|Sanofi CEO Olivier Brandicourt|
New Sanofi CEO Olivier Brandicourt has promised to unveil his 5-year strategic plan for the French drugmaker and he appears to be homing in on what to keep and what to let go. Sources say that he is considering a spinoff of Sanofi's animal health operation, while maybe unloading a supplement business and a biosurgery unit that were picked up by his predecessors.
Like competitors, Sanofi ($SNY) is looking to slim down and sharpen its focus. It is expected Brandicourt will lay out his plan during an investor day Nov. 6, and he is arriving at some final decisions in anticipation of that event.
Sources are telling Bloomberg that Brandicourt might spin animal health unit Merial into a separate company, or find a partner to share the unit with. Merial brings in about €2.1 billion a year and is currently run as an independent company, sources pointed out. He also is looking at selling a biosurgery business Sanofi got with its 2011 buyout of Genzyme, its renal unit and Oenobiol, a nutritional, health and beauty supplements maker it acquired in 2009. Sources were quick to say these plans are not final and may not happen.
Sanofi had a solid second quarter with revenues of €9.38 billion ($10.24 billion), up 4.9%, and the company in July got FDA approval for a new class of cholesterol lowering drug it developed with Regeneron ($REGN), expected to hit blockbuster sales. But with pressure on its diabetes franchise, investors have been looking to see how the new CEO will move the company forward.
In July, Brandicourt revamped the management structure and like other companies is expected to make some moves that slim down operations. If it spins off Merial and dumps the supplement biz, it would be following the blueprint of Pfizer ($PFE), which started the trend a couple years ago when sold off its nutrition unit and spun off animal health into the now-publicly-traded Zoetis ($ZTS).
But many others have been working in the same vein. Novartis ($NVS), GlaxoSmithKline ($GSK) and Eli Lilly ($LLY) struck a three-way deal that had Novartis pick up Glaxo's oncology assets and established a consumer health joint venture between the two companies, while Glaxo got Novartis' vaccines business and control of that consumer JV. Lilly bought Novartis' animal health unit. There were other deals last year as well. Merck sold Bayer its consumer business for $14 billion, for one.
Brandicourt has said his division of the company into 5 operating units will take effect in January. In that change-up, he put specialty drugs, including cancer, under the Sanofi Genzyme umbrella; created a Diabetes & Cardiovascular unit. He put established products, generics, consumer health and emerging markets under the name General Medicines & Emerging Markets. Along with Merial and its Sanofi Pasteur vaccines operation, it will have 5 units going forward, unless one of those gets spun off.
- read the Bloomberg story