Sanofi to create massive standalone API producer by melding 6 sites in Europe; IPO to come

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Sanofi says it will create a standalone API production company in Europe with €1 billion in sales by 2022. (Sanofi)

New CEO Paul Hudson has pledged to squeeze €2 billion out of Sanofi’s annual costs in a couple of years through a mix of methods that leans heavily on clamping down on its manufacturing budgets. It has now announced a plan that it says will not only do that but add to its top line. 

The French drugmaker today trumpeted plans to create the world’s second-largest API production operation by clumping together its six API manufacturing sites in Europe and the U.K. It said the operation, with 3,100 employees, is projected to have about €1 billion in sales by 2022. 

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Sanofi intends to decide by then whether to float an IPO for the new French-based company on Euronext Paris. It said the company, in which it will hold a 30% share, will be debt-free to enhance its investment ability.

“With this endeavor, this new entity would be agile as a standalone company, and able to unlock its growth potential, especially in capturing new third-party sales and all the opportunities of a market growing at a pace of 6% per year,” Philippe Luscan, executive VP of Sanofi global Industrial affairs said in a statement. 

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Sanofi says it will include its API commercial and development operations with its API manufacturing sites Brindisi, Italy: Frankfurt, Germany; Haverhill, UK; St Aubin les Elbeuf and in Vertolaye, France and in Újpest, Hungary. 

The company said that such a business would help alleviate drug shortages and balance Europe’s “heavy reliance on API sourced from the Asian region.”

That, of course, has been top of mind as COVID-19 has wreaked havoc on manufacturing in China, the world’s Walmart of API sales. It says that statistics show 60% of global API production comes from China and India. 

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