Sanofi Plans Spin-Off Of API Unit Into A European Company
Zacks Investment Research | Feb 24, 2020 10:28PM ET
Sanofi (PA:SASY) (NASDAQ:SNY) announced that it plans to spin-off its active pharmaceutical ingredients (API) business into a separate standalone European company. The new API company will combine Sanofi’s API commercial and development activities with six of its European API production sites located in Italy, Germany, Britain, France and Hungary. Active pharmaceutical ingredients or APIs are the chemicals or biologicals which are used in the composition and the production of any drug.
The new API company, to be headquartered in France, is expected to be the world's second largest API company with sales expected to be approximately €1 billion by 2022. Meanwhile, Sanofi will decide on whether the API company should be listed via an initial public offer (IPO) on Euronext Paris by 2022. Sanofi plans to hold a 30% stake in the new API company and also intends to become its customer.
In Europe, most of the pharmaceutical companies rely on companies in Asia, mainly in China, for supply of the APIs used in their drugs. Sanofi believes that the new company will ensure adequate supply of APIs in Europe and lower the need for sourcing API from China. With the deadly coronavirus outbreak ravaging China, Europe-based pharmaceutical firms are facing supply disruptions.
Sanofi’s shares have outperformed the industry in the past year. The stock has risen 20.5% in the said time frame compared with the Zacks Investment Research
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