The French government has warned the United States investment company buying the consumer healthcare division of drugmaker Sanofi that it will incur penalties of more than 100 million euros ($107.6 million) if it fails to maintain production and jobs in France.

Opella, an arm of Sanofi that manufactures popular over-the-counter products including Doliprane painkillers, Dulcolax laxatives, and various medicines and vitamins, is being split off from its parent company.

The revelation on Oct 11 that its buyer was New York-based private equity firm Clayton, Dubilier & Rice, or CD&R, has raised concerns in France about possible job cuts and loss of domestic control to foreign ownership.

Sanofi revealed on Monday it had begun exclusive negotiations with CD&R, in which the US business would acquire a 50-percent stake in Opella for about 16 billion euros. State-owned investment bank, Bpifrance, will also secure both a 2 percent ownership stake in Opella and representation on the company's board of directors.

In a news briefing on Monday, France's Economy Minister Antoine Armand said a three-way agreement negotiated between the government, Sanofi, and CD&R on the weekend requires the US buyers to maintain Opella's essential facilities, research operations, management, and its French workforce of 1,700 employees.

CD&R has pledged to invest 70 million euros into Opella's French operations during the next five-year period, while maintaining both the company's headquarters and its research and development activities within France, reported The Guardian newspaper.

"To ensure that these guarantees are respected with the utmost rigor and firmness, (there will be) firm, immediate, and far-reaching sanctions," Armand told reporters.

Under the terms of the trilateral deal, Opella would face a 40-million-euro fine if it ceases production at its northern France facilities in Lisieux and Compiegne within the next five years, with the possibility of extending this requirement, he added.

The factories are key production sites for widely-used medications, including the paracetamol brand Doliprane and various treatments for allergies and digestive issues, reported the Politico news website.

Since the US acquisition announcement, employees at both facilities have been conducting strike action, protesting against the deal due to job-cut concerns.

The agreement specifies that Opella must pay a 100,000-euro penalty for each job cut made.

The most significant penalties in the agreement concern Opella's supply-chain relationships in France. The company is required to source paracetamol's active ingredient from Seqens, a French manufacturer, after its new factory opens in 2026, under a long-term contract. Breaking this commitment would result in a substantial 100-million-euro penalty.

Paul Hudson, Sanofi's chief executive, said: "The partner we have chosen, CD&R, has already demonstrated its unique expertise in consumer goods, while respecting consumers, communities, as well as the teams and values of the companies it supports."

jonathan@mail.chinadailyuk.com