Sanofi CEO Mulls Company Restructuring, Possible Bio-Surgery and Renal Unit Sales

Sanofi CEO Mulls Company Restructuring, Possible Bio-Surgery and Renal Unit Sales
September 25, 2015
By Mark Terry, BioSpace.com Breaking News Staff

Paris-based Sanofi is rumored to be deciding whether to sell its bio-surgery and renal units.

As reported by BloombergBusiness, insiders say that Olivier Brandicourt, the company’s chief executive officer, is considering unloading those two units as well as its Merial animal health division. At least one of the sources also indicated the company is evaluating the sale of its nutritional, health and beauty supplements unit, Oenobiol. The sources say no decision has been made and the company may not sell, but that more details will be available at the company’s investor meeting in November.

It was only Monday that rumors spread that Sanofi, as well as Pfizer, Abbott Laboratories and Israel-based Teva were making plans to buy Mexican generic-drug maker Representaciones e Investigaciones Medicas SA, better known as Rimsa. Apparently Goldman Sachs Group Inc. is managing the deal and the price tag could go as high as $1 billion.

The company made a big announcement at the end of August that it was partnering with Google/Alphabet’s Life Sciences on diabetes monitoring and treatment. Google recently formed an umbrella holding company, Alphabet, and spun off various companies. The first to stand alone under Alphabet was Life Sciences, which is expecting a new name later this year. Life Sciences is developing contact lenses that can monitor blood sugar levels with Alcon Laboratories, Inc. (ACL) , a division of Novartis (NVS) . It also has a 10-year collaboration deal with Chicago-based AbbVie (ABBV) to study age-related diseases. It also entered a partnership with DexCom (DXCM) to develop a Band-Aid sized wearable glucose monitor.

Sanofi bought its bio-surgery business in 2011 when it acquired Genzyme Corp. The unit has annual sales of approximately 200 million euros, according to one of the sources, although Sanofi does not break out sales data for that unit or its renal unit.

In many ways, these sales shouldn’t be a big surprise. In the company’s second quarter financial filing, Brandicourt said, “Recently, we announced a new organizational structure which will be implemented beginning in January 2016 and will simplify and focus Sanofi to optimize future growth.”

The company’s key drivers of revenue include Lantus, Plavix, Aubagio, and its vaccines and animal health divisions. Market Realist reported that “The company’s top line rose ~4.9 percent at constant currencies, mainly driven by the increased sales of the above-mentioned products, partially offset by a few of the established products.”

With relatively minor variations, has been quite consistent over the last year. On Oct. 24, 2014, shares traded for $47.96, dropped to $45.22 on Oct. 29, then rose on April 9, 2015 to $51.87. It rose to a high of $54.98 on Aug. 10, dropped to $47.68 on Aug. 24 and is currently trading for $47.96.

Fifteen analysts gave an average recommendation of “hold,” reported Dakota Financial News. Six analysts have a “hold” recommendation, eight a “buy” recommendation and only one a “sell” recommendation. The 12-month average target price was $59.

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