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"Selling Doliprane" To US fund: The Elephant in the Room
Eric Rambeaux, Founder &  CEO
October 23th, 2024

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These days, France has experienced a serious drama: Sanofi announcemed its decision to sell 50% of its subsidiary Opella to a US investment. This was covered in the press as “Selling (losing?) Doliprane To US”.

What are the most interesting points in this all story? The loss of Doliprane, one of the French favorite drug brand to US fund? The Sanofi Strategy? Or Something else? Let’s have a look.

Losing Doliprane? Not Really !

 

Sanofi decision raises important considerations for consumers, particularly regarding the production and availability of essential medications like Doliprane. In the short term, consumers are unlikely to experience any immediate changes. Doliprane and other over-the-counter drugs in Opella’s portfolio will continue to be produced and distributed under the strict regulations of the French market. This ensures that product quality, safety standards, and pricing will remain stable for the time being.

However, looking further ahead, there could be shifts in pricing, distribution, or availability of these products depending on the new objectives and strategies of the foreign fund. If the new co-owner decides to optimize operations or increase profitability, this could lead to adjustments that might affect consumers, either through higher prices or changes in how these medications are marketed and distributed.

 

So, short term, there is no real concerns. On a longer term, it seems that the French Government is willing to put some measure to avoid issues. We will see.

Sanofi? The future is uncertain

A recent article from Les Echos (1) critically assesses Sanofi’s strategic repositioning under CEO Paul Hudson. The article is quite comprehensive and I just pick up a couple of points here.

  1. Increased R&D Investments and Missed Communication: Sanofi's announcement of a significant boost in R&D spending to develop 12 potential blockbuster drugs was poorly received initially, causing a dramatic 19% stock drop in October 2023. While the strategy itself received approval, its communication was criticized. So was the communication on Opella and Doliprane.

  2. High-Risk Strategy: Hudson's "Play to Win" strategy is seen as high-stakes. The company is transitioning towards a riskier model focused on innovation, particularly in immunology, while shedding profitable but traditional assets. This shift is likened to "poker," and critics, including union leaders, argue that it leaves Sanofi without the financial safety net of its diversified past. The R&D track record does not speak for it….

  3. Leadership and Governance Issues: Paul Hudson’s leadership has been questioned. Furthermore, the appointment of Frédéric Oudéa, who has no experience in the pharmaceutical industry, as chairman, has raised concerns about inadequate oversight of Hudson’s bold strategy. Problems and doubt with governance will not help.

Sanofi is at a critical juncture. The potential of its ambition to become an innovation is weighed down by risky decisions, unconvincing leadership, and concerns over missed market opportunities.

 

Nothing new in our field but it may have been a surprise not to say a shock for politicians, journalists and people outside of our industry.

French State Took 2% of the equity to maintain control: No It Does Not

 

Bpifrance did. Not the French State. And, actually, this is the elephant in the room and a real concern.

This is what should be annoying everyone. Bpifrance, the French public investment bank, has played a crucial role in supporting the country’s economy by providing capital to startups, SMEs, and strategic industries. However, the "decision" to invest €150 million in Opella, do raise questions about whether this falls within its primary mission.

Bpifrance’s mandate is to support innovation, competitiveness, and economic growth in France. Investments in high-potential sectors such as technology, green energy, and biotech are expected, given their strategic importance. Opella, though a key player in generic drugs, operates in an established, competitive market, which some argue doesn't align with Bpifrance’s usual focus on fostering groundbreaking innovation or addressing market failures.

 

Proponents of the investment argue that pharmaceuticals are essential to national health security, especially given the growing importance of domestic drug production post-pandemic. The €150 million investment could help Opella expand its manufacturing capacity and reduce France’s reliance on foreign pharmaceutical suppliers, thus fulfilling a strategic objective.

On the other hand, critics question whether taxpayer money should be directed towards a private company that operates in a relatively stable and profitable industry. They argue that such capital might be better allocated to riskier, more innovative ventures that struggle to secure private funding.

 

Ultimately, Bpifrance's role is to balance economic support with fostering innovation. Whether this investment in Opella serves that mission remains, to say the least, a matter of debate, hinging on whether public funds should prioritize security and stability or disruptive innovation.

As a former biotech / medtech CEO and quite involved in deeptech development, I would have preferred to see this money used on a real purpose, supporting real innovative companies.

1 - https://www.lesechos.fr/industrie-services/pharmacie-sante/sanofi-le-coup-de-poker-de-paul-hudson-2127108

 

#sanofi #doliprane #innovation #biotech #bpifrance

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