Sanofi Explores Strategic Options for Consumer Health Business: Sale, IPO, or Joint Venture

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According to the foreign website Biospace, Sanofi is considering selling its consumer healthcare business, valued at approximately $30 billion, establishing a joint venture, or pursuing an initial public offering (IPO). Paul Hudson, the new Chief Executive Officer of Sanofi who took office on September 1, is expected to meet with investors in Cambridge, Massachusetts, on December 10 to discuss the strategic options for the consumer healthcare division.

In September 2018, Sanofi announced a realignment of the focus of its two international business units. The company plans to establish a new Global Primary Care business unit, combining the product portfolios of its existing Diabetes and Cardiovascular units with established products. This new Primary Care division will focus on mature markets. The second unit, named “China and Emerging Markets,” will concentrate on what Sanofi describes as emerging markets with unique characteristics and significant growth opportunities, particularly in China. Currently, China is Sanofi’s second-largest market after the United States.

At the time, Sanofi’s remaining three global business units—Sanofi Genzyme, Sanofi Pasteur, and Consumer Healthcare—remained unchanged. At constant exchange rates, Sanofi’s Consumer Healthcare business reported a 3% revenue growth in 2018, reaching $5.21 billion.

Over the past year, speculation has been intense among analysts and investors regarding whether Sanofi will divest or spin off its consumer healthcare division. The rationale is that Sanofi’s innovation engine has remained heavily reliant on its partnership with Regeneron, and divesting or spinning off the consumer healthcare business would enable the company to reinvest proceeds into greater internal research.

A Reuters source said Sanofi is considering various options, including joint ventures, an IPO, and a sale...

Last month, Paul Hudson stated that the company plans to evaluate the performance of each division and determine where to concentrate resources. In an interview, Paul Hudson remarked that prioritization will become increasingly important in the future.

In 2017, Sanofi completed a business swap with Boehringer Ingelheim. Sanofi exchanged its Merial animal health business for Boehringer Ingelheim’s over-the-counter (OTC) pharmaceutical business—essentially, Sanofi acquired Boehringer Ingelheim’s consumer healthcare business, while Boehringer Ingelheim paid Sanofi €4.7 billion in cash. The transaction increased Sanofi’s market share in consumer healthcare to approximately 4.6% and strengthened its presence in specific markets in Germany and Japan.

In 2018, GlaxoSmithKline merged its consumer healthcare division with Pfizer’s; the joint venture was subsequently spun off and listed independently. The joint venture reported global sales of approximately $12.7 billion in 2017, accounting for a 3.5% share of the global market. According to Reuters, Johnson & Johnson, Bayer, and Sanofi are close competitors in the global consumer healthcare market.

In its third-quarter financial report, Sanofi announced net sales of €9.499 billion for the quarter, a decrease of 1.1%. Among these, consumer healthcare generated €1.136 billion, an increase of 0.4%; total pharmaceuticals revenue reached €6.434 billion, up by 1.5%; and Sanofi Pasteur reported revenues of €1.929 billion, down 9.8%. During the Q3 investor conference call, Paul Hudson stated that Sanofi delivered resilient performance in the third quarter, with strong sales in specialty care primarily driven by the continued outstanding performance of the anti-inflammatory drug Dupixent.

Reference Source: Sanofi in Talks to Sell, Spin-Off or Create Joint Venture of its Consumer Health Unit