After 2 years, Sanofi's drug ingredients spinoff takes flight

It’s official: Two years and one pandemic after Sanofi unveiled plans to spin off its European drug ingredients business, EUROAPI has debuted on the Euronext exchange. Shares in the new active pharmaceutical ingredient (API) outfit rose more than 3% in early trading despite a wider market slump.

EUROAPI is touting its position as a “leading player” on the API scene. Its launch comes as COVID-19 and, more recently, the war in Ukraine expose gaps in the world’s pharmaceutical supply chain. Many of the ingredients the pharmaceutical industry relies on are made in countries like China and India.

EUROAPI is angling to become the “partner of choice for all pharmaceutical and biotech companies.” It’s previously said it believes it’s the world's top manufacturer of small molecules and the second largest API maker by revenue.

The Sanofi spinoff boasts a portfolio of roughly 200 APIs, which it markets to more than 500 customers across 80-plus countries, EUROAPI noted in a release.

EUROAPI employs around 3,350 staffers and operates six “state-of-the-art” manufacturing and development centers in France, Germany, Hungary, Italy and the U.K.

“By operating as an independent company, EUROAPI will gain flexibility and growth opportunities to reinforce its status as partner of choice for all pharmaceutical and biotech companies,” Karl Rotthier, the company’s CEO, said in a statement.

Sanofi has retained a roughly 30% stake in EUROAPI.

The company aims to generate 1 euros billion in 2022 revenue, building on the 893 million euros it posted last year. Looking ahead, the API process development and manufacturing market, which was valued at 72 billion euros (about $76.1 billion) in 2019, is expected to grow by about 6% to 7% per year until 2024, EUROAPI said.

At the same time, the global contract manufacturing and development market is expected to grow by 7% to 8% annually over that same stretch.

As part of its stock listing announcement, EUROAPI flagged four milestones on its strategic road map to capture the API market.

The company aims to accelerate its work as a CDMO, develop its existing product portfolio, expand its technical platforms and presence in highly differentiated and complex APIs and ensure operational efficiencies, EUROAPI said.

Sanofi pulled back the curtain on its API spinoff in 2020 as CEO Paul Hudson embarked on a quest to trim 2 billion euros from Sanofi’s annual expenses by 2022.

After joining the French drug major in 2019, the CEO imposed a “play to win” strategy, part of which involved deprioritizing struggling disease areas to double down in growth fields.