Sanofi consumer brands get a shot in the arm on demerger decision

Sanofi India (SIL) is set to demerge its consumer healthcare business into a new wholly owned subsidiary to ‘unlock and maximize’ its business potential in pharmaceuticals and consumer healthcare, the company said in an exchange notification on Wednesday.

The company’s board has approved the arrangement to demerge its consumer health business into a wholly owned subsidiary - Sanofi Consumer Healthcare India Ltd (SCHIL) - subject to receipt of necessary approvals from shareholders and regulators.

Sanofi Consumer Healthcare India is expected to be listed on both the BSE and NSE, the company said in an exchange notification. SCHIL is expected to be fully operational by the second half of 2024, subject to necessary approvals.

The proposed demerger will facilitate independent growth plans and also enable more focused management. “It will also facilitate flexibility in terms of providing liquidity for shareholders (following the listing of the shares of the Resulting Company),” Sanofi said. It added that the proposed demerger will de-risk both the businesses and also allow potential investors and other stakeholders the option of investing in both businesses

The consumer healthcare business which includes marquee brands like Allegra, Combiflam, DePURA and Avil will include all assets and liabilities pertaining to the business. The turnover of the healthcare business for the year ended December 2022 was around Rs 728 crore, amounting to 28 per cent of the total turnover.

Sanofi India’s pharma portfolio of products includes general medicine brands, with a focus on chronic therapies – insulin Lantus, Toujeo and Apidra, hypertension medicine Amaryl, kidney medicine Cardace, and diabetic medicine Cetapin, anxiety medication Frisium, apart from the recently approved Soliqua. The manufacturing site in Goa will continue to be part of Sanofi India.

Calling it a ‘momentous opportunity’, Sanofi India Managing Director Rodolfo Hrosz said that this will allow Sanofi to unlock and maximize its business potential in both pharmaceuticals and consumer healthcare, with the right assets, structure, and strategy. The Pharma business will focus on long-term success factors, expanding its portfolio of ‘life-changing’ treatments, he added. On the other hand, the consumer health entity will be a ‘fast moving consumer healthcare’ business which enables ‘customer-centric’ strategies, shapes the OTC environment and also focuses on digital and e-commerce, he said.

The shareholders of Sanofi India will be issued equity shares of Sanofi Consumer Healthcare India at a ratio of 1:1. No other cash consideration will be paid on demerger. Sanofi India will continue to own a 60.4 per cent stake in both entities post-merger.

Sanofi chairman Aditya Narayan said that “The Proposed Demerger will help both entities build a sustainable growth model. Today, Sanofi is in a strengthened position in India, allowing us to deliver better value to our shareholders and other stakeholders.”

Shares of Sanofi India closed 1.86 per cent higher on May 10.

Sanofi Q4 PAT dips 20%

Sanofi India posted a 4.2 per cent rise in total income from operations for Q4FY23 to Rs 762 crore. Revenue from operations grew by 4.2 per cent to Rs 736.5 crore. Profit for the period, however, declined by 20 per cent to Rs 190 crore.

During the quarter Sanofi sold the distribution business of Soframycin (antibiotic cream) and Sofradex to Encube Ethicals and accounted for a gain of Rs 118 crore. It also made a profit of Rs 25.5 crore from sale of property during Q4FY23. The company has paid Rs 7.7 crore as separation cost to sales and marketing personnel.