The board of Sanofi India Limited has approved the scheme of arrangement to demerge its consumer healthcare business into a separate entity, in an effort to grow both businesses.
The move echoes a similar global trend among multinationals including GlaxoSmithKline and Johnson and Johnson.
In an announcement to the stock exchange, Sanofi said its board had approved the scheme of arrangement “between SIL and its wholly owned subsidiary Sanofi Consumer Healthcare India Limited (currently under the process of incorporation) to demerge SIL’s consumer healthcare business into a legal entity,” subject to shareholder and regulatory approvals.
On completion of the proposed demerger, Sanofi will continue to own 60.4 percent stake in both entities and Sanofi India Limited shareholders will receive 1:1 SCHIL equity share of ₹10 each, for each equity share owned, it said. SCHIL will be listed on the BSE and NSE, it added. Sanofi Consumer Healthcare India is expected to be fully operational by the second half of 2024.
Business potential
While Sanofi has a 70-plus year presence in India, it said the latest decision would “open new gates for the India business and employees in a value-driven move to accelerate growth for both the pharmaceuticals business (SIL) and consumer healthcare business (SCHIL) in India.” Employees who will transition to SCHIL, will have continuity of service and same terms on the demerger becoming effective, it added.
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Rodolfo Hrosz, Sanofi India Managing Director, said the move would allow “Sanofi to unlock and maximise its business potential in both pharmaceuticals and consumer healthcare, with the right assets, structure, and strategy. The pharmaceuticals business will focus on its long-term success factors, expanding its portfolio of life-changing treatments available in India, driving world-class scientific HCP (health care practitioners) engagement, and accelerating its digital transformation to improve the lives of patients in India.
The proposed CHC (consumer health care) entity will be a Fast-Moving Consumer Healthcare business that enables consumer-centric strategies, shapes the OTC environment, and focuses on best-in-class digital and e-commerce capabilities.”
Sustainable growth model
Sanofi’s consumer healthcare business’ annual turnover for FY22 is ~₹730 crore. Its top consumer healthcare brands include Allegra®, DePURA®, Avil®, and Combiflam®. Designed to be a Fast Moving Consumer Healthcare organisation, Sanofi Consumer Healthcare India Limited will integrate into Sanofi’s global consumer healthcare strategy.
Sanofi’s pharma portfolio of products includes established and leading general medicines brands such as Lantus®, Toujeo®, Clexane®, Amaryl®, Apidra®, Frisium®, Cardace®, Lasix®, Targocid®, Cetapin®, and the recently approved Soliqua®. These and other assets like the Goa manufacturing site will continue to be part of SIL, it added.
Aditya Narayan, Sanofi India Chairman said, “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.”