On October 11, 2024, Paris time, Sanofi issued a press release revealing that it is in negotiations with CD&R (Clayton, Dubilier & Rice) to sell a 50% stake in its consumer health business, Opella. Industry sources say the deal could be worth up to €15 billion ($16.4 billion), making it one of the largest deals in the European pharmaceutical sector this year.
In fact, as early as October 2023, when Sanofi released its third-quarter financial report and announced a downgrade of its 2024 profit expectations, its CEO, Paul Hudson, reiterated the “Play to Win” strategy. To align with this strategy, Sanofi not only launched a pipeline priority adjustment and cost reduction plan but also signaled the spin-off of its consumer health business.
As for the reason behind the spin-off, it is part of the transformation of this pharmaceutical giant, indicating that the company will focus its resources on its innovative drug business in the future.
01 ettled!
Sanofi’s consumer health business—Opella—is a portfolio with 100 leading brands, including Allegra, Doliprane, Novanight, Icy Hot, and Dulcolax, making it the world’s third-largest company in the over-the-counter and vitamins, minerals, and supplements market. According to Sanofi’s press release, Opella is now operating as an independent business unit of Sanofi, with dedicated resources for research and development, production, and digitalization, employing over 11,000 staff members, managing 13 top-tier production sites, and 4 research and innovation centers.
Sanofi’s financial report for 2023 shows that its consumer health business generated revenues of €5.2 billion in 2023, a year-on-year increase of 6.3%. During the same period, its Specialty Care segment generated revenues of €18 billion (+14.2%), and its vaccine business generated revenues of €7.5 billion (+8.3%).
Previously, regarding the future of Opella after the split, Sanofi’s Chief Financial Officer François Roger had indicated three possible directions in a financial report conference call: 1) Private spin-off: Opella becomes independent from the parent company, but Sanofi will retain full or partial ownership and control of Opella; 2) IPO: Opella is listed as an independent entity on a stock exchange; 3) Direct sale.
After initially revealing the intention to split, private equity investment firms including Advent International, PAI Partners, CVC Capital Partners, Blackstone, TPG (Texas Pacific Group), and CD&R all competed for the opportunity. In September 2024, Bloomberg reported that Sanofi had received two independent bids from CD&R and PAI Partners.
With the release of the official press release yesterday, the outcome of Opella’s split is becoming clearer. Based on the press release and assuming negotiations proceed smoothly, 50% of Opella’s equity will be sold to CD&R, and Sanofi is also likely to retain a stake in Opella.
The acquiring party, CD&R, is known for its expertise in mergers and acquisitions, restructuring, and helping businesses achieve long-term growth. Its pharmaceutical investments include Inizio, Aster Insights, etc. The latter’s capital restructuring was completed by CD&R, Merck GHI, McKesson Ventures, and Clayton. Earlier this year, CD&R’s management team was further strengthened with the appointment of Adam Karol from Silver Lake as a partner and Leslie Starr, who has extensive experience at PepsiCo and Procter & Gamble, as an operations advisor focused on consumer business.
For Sanofi, this sale will not only provide a substantial cash injection but also allow the company to devote more resources and attention to its biopharmaceutical business. According to information previously released by Sanofi, autoimmune diseases may be one of the key areas for its strategic layout. In addition to the rising sales of Dupixent, Sanofi is also expected to explore more potential pipelines in the autoimmune field, making it a potential candidate for the “Autoimmune Disease Leader.”
02 Mainstream Choices in a Changing Landscape
Currently, it has become a popular strategy for multinational corporations (MNCs) to sell their over-the-counter (OTC) businesses to free up more space for pharmaceutical businesses with higher profit margins.
(I) Novartis
Consumer Health Business: In 2014, Novartis reached an asset swap agreement with GSK, transferring its consumer health business to GSK, while GSK transferred its vaccine business (excluding flu vaccines) to Novartis.
Alcon: In 2019, Novartis announced the spin-off of its eye care business, Alcon, from the group as an independent publicly traded company.
Sandoz: In 2023, Novartis’s former generic drugs business unit, Sandoz, completed a 100% spin-off and was listed as an independent company on the Swiss Stock Exchange.
Additionally, Novartis sold its animal health division to Eli Lilly.
(II) Pfizer and GSK
Following the acquisition of Novartis’s consumer health business in 2014, in 2019, GSK and Pfizer reached a cooperation agreement to merge their consumer healthcare businesses into a new joint venture. Pfizer held 32% of the shares, while GSK held 68%.
In 2022, GSK bought the remaining 32% of the shares from Pfizer. Pfizer exited, and GSK gained full control of the business. Subsequently, GSK, with full control, planned to split the company into two independent listed entities—one focused on pharmaceuticals and vaccines, and the other on consumer health products.
This split was completed in July 2022, and the new consumer health company was named Haleon. Haleon inherited consumer health brands from both GSK and Pfizer, including but not limited to: Centrum, Sensodyne, Caltrate, Voltaren, and Fenbid, among others.
(III) Johnson & Johnson
In August 2023, Johnson & Johnson announced the completion of the spin-off of its consumer health business, with the new independent company named Kenvue. According to the press release at the time, after the completion of the share exchange offer, Johnson & Johnson would continue to hold approximately 9.5% of Kenvue’s common stock.
The successful completion of the share exchange offer between Johnson & Johnson and Kenvue was announced. From now on, Kenvue will operate entirely independently. Both companies will continue to fulfill their unique missions, providing innovative medical and consumer health products for patients and consumers worldwide, and advancing the cause of human health.
Additionally, in 2023, Hikma Pharmaceuticals also announced that it had received an offer to divest almost all of its non-prescription drug business; at the same time, Hikma also signed definitive agreements with related companies regarding the divestment of its women’s healthcare business and Indian API business. After the divestment, Hikma will focus on ophthalmic business.
【Editor’s note】The above content (~5950 words) is a quick translation of a Chinese article (posted on 2024-10-12) by DrugTimes team. To read the original article, please click here. All comments are warmly welcome. Many thanks!
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