Sanofi has tied a name—and a new chief executive—to the European drug ingredients business it plans to spin off next year.
Now dubbed EUROAPI, the active pharmaceutical ingredient (API) business is Sanofi’s “made in Europe” solution to the region’s heavy reliance on materials sourced from countries like China and India—an issue thrown into relief by the COVID-19 pandemic.
Pegged at €1 billion ($1.2 billion) in sales by 2022, the company “will rank number 1 in small molecules API, and number 2 on the global API market,” Sanofi estimates.
Along with the new moniker, Sanofi tapped Karl Rotthier, former CEO of Dutch drugmaker Centrient Pharmaceuticals, to steer the EUROAPI ship. Rotthier joins as CEO of the business, which comprises six Sanofi sites in France, Italy, Germany, Hungary and the U.K., on Jan. 18.
The company, with 3,200 staffers, will be based out of France, Sanofi said. The French Big Pharma plans to own about a 30% stake in the new company; plus, it says it will be one of EUROAPI’s first customers. Sanofi intends to decide by 2022 whether to launch an IPO for the company on Euronext Paris.
Revealed in February 2020, the EUROAPI plan took shape as then-new CEO Paul Hudson embarked on a quest to trim €2 billion from Sanofi’s annual expenses by 2022 through a mix of job cuts, tightened manufacturing budgets, diminished travel and more.
As the COVID-19 pandemic unfolded, Sanofi stayed the course and entered talks with potential investors about the company, including France’s state investment bank, sources told Reuters in July.
Still, the spinoff won't be easy, the sources said. Defining the status and contracts of staffers could prove complicated, because Sanofi will only retain a minority stake in the company. Meanwhile, Sanofi's move in July to slash some 1,680 jobs in Europe over the next three years could hamper discussions with employee representatives about the spinoff, the sources said.
The COVID-19 pandemic and political sensitivities about drug supplies threatened to toss another spanner in the works, Reuters added.
For now, the “extremely complex” API split—as one source described it to Reuters—looks a bit more concrete. Once the company takes off, it will boast a portfolio of 200 APIs and tap into a commercial network of more than 80 countries, Sanofi said.