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Sanofi Spins Off an Industry-Leading Business

By Cory Renauer - Jan 12, 2021 at 2:10PM

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After divesting its active pharmaceutical ingredient segment, the slimmed-down company will have more time to focus on developing new blockbuster drugs.

Sanofi's ( SNY -1.30% ) long-running transition from a traditional big pharma to a focused developer of new drugs took another big step forward on Tuesday, when it chose Euroapi as the official name of its active pharmaceutical ingredient (API) manufacturing spinoff.

Euroapi will hit the ground running with a portfolio of more than 200 APIs and annual sales expected to reach $1.2 billion in 2022. In the highly fractured industry for APIs, Euroapi will be the top-ranked manufacturer of small-molecule APIs and the world's second-largest API manufacturer overall.

Scientist measuring something.

Image source: Getty Images.

Sanofi will retain a 30% stake of Euroapi, but the spinoff will assemble a new management team to be led by Karl Rotthier, a former CEO of Centrient Pharmaceuticals. His appointment will allow Sanofi to focus on the development of new drugs.

Yesterday, Sanofi acquired a cancer therapy developer called Kymab for $1.1 billion up front. This gives Sanofi rights to Kymab's OX40-directed antibody KY1005, a potential new treatment for eczema that produced compelling results in a phase 2 trial last August.

Sanofi is enjoying great success with an eczema treatment that launched a few years ago called Dupixent. Developed in partnership with Regeneron ( REGN 0.18% ), Dupixent is currently generating about $4 billion in annual sales.

Sanofi thinks Dupixent sales will surpass $12 billion at its peak, if the company can pilot its blockbuster through some label-expanding drug approvals. With this in mind, diverting fewer managerial resources to run an API business seems like the right move.

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Stocks Mentioned

Sanofi Stock Quote
Sanofi
SNY
$47.07 (-1.30%) $0.62
Regeneron Pharmaceuticals, Inc. Stock Quote
Regeneron Pharmaceuticals, Inc.
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