Sanofi has mapped out a separate listing of its consumer healthcare business from the fourth quarter of next year, the French drugmaker said, adding it plans to boost product development spending at its core business.
'Sanofi is reviewing potential separation scenarios, but believes that the most likely path would be through a capital markets transaction, by creating a listed entity headquartered in France,' Paris-listed Sanofi said in a statement.
The timing of the potential listing, which Sanofi said would not happen before the fourth quarter of 2024, would be set to maximise value creation for shareholders.
The French firm said it would consult with employee representatives on any planned deal.
Consumer Healthcare
The announcement comes after larger consumer rival Kenvue was spun off from Johnson & Johnson this year, and after the creation of Haleon by GSK and Pfizer in 2022. Bayer, led by a new CEO since June, has faced calls by several investors to split off its consumer business.
Speaking in a media call, Sanofi finance chief Jean-Baptiste de Chatillon said the increase in research and development would be significant, weighing on next year's profit, but declined to provide figures.
Predictable Cash Flows
CEO Paul Hudson said the core business had improved enough to soon do without the more predictable cash flows from consumer products. He had put the consumer business on course to become a stand-alone division within months of taking the helm about four years ago.
"Our recent pipeline news flow, added to our strong progress that we've made in advancing our strategy, gives us a unique opportunity to further invest in our long-term growth," said Hudson.
The company would not be drawn on further details of the planned listing and declined to comment on whether it might sell the business.
Full-Year Expectations
Sanofi expects 2024 adjusted earnings per share to decline by a "low-single-digit" percentage, citing increased spending on research and development and a higher tax rate, followed by a strong rebound in 2025.
For 2023, the Paris-based drugmaker still expects adjusted earnings per share to grow by a "mid-single-digit" percentage rate, excluding the effect of currency swings.
Sanofi said it is targeting cost savings of up to €2 billion from 2024 until 2025-end, of which most will be reallocated to fund innovation and growth.
The consumer healthcare business saw 2022 revenue grow 8.6% to €5.1 billion.
Additional reporting by ESM
