices, this insurance may not be adequate to fully cover all potential hazards incidental to our business.

The environmental laws of various jurisdictions impose actual and potential obligations on our Company to manage and/or remediate contaminated sites. These obligations may relate to sites:

These environmental remediation obligations could reduce our operating results. Sanofi accrues provisions for remediation when our management believes the need is probable and that it is reasonably possible to estimate the cost. See “Item 4. Information on the Company -— B. Business Overview -— B.10. Health, Safety and Environment (HSE)”Environment” for additional information regarding our environmental policies. In particular, our provisions for these obligations may be insufficient if the assumptions underlying these provisions prove incorrect or if we are held responsible for additional, currently undiscovered contamination. These judgments and estimates may later prove inaccurate, and any shortfalls could have an adverse effect on our results of operations and financial condition. For more detailed information on environmental issues, see “Item 4.Information4. Information on the Company -— B. Business Overview -— B.10. Health, Safety and Environment (HSE) and Notes B.12B.12. and D.19.3D.19.3. to the consolidated financial statements”.

We are or may become involved in claims, lawsuits and administrative proceedings relating to environmental matters. Some current and former Sanofi subsidiaries have been named as “potentially responsible parties” or the equivalent under the US Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (also known as “Superfund”), and similar statutes or obligations in France, Germany, Italy, Brazil and elsewhere. As a matter of statutory or contractual obligation,obligations, we and/or our subsidiaries may retain responsibility for environmental liabilities at some of the sites of our predecessor companies, or of subsidiaries that we demerged, divested or may divest. We have disputes outstanding regarding certain sites no longer owned or operated by the Company. An adverse outcome in such disputes might have a significantan adverse effect on our operating results. See Note D.22.d) to the consolidated financial statements included at Item 1818. of this annual report and “Item 8. Financial Information -— A. Consolidated Financial Statements and Other Financial Information -— Information on Legal or Arbitration Proceedings”.

Holders of ADSs face exchange rate risk.risks. Our ADSs trade in US dollars and our shares trade in euros. The value of the ADSs and our shares could fluctuate substantially as the exchange rates between these currencies fluctuate. If and when we pay dividends, they would be denominated in euros. Fluctuations in the exchange rate between the euro and the US dollar will affect the US dollar amounts received by owners of ADSs upon conversion by the depositary of cash dividends, if any. Moreover, these fluctuations may affect the US dollar price of the ADSs on the NasdaqNASDAQ Global Select Market (Nasdaq)(NASDAQ) whether or not we pay dividends, in addition to any amounts that a holder would receive upon our liquidation or in the event of a sale of assets, merger, tender offer or similar transaction denominated in euros or any foreign currency other than US dollars.

Holders of ADSs may have more difficulty exercising their rights as a shareholder than if they directly held shares. For example, if we issue new shares and existing shareholders have the right to subscribe for a pro rata portion of the new issuance, the depositary is allowed, at its own discretion, to sell this right to subscribe for new shares for the benefit of the ADS holders instead of making that right available to such holders. In that case, ADS holders could be substantially diluted. Holders of ADSs must also instruct the depositary how to vote their shares. Because of this additional procedural step involving the depositary, the process for exercising voting rights will take longer for holders of ADSs than for holders of shares. ADSs for which the depositary does not receive timely voting instructions will not be voted at any meeting. US investors may have difficulty in serving process or enforcing a judgment against us or our directors or executive officers.

Sales of our shares may cause the market price of our shares or ADSs to decline.decline

Sales of large numbers of our shares, or a perception that such sales may occur, could adversely affect the market price for our shares and ADSs. To our knowledge, L’Oréal, our largest shareholder, is not subject to any contractual restrictions on the sale of the shares it holds in our Company. L’Oréal does not consider its stake in our Company as strategic.