Sanofi Consumer Healthcare Spin-off Notes

November 23, 2023 Update

On October 27th, Sanofi (SNY) announced that it will spin-off its consumer healthcare unit into a publicly listed entity in Q4 2024.

The consumer healthcare business is made up of allergy and pain treatment brands, such as Allegra and IcyHot. The announcement comes after larger consumer rival Kenvue was spun off from Johnson & Johnson this year, and after the creation of Haleon by GSK and Pfizer in 2022.

With the potential spinoff, Sanofi announced that it would be abandoning its target for a 32% operating profit margin in 2025 in favor of long-term profitability, planning to invest immunology and inflammation drug development. Restructuring SNY into a pure play biopharma company.  The stock plummeted on the news.

Looking at a forward P/E, SNY looks rather cheap at 10.6x, compared to two of its closer comps in J&J at 14.7x and AstraZeneca at 17.1x forward P/Es.