Why US Equity Wants to Buy Into French Pharma

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Paul Hudson joined Sanofi as CEO in September 2019
Sanofi CEO Paul Hudson confirms France’s biggest pharma giant is in talks with US private equity firm Clayton Dubilier & Rice for it to buy Opella

US private equity firm Clayton Dubilier & Rice is in exclusive talks with French pharma giant Sanofi to take control of its Opella subsidiary.

Opella manufactures France’s biggest-selling drug, its Doliprane-branded paracetamol. 

Sanofi CEO Paul Hudson confirmed the exclusive negotiations in a statement.

Meanwhile, the French government has agreed to buy a 2% stake in Opella and to hold a seat on the board. 

BpiFrance, the state-owned investment firm, will spend between €100-150m on its Opella stake. 

The deal is only being made possible because the American private equity firm has agreed to protect jobs and investment in France. 

In particular, if CD&R does make any redundancies, it will be fined €100,000 for each Opella job lost.

The US private equity firm has also agreed to maintain Opella’s headquarters and R&D activities in France, and it plans to invest €70m in the country over the next five years.

Fierce backlash

The news that Sanofi was seeking to sell half of Opella to a US firm provoked fierce backlash in France earlier this month.

Although Sanofi is set to retain roughly half of the business, it will cede control to CD&R, provoking fears surrounding French jobs and medicine shortages.

Since the Covid-19 pandemic - when French citizens found themselves unable to source certain drugs - conversations around onshoring pharmaceutical production have become louder in France.

If the deal goes ahead, Opella will have an enterprise value of around €16bn.

The wider Sanofi group is renowned for its diverse portfolio that includes medications for diabetes, oncology, and vaccines. Its global annual revenue is estimated to be €43bn. 

If the state does greenlight the sale, it is now expected to be finalised in the second quarter of 2025 at the earliest.

Last-minute offer

US private equity has triumphed as the chosen buyer despite a last-minute offer from a consortium led by French firm PAI.

PAI last week raised its bid by €200m, hoping to capitalise on public anger over the proposed CD&R deal.

The French pharmaceuticals market was estimated to be worth US$78.8bn in 2023, the fifth largest pharma market in the world. The French pharma market is expected to grow at a CAGR of 5.2% between 2024 and 2030. 

Paul Hudson, CEO of Sanofi, said: “Our chosen partner CD&R has demonstrated unique capabilities in the consumer space, with deep values of respect for employees, customers, communities in which they operate, and the environment.

“We are proud of what Opella and its inspired people have already accomplished. We are confident that the future of Opella will be even brighter. We share the love and emotional attachment to Opella’s brands, hence our decision to remain vested in its future. We will support Opella on its path to become an independent company, grounded in talented people, a deep consumer expertise and a truly global presence with deep roots in France.”

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