All businesses are undergoing thorough reviews at the moment, according to the Paris-based company. The consumer-health unit generated more than $5 billion in revenue last year. It competes with a similar division at Bayer AG, which doubled down in the field when it bought Merck & Co.’s over-the-counter operations in 2014, gaining brands such as Claritin.
Both Novartis AG and GlaxoSmithKline Plc have recently narrowed their focus on cutting-edge prescription drugs.
Led by CEO Emma Walmsley, Glaxo pooled its consumer
assets with those of Pfizer Inc., paving the way for a split into two companies, one focused on pharma and vaccines and the other dedicated to over-the-counter brands. Novartis’s Vas Narasimhan spun off the drugmaker’s Alcon eye-care division and ditched a stake in a consumer-health venture as it bets on targeted products like a gene therapy for a rare but devastating muscle disease.
Hudson, a former executive at Novartis and AstraZeneca Plc, is also grappling with questions about the future of Sanofi’s diabetes unit, along with its pipeline priorities and acquisition plans. He’s weighing the options with new head of research (and former Roche Holding AG executive) John Reed as well as Chief Financial Officer Jean-Baptiste Chasseloup de Chatillon, who held the same job at PSA Group, the French manufacturer of Peugeot cars, before joining Sanofi last year.
Hudson has said he plans to shed light on his strategy at next month’s event outside Boston. A spinoff of the consumer-health unit could unlock as much as 8 euros per share of “trapped value,” Morgan Stanley analysts including Mark Purcell wrote in a September report. Hudson and his team can draw inspiration from strategic transformations at Novartis and AstraZeneca, as well as efforts to spur innovation at Roche and control costs at Peugeot, they wrote.
Sanofi shares have climbed about 10% since Hudson was named CEO in June, closing at 82.88 euros on Wednesday. The stock had fallen about 16% over the previous four years. A consumer
business spinoff would send a positive signal about Sanofi’s ability to generate a new crop of prescription drugs, said Daniel Mahony, a health-care fund manager with Polar Capital LLP in London.
“That would show confidence,” Mahony said in a telephone interview. A stand-alone over-the-counter business might also be attractive, he said. “When you let it loose, it can invest in itself.”
In prescription treatments, the company could look to accelerate some of its best prospects, while ditching less promising ones -- a process already underway. Sanofi is advancing into the lucrative field of cancer and seeking novel products to reduce its reliance on Dupixent, a standout medicine for severe eczema and asthma. Hudson and his team are reviewing disease areas “with an eye toward a deeper and much more precise look into our pipeline, into competition and into disruptive science,” the CEO told investors in October. “Fundamental to this will be bolstering our R&D engine.”