Sanofi spinoff EUROAPI hits the ground running with double-digit growth in the first half

Just a few short months after liftoff, Sanofi’s drug ingredients spinoff EUROAPI has started to show its promise as a standalone company.

For the first half of 2022, EUROAPI—which debuted on the Euronext exchange in May—pulled down 483.8 million euros (about $483.2 million) in revenue, climbing roughly 11% over the 434.7 million euros ($434.2 million) it brought home for the same period in 2021.

The company’s haul came in “well ahead of expectations,” ODDO BHF analysts wrote in a note to clients Thursday, noting that EUROAPI’s commercial strategy is “beginning to deliver.”

Specifically, the Sanofi spinoff’s active pharmaceutical ingredient business brought home 362 million euros over the first six months of the year, growing 6.5% at constant currencies. EUROAPI credited those gains to “stable” sales to Sanofi, plus a 15.3% increase in revenues from other customers.

Volumes for certain products grew as the pandemic abated, EUROAPI said. The company also made price adjustments to counter rising inflation, which should be visible in the back half of the year, the ODDO BHF team pointed out.

Meanwhile, EUROAPI’s contract manufacturing and development business grew 22% to 122 million euros in the first half, beating consensus estimates of 118 million euros, the ODDO team said.

“Although sales continue to be driven by the agreements with Sanofi, we note a sharp acceleration in the number of requests for proposals (RFPs) received in H1, which matched those for the full year 2021,” the analysts remarked.

So far, EUROAPI has locked up 64 CDMO projects to date, 19 of which are new, according to the company’s earnings release. The company has secured projects in oligonucleotides, lipid nanoparticles and complex chemistry.

Previously, EUROAPI has touted a roster of roughly 200 APIs, which it said it markets to more than 500 customers across 80-plus countries. Back in May, the manufacturer and drug ingredients maestro said it employed around 3,350 employees at six high-tech manufacturing and development centers in France, Germany, Hungary, Italy and the U.K.

Even after the spinoff, Sanofi still owns a roughly 30% stake in EUROAPI.

For the remainder of the year, EUROAPI confirmed that it’s banking on consolidated net sales in the vicinity of 1 billion euros, with CDMO sales predicted to account for some 25% to 30% of that haul. The company also aims to reduce its “dependency” on Sanofi compared with 2021. 

While there isn’t a one-to-one correlation between the API and CDMO businesses and generic drug making, EUROAPI’s success could prove a good omen for Novartis’ own spinoff-in-waiting.

Late last week—and less than a year into a top-down strategic review—Novartis decided to turn its generics business Sandoz into a publicly traded, standalone company, now poised to become Europe’s largest generics outfit.

Despite the separation, meanwhile, Novartis’ Sandoz unit has shown signs of recovery in recent months. In the first half of 2022, Sandoz sales grew 6% at constant currencies to $4.7 billion, contributing 18.6% of Novartis’ total revenue haul.