10. Sanofi

Sanofi sign

Paris, France
2016 generic sales: €1.85 billion ($2.05 billion)

It was pretty much business as usual at Sanofi generics in 2016 in terms of revenue—net sales were down 3.3% or up 0.7% at constant exchange rate to reach €1.85 billion ($2.05 billion). But there was a different story fermenting beneath that calm sea surface, namely the fate of its European generic unit.

Sanofi CEO Olivier Brandicourt expressed intention to divest the company’s European generic unit in his “strategic roadmap” unveiled in November 2015, less than a year he had been at the helm. But it was only in October 2016 that the French drugmaker, after “examining all options,” confirmed the plan.

Sanofi’s European generic business is built around Zentiva, a Czech business Sanofi acquired in 2008 for $2.6 billion. As for manufacturing, that includes two sites, one in Prague, and the other in Bucharest, Romania. The sector, which doesn’t include the Russian Commonwealth countries and Turkey, contributed more than 43% of sales (€802 million) to the company’s entire generics business in 2016. Then why did Sanofi want to sell it?

When it first announced the option, the company said that “geographic synergies are limited and market complexity is increasing” for its European generic business.

Compared to other markets, generic sales growth in the European area has not exactly been energetic these years. In 2015, that market grew 2.8% CER, while emerging markets grew 6.9%, the U.S. rose 15.4%, and the rest of the world grew 86.4%, mainly due to launches in Japan of the authorized generics of its own Allegra and Plavix. In 2016, generics sales in Europe decreased 0.7% CER, while emerging markets, the U.S. and the rest of the world enjoyed growths of 1.8%, 1.8% and 1.2%.

In March it was reported the Pharma had hired financial advisers to guide the long-awaited deal, potentially worth more than €2 billion, through an auction process slated to begin laster in the year.  

In its 2016 annual report, Sanofi said it “will be looking for a potential acquirer that will leverage the mid and long-term sustainable growth opportunities for [the European generic] business,” and that it is still committed to its generics business in other parts of the world, “and will further focus on emerging market.”

At least the sell will give those who missed out on the recent Stada deal another chance into the European generics market. After Boston private equity firm Advent made the first offer of $3.7 billion, the German drugmaker announced in April that it will be sold at €5.32 billion ($5.63 billion) to Cinven and Bain Capital. After adjustment, Stada’s 2016 generics sales around the world reached about €1.29 billion.

10. Sanofi