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Sanofi says it will spin out active ingredient business by 2022

New chief exec Paul Hudson continues revamp

Sanofi

The revamp of Sanofi continues apace under new chief executive Paul Hudson, with the latest move a spin-out of the drugmaker’s active pharmaceutical ingredient (API) division into a separate company.

The move will create a major new API specialist – ranked number two worldwide – that will “secure significant API manufacturing and supply capacities that are critical for patients in Europe and beyond”, said Sanofi in a statement.

The move would also create a European powerhouse in ingredients production, with annual sales of around €1bn – at a time when around two-thirds of pharma raw materials are sourced from China and India.

Sanofi said that would “help in balancing the industry's heavy reliance on API sourced from the Asian region”, which could help prevent shortages and supply disruptions in the event of quality issues at producers or other factors such as the current COVID-19 coronavirus outbreak.

The new company would bring together Sanofi’s API development and commercial operations with six of its 11 European production sites: St Aubin les Elbeuf and Vertolaye in France; Brindisi in Italy; Frankfurt in Germany; Haverhill in the UK and Újpest in Hungary.

These sites already carry out a lot of API production on contract for other drugmakers. However, according to Sanofi’s head of global industrial affairs Philippe Luscan, “this new entity would be agile as a standalone company, and able to unlock its growth potential, especially in capturing new third-party sales and all the opportunities of a market growing at a pace of 6% per year.”

The spin-out should complete in 2022, according to the company, and start its independent life debt-free with around 70% of its stock floated on the Paris Euronext stock exchange and the remainder held by Sanofi.

The drugmaker has also pledged to remain a customer to the new company in the long-term. Nevertheless, there are signs of resistance among France’s powerful unions.

The General Confederation of Labour (CGT) said the deal would harm workers and was an attempt by Hudson to “dismantle” the Sanofi group.

There has been a lot of speculation about Hudson’s next move at Sanofi, but few industry observers saw the API spin-out coming, with attention focusing on a possible hiving off of the group’s consumer healthcare operations.

The new CEO has already slimmed down the organisation and restructured its approach to R&D, for example by abandoning research into new diabetes and cardiovascular disease products, while increasing its investment in immunological/inflammatory diseases, rare blood disorders, cancer and vaccines as well as digital healthcare.

Article by
Phil Taylor

25th February 2020

From: Marketing

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