Sanofi (SNY) announced plans to create a European company dedicated to the production and marketing to third parties of active pharmaceutical ingredients.

The project consists of creating a standalone company which would combine Sanofi's API commercial and development activities with six of its European API production sites.

"With increasing medicine shortages that critically impact patient care, the new entity would contribute to supporting and securing API manufacturing as well as supply capacities for Europe and beyond. In Europe, the new API industry champion is expected to help in balancing the industry's heavy reliance on API sourced from the Asian region," Sanofi said in a statement.

The new company would rank as the world's second largest API company with approximately EUR 1B in expected sales by 2022, it added. It is expected to include 3,100 employees and to be headquartered in France. A planned initial public offering on Euronext Paris would be evaluated with a decision expected by 2022, subject to market conditions, Sanofi said.

"Sanofi is fully committed to the new company's success and intends to establish a long-term customer relationship with the new API supplier and to hold a minority stake of approximately 30% in the new company," it added.