On the evening of February 20th, according to multiple media reports, Sanofi's consumer health division received a valuation of approximately $20 billion, and the company is open to selling the business; Anhong Capital and Blackstone Group are considering bidding for Sanofi's consumer health division, while Bain Capital, CVC, Yintuo EQT, and KKR are also exploring the possibility of acquiring the aforementioned division.
Sanofi is one of the top pharmaceutical companies in the world, headquartered in Paris, France. Its current flagship product is Duprizumab Injection (trade name: Dabitol), with global sales reaching 10.7 billion euros in 2023. Meanwhile, this company's insulin and vaccine series products have a broad influence.
As a global pharmaceutical giant, Sanofi's plan to split its consumer business was officially announced as early as the end of the third quarter of last year. The reason why this news has attracted widespread attention may be that, unlike several past cases of spin offs of large pharmaceutical companies, the intended takeover party this time is not pharmaceutical companies, but various well-known private equity players.
Among them, Anhong Capital is one of the largest and oldest private equity institutions in the world, with projects in China including Aimeng Group, Guangsheng Group, Baonuo Sandia, etc; Blackstone Group enjoys a reputation as the "king of global private equity" and the "king of the new generation of Wall Street", and is a typical winner in assetizing real estate finance. It is also considered an important competitor to investment banks such as Goldman Sachs and Morgan Stanley.
On February 21st, Interface News reporters sought confirmation from Sanofi regarding the aforementioned information. The company only stated that relevant background information can refer to the press release released by the company headquarters at the end of October last year.
This press release is also Sanofi's official explanation of the split announced in last year's third quarter report. Specifically, on October 30, 2023, Sanofi China's official official account reported that Sanofi announced on October 27 of the same year to launch the strategy of "striving to win", in which it clearly proposed that the company planned to split consumer health business. That is, as early as the fourth quarter of 2024, by creating an independent operating entity headquartered in France, to spin off its consumer health business.
This also means that although Sanofi has not been able to respond positively to topics such as "the consumer health department has received a valuation of approximately $20 billion" and "private equity giants have expressed interest", it is highly likely that the company is proceeding with the planned spin off plan.
In 2019, Sanofi adjusted its global business framework to a "3+1" model, focusing on specialty drugs, vaccines, and general medicines. The original consumer health business was arranged as an independent consumer business unit.
Compared to peers, Sanofi's consumer healthcare business is generally well-known in China. But it also has a series of representative products, such as Allegra (the trade name of the drug, the same below), cough syrup Phytoxil, pain gel Icy Hot, and Dulcolax pain reliever IcyHot. In 2023, the annual revenue of this business unit was 5.18 billion euros. Meanwhile, this department has approximately 11000 employees.
It is not difficult to understand that Sanofi wants to spin off its consumer health business. Although the company's Duprizumab injection is growing strongly, the company no longer has a second product that can be compared to it. Moreover, products including Aubajie have experienced a sharp decline in sales, resulting in less optimistic current performance and subsequent growth for the company.
From a financial perspective, Sanofi's performance growth has shown a decline in recent years. According to the company's performance report for the third quarter of 2023, the net sales for the third quarter were 11.96 billion euros, a year-on-year decrease of 4.1%; Commercial earnings per share were 2.55 euros, a year-on-year decrease of 11.5%. All of these indicate the current predicament of this giant, and the emotions of its shareholders can also be imagined.
So, at the end of October 2023, Sanofi reiterated its guidance for achieving medium single digit growth in earnings per share for the full year of 2023 and announced the implementation of a cost savings plan of 2.7 billion euros. In terms of business, Sanofi stated that it will focus on the pharmaceutical business, increase research and development investment to stimulate the potential of product pipelines and enhance shareholder value. At the same time, news of Sanofi hiring Rothschild for preliminary negotiations on the separate listing of its consumer health division business also leaked.
However, Sanofi's response plan still concerns some investment institutions. For example, Morgan Stanley analyst Mark Purcell pointed out in a report that Sanofi's profit forecast for 2024 is about 9% lower than analysts' expectations, and it may further disappoint as the company cancels its profit target of achieving a 32% operating profit margin in 2025.
In addition, Sanofi's financial performance in the fourth quarter of 2023 still did not improve. Meanwhile, exchange rate fluctuations have a significant negative impact on sales. The fourth quarter sales revenue of the company was 10.92 billion euros, a year-on-year increase of 1.9%, but the net income during the same period was a loss; Commercial earnings per share were 1.66 euros, a year-on-year decrease of 2.9%.
As a result, for the entire year of 2023, Sanofi's net sales for the year were 43.07 billion euros, which was basically the same as the same period. However, the net income was 5.4 billion euros, a year-on-year decrease of 35.5%, and the earnings per share was 4.31 euros, a year-on-year decrease of 35.6%.
In terms of industry, multinational pharmaceutical companies have frequently spun off their consumer health departments in recent years, engaging in "separation". For multinational pharmaceutical companies, after a spin off, the stock price of the parent company may experience a certain degree of boost, which may help enhance shareholder value; At the same time, the spun off company can also better develop its business by obtaining financing, and the parent company can also focus more on its core business.
Previously, in June 2021, Organon spun off from MSD as an independent listed company, which was originally MSD's Basic Healthcare and Women's Health division; In the first half of 2022, GlaxoSmithKline (GSK) spun off its consumer health and over-the-counter (OTC) businesses and established an independent listed company, Haleon; In August 2023, Johnson&Johnson completed the spin off of its consumer health business, and consumer health company Kenvue became an independent operating enterprise. In addition, major pharmaceutical companies such as Pfizer have also completed the spin off or sale of the consumer health sector.