Paris threatens millions in penalties if paracetamol-maker leaves France after US takeover

PARIS — The French government on Monday warned an American private equity firm purchasing a subsidiary of pharmaceutical giant Sanofi that it would face millions of euros in penalties if it tried to move jobs or drug production outside of France.
The firm, CD&R, is attempting to acquire control of Sanofi subsidiary Opella, which manufactures over-the-counter drugs like paracetamol. Sanofi announced on Monday that it had entered exclusive talks with CD&R for the firm to buy 50 percent of Opella’s shares for around €16 billion.
News of the potential deal sparked widespread criticism from across France’s political spectrum when talks were announced earlier this month, with politicians warning it could threaten manufacturing jobs in France and fall afoul of Europe’s post-pandemic push to secure its supply chains for critical medicines.
Sanofi said it was selling Opella as part of its effort to focus on vaccines and innovative drugs. The French government responded to the backlash against the deal with a warning against offshoring jobs and production, but Paris is keen on the takeover. On Sunday evening, the government announced the various stakeholders had sealed an agreement requiring Opella to keep production, jobs and management in France after the American takeover.
“To ensure that these guarantees are respected with the utmost rigor and firmness, [there will be] firm, immediate and far-reaching sanctions,” Economy Minister Antoine Armand told reporters on Monday morning as he presented the deal alongside Industry Minister Marc Ferracci.
Under the trilateral deal signed by Sanofi, CD&R and the government, Opella will have to pay a €40 million penalty if it stops production in two of its factories that produce popular medicines like paracetamol, marketed by Sanofi in France’s omnipresent yellow boxes of Doliprane, and drugs to treat allergy and digestion problems.
Workers at the two factories have been on strike since news of the American takeover broke, as they feared for their jobs. Under the deal, Opella will have to pay a €100,000 penalty for every single economic-related layoff.
The biggest sanctions aim to preserve Opella’s relations with French suppliers. The pact requires Opella to purchase the active ingredient for the production of paracetamol from a future French factory to be opened by Seqens in 2026. Opella will have to pay €100 million penalty if it doesn’t keep that promise.
The French government, via public investment bank Bpifrance, will also buy shares of Opella for up to €150 million to have more visibility on company strategy, but their stake amounts to just a percent or two of ownership.
The Economy Ministry expressed confidence that the agreement’s strict punishments would help promote France’s strategic objectives of reshoring medicine production and keeping manufacturing jobs in the country — while also bringing in a bit of foreign cash as well.
CD&R committed to invest €70 million in Opella’s French operations over the next five years and to keep the company’s headquarters and research and development activities in France.