Sanofi may have found a buyer for its consumer health business
For the past year, French pharmaceutical giant Sanofi has been searching for a buyer to take control of its consumer health business. That search may now be over.
On Friday, Sanofi said it’s in negotiations with the private equity firm Clayton Dubilier & Rice for the potential sale of a 50% controlling stake in the consumer business, named Opella. Financial terms of the deal weren’t disclosed. However, Reuters, citing a person familiar with the matter, reported a day earlier that the two parties were closing in on a transaction worth around 15 billion euros, or $16.4 billion.
For Sanofi, the sale would not only provide a large infusion of cash, but also allow the company to direct more resources and attention to its biopharmaceutical business. That business, which includes vaccines and medicines for cancer, diabetes, rare diseases and immune system disorders, had sales of more than 18 billion euros across the first half of this year. Opella, meanwhile, generated close to 3 billion euros during the same period.
It’s become a popular strategy for big pharmas to offload their over-the-counter businesses to make more room for higher-margin, branded medicines. Novartis did that in 2018. Then, more recently, Pfizer, GSK and Johnson & Johnson either sold or spun out consumer health units.
With its Friday announcement, Sanofi seems to have solidified the path through which it will divest Opella. That was still an open question as of late July, when Chief Financial Officer François Roger said during an earnings call that Sanofi was “still in a very competitive process with basically three options.” Those options were to spin out Opella privately, shape it into a new, publicly traded company, or sell it.
Late last month, Bloomberg reported that Sanofi had received binding offers from CD&R as well as Paris-based PAI Partners, another private equity firm.
“The game is still totally open as we speak, with one objective, which is value creation for shareholders,” Roger said in July. “Usually, when you have a competitive process, you’re in a better position to extract value. So we are very positive [about these] quality assets.”
Opella sells well-known products like Allegra and Icy Hot, and, according to Sanofi, employs more than 11,000 people. The unit also operates in 100 countries, manages 13 manufacturing sites and operates four research centers.
Headquartered in New York, CD&R lists more than 40 companies in its portfolio, which cuts across industries including healthcare, technology, retail and financial services. Among its healthcare investments are Inizio, a specialist in drug commercialization services, and Aster Insights, a data solutions firm that is focused on cancer drug development and has caught the attention of the venture arms of Merck & Co. and McKesson.
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