Sanofi Announces Planned Spin-off of Consumer Healthcare Business to Strengthen Focus on Innovative Medicines and Vaccines

Oct 27, 2023 17:34 CST Updated 17:34

Sanofi

Pharmaceutical R&D Developer

On October 27, Sanofi released its Q3 2023 financial report on its official website and announced a comprehensive update to its "Play to Win" strategy, including the spin-off of its consumer healthcare business.

Latest Financial Report Released, Business Continues to Grow

Sanofi's Q3 2023 financial report shows that the single-quarter revenue was approximately 11.964 billion euros, a year-on-year increase of 3.2%; the revenue for the first three quarters was approximately 32.151 billion euros, a year-on-year increase of 3.9%.

From different business perspectives, Specialty Care revenue was 4.635 billion euros, increasing by 13.5%; General Medicines revenue was 2.986 billion euros, decreasing by 6.6%; Vaccines revenue was 3.098 billion euros, decreasing by 0.6%; Consumer Healthcare revenue was 1.245 billion euros, increasing by 4.6%.

In terms of products, Dupixent (dupilumab) remains its core pipeline. In the third quarter, Dupixent sales increased by 32.8% to 2.847 billion euros; in the first nine months of this year, Dupixent sales reached 7.725 billion euros, an increase of 35.1%.

In addition, Sanofi has also achieved a series of successes in the approval of new products: Beyfortus was approved in the United States for the prevention of RSV lower respiratory tract disease in infants; ALTUVIIIO was approved in Japan for the treatment of hemophilia A; Nexviazyme was approved in China for the treatment of Pompe disease.

Based on positive earnings expectations, Sanofi reaffirmed its full-year 2023 business earnings per share guidance, projecting a mid-single-digit growth.

Sanofi CEO Paul Hudson stated: "With our recent two business development deals in immunology and vaccines, we are further strengthening the core of our innovative pipeline and following our strategic focus of transforming medical practice through breakthrough science. As our company's Play to Win strategy enters an exciting new chapter, we are confident about the outlook for the last quarter, thus maintaining our full-year profit guidance unchanged."

"Play to Win" Strategy Opens a New Chapter

The "play to win" strategy mentioned by Paul Hudson was a new reform path established after he joined Sanofi in 2019. According to this strategy, Sanofi shifted its development focus to oncology and rare diseases, and formed three core global business units globally: specialty medicines, general medicines, and vaccines.

According to the announcement released by Sanofi on October 27, the updated "Play to Win" strategy will continue to focus on key objectives such as implementing transformative drug and vaccine launches, promoting flexible and efficient resource deployment, and enhancing R&D productivity, specifically including four parts.

Increase R&D Investment

Sanofi stated that it will strengthen and sustain the company's long-term profitable growth trajectory by increasing investment to drive existing or new clinical development. On December 7, 2023, at the R&D Day event for investors held in New York City, Sanofi will provide detailed information about its pipeline and new growth pathways.

Strategic Cost Measures

To further improve its cost structure, Sanofi will launch an efficiency program across its entire biopharmaceutical business, prioritizing investments in R&D and modernizing its commercial delivery methods. Sanofi aims to achieve total savings of up to 2 billion euros from 2024 to the end of 2025, with the majority reallocated to innovation and growth drivers.

Plan to spin off consumer healthcare business

To strengthen its focus on innovative drugs and vaccines, Sanofi announces the spin-off of its consumer healthcare business. Sanofi is currently evaluating potential spin-off options but considers the most likely route to be through a capital markets transaction, creating a listed entity headquartered in France. Depending on market conditions, and following consultations with social partners, the separation could occur as early as the fourth quarter of 2024, with further details to be disclosed later.

It is reported that since the announcement of the establishment of an independent global business unit in December 2019, the Consumer Healthcare business has now expanded to 150 countries, with over 11,000 employees. It possesses dedicated resources in R&D, manufacturing, and information technology, and has developed a unique sustainability roadmap.

Update on Preliminary Performance Outlook

Sanofi Reaffirms Full-Year 2023 Business EPS Guidance and Supplements Growth Expectations for 2024 and 2025.

Considering the full realization of the long-term potential of the product line, continued investment around new products, and the price headwinds for generic drugs, Sanofi will no longer aim to expand its business operating margin to 32% by 2025, while maintaining a focus on long-term profitability.

Due to the increase in R&D investment, Sanofi expects its business earnings per share to remain roughly stable at the 2023 level in 2024, and anticipates a strong rebound in business earnings per share growth in 2025.

Sanofi reiterated its goal of achieving sales of over €22 billion in the immunology field and over €10 billion in the vaccines field by 2030.

Paul Hudson said, "In the new chapter of our strategy, we are deepening our investment in R&D as we move towards becoming a pure biopharmaceutical company."

References:

[1]Sanofi: Press Release: Specialty Care growth, strong launch uptake of Beyfortus® and ALTUVIIIO® drive solid Q3 results

[2]Sanofi: Press Release: Sanofi Enters Next Chapter of Play to Win Strategy

[3]Endpoints News: Sanofi will spin out consumer unit, putting weight behind R&D efforts: ‘I have to invest in the science now’

Source: Siqi Club

Compiled by: Nicole

Editor: Adam

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