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Sanofi Goes The Rival Way: Plans Separation Of Consumer Healthcare Unit

Published 27/10/2023, 12:44
Updated 27/10/2023, 14:10
© Reuters.  Sanofi Goes The Rival Way: Plans Separation Of Consumer Healthcare Unit

Benzinga - by Vandana Singh, Benzinga Editor.

Sanofi SA (NASDAQ: SNY) plans to spin off its consumer healthcare business as the French pharmaceutical company outlined its strategic update to increase investment in its drug-development pipeline and cut costs.

Sanofi said the spinoff would allow it to increase its focus on innovative medicines and vaccines.

Also Read: Pfizer, Sanofi's Respiratory Syncytial Virus Products Faces Insurance And Logistical Hurdles To Protect Infants.

The separation is expected to occur by Q4 2024 by creating a publicly listed entity headquartered in France.

The consumer-healthcare business employs some 11,000 people.

"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," Sanofi said in a statement.

Most recently, rival pharma giants GSK Plc (NYSE: GSK) and Johnson & Johnson (NYSE: JNJ) split their consumer healthcare units Haleon Plc (NYSE: HLN) and Kenvue Inc (NYSE: KVUE), respectively.

GSK raised £885.6 million (around $1.08 billion) from selling some of its shares in Haleon, reducing its stake to around 7.4%.

Johnson & Johnson unveiled 2023 projections, predicting double-digit profit growth after its recent spinoff of consumer health company Kenvue.

Given Sanofi's decision to support the full realization of its pipeline's long-term potential, its continued investment around the new launches, and pricing headwinds in General Medicines, the company will no longer target a 32% operating income margin for 2025 while maintaining a focus on long-term profitability.

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.

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Sanofi reported a 10.4% decline in Q3 business operating income of €4.03 billion. Business EPS of €2.55, down 11.5% on a reported basis and 1% at CER.

Revenues fell to €11.96 billion, down 4.1% and up 3.2% at constant currency.

Consumer healthcare sales increased 4.6% to €1.25 billion.

Outlook: Sanofi reiterates its FY23 Business EPS guidance to grow mid-single-digit at CER.

The negative currency impact on 2023 earnings is expected to be 6%-7%.

The outlook includes about €400 million of expected one-off COVID-19 vaccine revenues in Q4.

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.

Price Action: SNY shares are down 18.10% at $43.69 during the premarket session on the last check Friday.

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga

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