Sanofi plans API spinoff company with $1bn expected in sales by 2022

New European company aims to reduce reliance on APIs from Asia, a well-timed move considering the ongoing coronavirus outbreak

Sanofi Swiftwater, US, facility

Sanofi has announced plans to create a major European company dedicated to the production and marketing to third parties of active pharmaceutical ingredients (API), which are the essential molecules responsible for the beneficial effects used in the composition of any drug.

The project consists of creating a standalone company that would combine Sanofi’s API commercial and development activities with six of its European API production sites: Brindisi (Italy), Frankfurt Chemistry (Germany), Haverhill (UK), St Aubin les Elbeuf (France), Újpest (Hungary) and Vertolaye (France).

With increasing medicine shortages that critically impact patient care, the new entity would contribute to supporting and securing API manufacturing as well as supply capacities for Europe and beyond.

In Europe, the new API industry champion is expected to help in balancing the industry’s heavy reliance on API sourced from the Asian region. With the coronavirus outbreak putting some strain on this region, this is a well-time announcement.

The new company would rank as the world's second largest API company with approximately €1 billion ($1.1bn) in expected sales by 2022. It is expected to include 3,100 skilled employees and to be headquartered in France.

A planned IPO on Euronext Paris would be evaluated with a decision expected by 2022, subject to market conditions.

Philippe Luscan, Executive VP of Global Industrial Affairs at Sanofi, said: “Based on the expertise and experience built over decades within our industrial network, this new entity would help ensure a greater stability in supplying drugs to millions of patients in Europe and beyond.”

“With this endeavor, 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,” explained Lucan.

By operating independently, the new entity plans to increase its sales to third parties and to expand its partnerships with other pharmaceutical companies in order to take advantage of new growth opportunities and have the ability to deftly adapt to customer needs.

The new company would be positioned to benefit from its significant competitive strengths, including a broad portfolio of both volume and niche products, high standards of quality, competitive pricing, state-of-the-art industrial capabilities and technologies across Europe (including France, Italy, Germany, Hungary, and the United Kingdom) as well as leveraging an extensive commercial network covering more than 80 countries.

Sanofi is fully committed to the new company’s success and intends to establish a long-term customer relationship with the new API supplier and to hold a minority stake of approximately 30% in the new company.

To provide the optimal conditions for success, Sanofi intends the new company to be debt free in order to maximise its future investment capacities, and is committed to remaining an important customer.

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