One year after announcing the spin-off of its consumer health division, Sanofi has finally taken a significant step forward.
In October, amidst market speculation, the French giant confirmed that it would sell 50% of its stake in Opella to the US private equity firm CD&R, for a consideration of approximately $17.4 billion (€16 billion). If successful, the deal is expected to close by the second quarter of 2025 at the earliest.
According to media reports, Sanofi plans to sell the remaining shares of its consumer health division in the coming years, ultimately transforming itself into a purely biopharmaceutical company.
This shift is both a reflection of the broader industry trend and a necessary move for Sanofi, which is in urgent need of transformation. In the first half of this year, Sanofi's Dupixent revenue surpassed that of Humira for the first time, making it the "king" of the autoimmune drug category. However, the stock market's tepid response subtly reveals investor concerns behind the "normal performance" of this achievement. It seems that Dupixent is shouldering nearly half of Sanofi’s biopharmaceutical business, and the company has missed out on numerous innovative hotspots.
With ADCs (antibody-drug conjugates) and GLP-1s emerging as hot topics, while many peers are actively acquiring, Sanofi appears somewhat slow to act.
In fact, back in 2019, Sanofi’s CEO Paul Hudson launched the “Winning through Innovation” strategy, aiming to accelerate the pharmaceutical giant's innovation process.
It's important to acknowledge that, while working on the Opella spin-off, Sanofi has made significant investments in potential assets. However, the high-risk nature of innovation means that its path to leadership in oncology, immunology, and vaccines will not be solely determined by bold decisions to cut ties and make radical moves.
Pfizer, Novo Nordisk, and AbbVie have all recently encountered setbacks. Notably, the latter two faced development hurdles within a year of acquisitions, with AbbVie’s $8.7 billion investment suffering a near $40 billion market cap loss following two clinical failures in November.
Will Sanofi, which is taking a more cautious approach, learn from the lessons of its peers?
The "Winning through Innovation" strategy marks Sanofi’s clear transition to biopharmaceuticals. When the spin-off of Opella was announced last year, Hudson emphasized that their focus is on bringing transformative medicines to market.
Like its predecessors, the key to becoming a purely biopharmaceutical company is investment.
Despite not being a major player in the 2023 M&A frenzy, Sanofi made its only acquisition of the year in January by acquiring Inhibrx. However, the substantial progress in the Opella deal has provided the multinational corporation with more confidence and momentum in future transactions. In October alone, Sanofi announced three different investments in various therapeutic areas.
On October 17, Sanofi revealed a strategic partnership with Orano Med.
Orano Med, a subsidiary of the Orano Group, specializes in targeted alpha therapy for cancer. The collaboration aims to leverage Orano Med’s expertise in Pb-212-based technology to develop next-generation radioligand therapies, AlphaMedix, targeting rare cancers.
As the first targeted alpha therapy to receive FDA breakthrough therapy designation, AlphaMedix is currently in Phase II/III trials for the treatment of progressive, unresectable, or metastatic neuroendocrine tumors expressing somatostatin receptors. Treatment options for such cancers are limited.
In short, radioligand therapy combines radioactive isotopes with molecules targeting specific cancer cells, delivering cytotoxic effects directly to the tumor site. Pb-212 is an isotope that emits alpha radiation, which has high linear energy transfer, significant ionizing radiation effects, and a short range, thereby enhancing its destructive power on tumor cells while protecting surrounding healthy cells.
Unlike Novartis, which has firmly attached the "radiopharmaceuticals" label to itself, and companies like AstraZeneca, BMS, and Eli Lilly, which have more or less been slower to follow, Sanofi only recently entered the radioligand therapy field.
In the first three quarters of this year, Novartis’ Pluvicto alone generated $1.04 billion in sales. This marks a significant milestone for the entire radiopharmaceuticals industry, and it’s easy to understand why Sanofi is moving quickly in this direction.
Last month, Sanofi also signed a three-party agreement with RadioMedix and Orano Med to develop another radioligand therapy, AlphaMedix.
On October 25, Sanofi participated in a $89 million Series D financing round for Belgian company Agomab Therapeutics, revealing its broader exploration in the pharmaceutical field.
Agomab is developing therapies to regulate fibrosis and promote regeneration in chronic diseases, such as fibrotic Crohn's disease and idiopathic pulmonary fibrosis.
On one hand, treatment options for this subtype of Crohn’s disease are limited, with steroids and immunosuppressants focusing on controlling inflammation and alleviating symptoms without directly addressing the fibrotic components. On the other hand, therapies for idiopathic pulmonary fibrosis may slow disease progression, but the effects are limited, and potential side effects exist.
As a result, patients in both conditions often require surgical intervention.
Through its strategic investment in Agomab, Sanofi aims to find first-in-class drugs for multiple diseases. Agomab’s lead candidate, AGMB-129, is an oral small-molecule inhibitor targeting ALK5 (TGFβ1R), currently in Phase IIa trials for treating fibrotic Crohn’s disease. Mid-term data is expected to be released in Q1 2025.
