Latest Progress on Sanofi's Plan to Spin Off Consumer Healthcare Business: Advent International and Blackstone May Be Considering Acquisition for Up to $20 Billion
In recent years, several large multinational pharmaceutical companies, including Merck, GlaxoSmithKline, and Johnson & Johnson, have successively spun off their consumer healthcare businesses to focus on drug research, development, and commercialization, becoming a shared original intention among multiple enterprises.
Last year, health care business revenue was 5.18 billion euros
Sanofi is a multinational pharmaceutical company headquartered in France, with operations in more than 100 countries and regions worldwide, and 73 production bases across 32 countries and regions.
Sanofi officially entered the Chinese consumer healthcare market in 2010. In 2016, it signed a strategic cooperation agreement with CR Sanjiu, committing to introduce Sanofi's consumer healthcare products into China. In 2019, Sanofi restructured its global business framework into a "3+1" model, focusing on specialty care, vaccines, and general medicines, while establishing consumer healthcare as an independent Consumer Division. In October 2023, Sanofi explicitly announced plans to spin off its consumer healthcare business by creating an independently operated entity headquartered in France, with the earliest completion expected in the fourth quarter of 2024. In 2023, Sanofi’s consumer healthcare business achieved revenue of 5.18 billion euros, marking a year-on-year increase of 6.3%.
So far, Sanofi has products such as the antiallergic drug Allegra and the cough syrup Phytoxil in the consumer healthcare business field.
Unlike the previous approach of several multinational pharmaceutical companies spinning off their consumer healthcare businesses, according to foreign media reports, Sanofi is expected to divest its consumer healthcare business through an acquisition this time. In addition to the two private equity firms mentioned above, other institutions such as Bain Capital are also considering participating in the potential acquisition.
Sanofi's 2023 performance, announced on February 1 this year, showed that the company achieved revenue of 43.07 billion euros last year, a year-on-year increase of 5.3%. Among this, its flagship product Dupixent (dupilumab) achieved sales of 10.715 billion euros. However, due to weak growth in other business units, Sanofi’s net income last year (5.4 billion euros) saw a year-on-year decrease of 35.5%. Although Sanofi stated that Dupixent’s sales in 2024 are expected to reach 13 billion euros, it is clear that this single product alone cannot yet sustain the entire company.
Multinational pharmaceutical companies frequently spin off consumer health businesses
Among multinational pharmaceutical companies, several enterprises, including Johnson & Johnson and Merck, have spun off their consumer healthcare businesses.
The most recent case occurred in August 2023, when Johnson & Johnson announced the completion of the share exchange offer with Kenvue, marking the successful spin-off of its consumer health business. At that time, Joaquin Duato, Chairman of the Board and Chief Executive Officer of Johnson & Johnson, stated that the spin-off not only brought significant value to shareholders but also made Johnson & Johnson more agile, focused, and competitive.
In the first half of 2022, GlaxoSmithKline also spun off its consumer health and OTC (over-the-counter) businesses, with the divested units subsequently forming the independently listed Haleon company.
In June 2021, Merck & Co. spun off its former primary care and women's health divisions, which were subsequently listed independently under the name Organon.
In the case of weak business growth, divesting the consumer health business to focus on core operations is a common motivation for many companies to spin off their businesses. In November 2023, the German pharmaceutical company Bayer announced its third-quarter earnings report, which were less than ideal, with a single-quarter loss of 4.569 billion euros (approximately 35.553 billion yuan). CEO Bill Anderson stated during the third-quarter earnings call that Bayer would consider spinning off its consumer health or crop science division.
Another well-known generic drug company, Viatris, announced in 2023 the divestiture of almost all its over-the-counter (OTC) business, including the sale of its OTC operations and its production and R&D bases in France and Italy.
Industry insiders pointed out that multinational pharmaceutical companies have large organizational structures. In the case of weak revenue growth, directly spinning off a certain business unit is one of the ways to quickly improve efficiency. Spinning off the consumer health business allows for better focus on core operations.
Reporter Zhang Xiulan of The Beijing News
Proofread by Wang Xin