Sanofi of France Contemplates Listing Consumer Unit in Late 2024

31 Oct, 2023

Sanofi of France Contemplates Listing Consumer Unit in Late 2024

In a strategic move, Sanofi has unveiled its plan to separate its consumer healthcare business, with the anticipated listing not slated to happen until the fourth quarter of 2024. The decision follows in the wake of similar moves in the pharmaceutical industry, including the spin-off of Kenvue from Johnson & Johnson and the creation of Haleon by GSK and Pfizer in 2022. Additionally, Bayer, under new leadership since June, has faced pressure from investors to split off its consumer business.

Sanofi, a Paris-based pharmaceutical giant, intends to explore various scenarios for the separation of its consumer healthcare division. The preferred route, according to the company, would likely involve a capital markets transaction, creating a listed entity headquartered in France. This decision is expected to maximize value creation for Sanofi's shareholders.

CEO Paul Hudson emphasized that the core business of Sanofi has significantly improved, making it possible to reduce reliance on the more predictable cash flows generated by consumer products. He pointed out that the company's strong progress and recent advancements in its strategy create a unique opportunity for substantial investment in long-term growth.

The increased focus on research and development, while significant, may impact the company's profits in the upcoming year. Sanofi's finance chief, Jean-Baptiste de Chatillon, refrained from disclosing specific figures.

Sanofi remains tight-lipped about further details of the planned listing and whether the consumer healthcare business might be put up for sale. Nevertheless, the company expects its 2024 adjusted earnings per share to experience a "low-single-digit" percentage decline due to increased spending on research and development and a higher tax rate, followed by a strong rebound in 2025.

For 2023, Sanofi continues to anticipate adjusted earnings per share growth at a "mid-single-digit" percentage rate, excluding currency fluctuations. Additionally, the company is targeting cost savings of up to €2 billion from 2024 until the end of 2025, with the majority of the savings being reallocated to fund innovation and growth.

Sanofi's consumer healthcare business reported a remarkable 8.6% growth in revenue in 2022, reaching €5.1 billion. The company will consult with employee representatives as part of the decision-making process regarding the planned separation, ensuring that all stakeholders' perspectives are considered.