It’s worth noting that Agomab had already received investments from giants such as Pfizer and Boehringer Ingelheim. While this collaboration expands Sanofi’s presence in immunology and inflammation, it will need to act quickly to catch up to its competitors.
On October 28, Sanofi made its second equity investment in the Italian company Resalis Therapeutics, which specializes in RNA-based therapies for metabolic disorders.
The investment aims to accelerate the development of Resalis' lead candidate, RES-010, through Phase II proof-of-concept clinical trials. RES-010 is a potential first-in-class antisense oligonucleotide targeting microRNA-22 (miR-22), a non-coding RNA associated with obesity and related metabolic diseases.
Resalis hopes to reprogram metabolic pathways by inhibiting miR-22, thereby helping to sustain weight loss and improve metabolic health. Obesity has become an increasingly prominent issue in recent years, with companies like Novo Nordisk and Eli Lilly driving stock price surges with their GLP-1 drugs, which have attracted more capital into the field.
However, Sanofi’s approach differs. Through upstream mechanisms, RNA therapies could potentially address challenges faced by GLP-1 drugs, such as supply issues.
The “VC-ization” of multinational pharmaceutical companies is no longer a rare phenomenon.
Sanofi has a long history of biotechnology investments, even before it started the Opella spin-off process. To date, the MNC has invested in 60 companies, spanning early to mature-stage technologies, such as cell and gene therapies (CGT).
Currently, most CGT companies are early-stage biotechs, and pharmaceutical giants often partner with these biotechs to quickly enter related markets. Sanofi has been involved in high-profile projects, including Bluebird Bio and Fate Therapeutics. However, its core base still seems to be in immunology.
Shortly after announcing the spin-off of its consumer health division, Sanofi invested $30 million in the clinical-stage gene therapy company MeiraGTx.
This partnership brought in MeiraGTx's riboswitch gene regulation technology, which Sanofi plans to apply in immunology, inflammation, CNS targets, GLP-1, and other metabolic diseases treatments.
Additionally, in August, before announcing the deal with CD&R, Sanofi participated in a $100 million direct offering of new shares from AnaptysBio, a company focused on developing immune cell modulators for autoimmune and inflammatory diseases.
It is evident that pharmaceutical giants are facing new turning points.
From a business strategy perspective, overly diversified approaches are being abandoned as MNCs focus on biopharmaceuticals, seeking to develop blockbuster products to avoid the “patent cliff” and achieve growth.
The positioning of the consumer health division clearly conflicts with this narrative. In 2022, GSK spun off its consumer health business, which later operated as the independent company Haleon. Johnson & Johnson also completed the separation of its consumer health business, Kenvue, in 2023.
Sanofi’s sale of Opella is expected to inject substantial resources into its biopharmaceutical R&D. Thanks to additional funding for later-stage drug development, Sanofi’s Phase III pipeline is expected to expand by 50%.
By 2030, the company targets over $23.97 billion (€22 billion) in sales from its core areas of immunology, oncology, and vaccines.
However, Sanofi must proceed with caution. Aside from the integration pressure after acquisitions, large pharmaceutical companies tend to overlook future challenges due to the fear of missing opportunities in busy years for M&A deals.
The most recent lesson comes from AbbVie, which spent $8.7 billion acquiring Cerevel Therapeutics last December, only to announce on November 11 that its acquired drug emraclidine had failed two key clinical trials. This led to a 12% drop in AbbVie’s stock price.
In October, Novo Nordisk announced the termination of ocedurenone’s development, just a year after acquiring the candidate for $1.3 billion. Despite efforts to assess its potential in other indications, Novo Nordisk ultimately decided to abandon the drug.
Another case is from Pfizer. In September, Pfizer announced its decision to withdraw its sickle cell disease drug Oxbryta from global markets due to safety concerns, as clinical trials showed it was linked to several patient deaths, outweighing its clinical benefits.
Sanofi has also encountered setbacks. Earlier this year, in April, Sanofi was reported to have closed the nearly $400 million acquisition of NK cell therapy company Kiadis Pharma. In 2020, the two had partnered on NK cell therapy, but after four years, the Phase I trial for SAR445419 was terminated.
These setbacks from both competitors and itself highlight the harsh realities of innovation.
In addition to the funds raised from the Opella transaction, Sanofi has launched cost-cutting measures with the aim of saving $2.18 billion (€2 billion) by 2025, which will also be directed towards its biopharmaceutical transformation.
With more financial flexibility, Sanofi is likely to become more active in the biopharmaceutical deals space in the future. However, it will need to deliver concrete results to convince investors.
Data Source:
1.From consumer health to pure biopharma: Inside Sanofi’s strategic shift
2.Sanofi completes the $1.7bn acquisition of Inhibrx
3.AbbVie’s $9B bet collapses as closely watched schizophrenia drug fails studie
