Sanofi having difficulty deciding how, or even if, to divest EU generics biz

Breaking up can be hard to do, Sanofi's ($SNY) Olivier Brandicourt is finding out about the company's European generics unit. As part of his plan to refocus the company, the new CEO last year said he would consider a divestiture of the unit but sources are saying the French drugmaker is having difficulty deciding how to make that happen.

Sanofi CEO Olivier Brandicourt

Sanofi had been expected to do something in Q1, but Bloomberg reports that will be delayed as the company debates whether to sell the generics business in pieces or in total, consider some kind of asset swap, or perhaps a joint venture. The drugmaker hasn't even concluded for sure to do anything with it, sources told Bloomberg. The company declined to comment.

In November, Brandicourt laid out his strategic options for getting the drugmaker through several challenging years in the face of sagging diabetes sales. That included possibly selling or spinning off animal health and European generics, while cutting €1.5 billion in costs, then using the resulting cash to invest in deals and R&D. The company said at the time that "geographic synergies are limited and market complexity is increasing" for its European generics business.

Weeks later, Sanofi announced it was working on a deal to swap its Merial Animal Health business for Boehringer Ingelheim's consumer healthcare unit. The German company also would throw in €4.7 billion, valuing Merial at €11.4 billion ($12.56 billion), and giving Sanofi some cash to buy back shares.

But figuring out how to gain the most out of its generics business is proving more complicated, sources tell Bloomberg. The drugs in the portfolio, which include blood thinner and former blockbuster Plavix and hypertension drug Aprovel, generated $2 billion (€1.9 billion) last year. The business is built around Zentiva, a Czech business Sanofi acquired in 2008 for $2.6 billion. The business is particularly strong in the Czech Republic, Romania and Turkey, and has its main manufacturing facilities in central and eastern Europe.

But when Brandicourt laid out his thinking, he said he would arrive at a decision within 12 months, so still has plenty of time to figure out a strategy and meet his self-imposed deadline.

- read the Bloomberg story

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