Sanofi continuing with API spinoff despite French on-shoring push, tensions with union — Reuters
The question of where and by whom drugs’ active ingredients are manufactured was a fairly niche issue back in February, when new Sanofi CEO Paul Hudson first said he would spin off the French giant’s active pharmaceutical ingredient (API) business into its own public company as part of his strategic rethink of the long-laboring drugmaker.
He likely did not imagine that it would soon become a national security question for many countries as a pandemic threatened global supply lines and a vaccine arms race underscored the advantage those with in-country pharmaceutical manufacturing capacity had. Or that French President Emmanuel Macron would stand in a teal facemask at their own French facilities and tell broadcasters about the need to keep production in France.
Still, Sanofi is soldiering on with the plan to spin out its API business, Reuters reported. The goal remains to re-focus the company around its most profitable areas, including development of vaccines and drugs for rare diseases and cancer.
“Sanofi remains committed to executing our IPO on Euronext Paris as planned. We are not reviewing any other financial alternative option,” a Sanofi spokesperson said in an email to Reuters in a rare unequivocal statement for a Big Pharma talking about its plans.
The plan, Reuters reported, is to begin soliciting individual investors in the fall and potentially launch an IPO in 2021 — a year earlier than they had initially indicated. They are already reportedly in discussions with the state investment bank Bpifrance. The spinout value could range to 1-2 billion euros, depending on how much Sanofi plans to keep for itself, and would become the second largest API producer behind Switzerland’s Lonza.
The spinout would not necessarily mean production would move, though it would expose it to the whims of shareholders. Sanofi has said the new group will still be headquartered in France, and that Sanofi will retain a stake in the business and be its biggest customer.
The move, though, will be complicated not only by international concerns but also by internal ones. Tensions between Sanofi and its workers’ union have been running high since the company said last month they would lay off 1,680 European workers over the next year.
A source told Reuters that talks with the union would begin in September. “Shaping the future of the API will be one of the first priorities of the management team after the summer break,” they said, “and everyone is well aware the discussions with the employee representatives will be very challenging.”