Sanofi to Merge European API Plants into Separate Major API Company

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--French pharmaceutical major Sanofi has announced plans to spin off six of its active pharmaceutical ingredients (API) manufacturing sites in Europe into one, large standalone API producer.

The new company would rank No. 2 globally in API production, with approximately €1 billion ($1.1 billion) in expected sales by 2022. Sanofi said that it will be headquartered in France and that an intent for an IPO on Euronext Paris would be evaluated for an anticipated decision by 2022, "subject to market conditions." The affected API manufacturing sites are Brindisi, Italy; Frankfurt, Germany; Haverhill, U.K.; St Aubin les Elbeuf and Vertolaye in France; and iÚjpest, Hungary.

Sanofi said the new spinoff would be perfectly placed to address "increasing medicine shortages that critically impact patient care," by supporting and securing API manufacturing as well as supply capacities for Europe and beyond. In Europe, Sanofi said that the company would be a "new API industry champion" that helps in balancing the industry's heavy reliance on APIs sourced from Asia. The announcement's timing also comes at a time when the coronavirus (Covid 19) has massively impacted API manufacturing in China, which dominates around 60% of the global API market.

The new company is expected to employ 3,100 skilled employees, and Sanofi will retain a 30% stake. The decision was revealed by new Sanofi Chief Executive Officer Paul Hudson, who has promised to eliminate $2.2 billion from the company's annual costs over the next couple of years.

Philippe Luscan, executive vice president, 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 endeavour, 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."

Sanofi believes that by operating independently, the new company will increase its sales to third parties and expand its partnerships with other pharmaceutical companies. It claimed the company also will 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. It also will be able to leverage a commercial network covering more than 80 countries.

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