Sanofi plans to list its drug ingredients subsidiary EUROAPI on May 6, saying the business is set to grow and improve its profitability as a separate business.

Having received approval from the French markets regulator, the listing on the Euronext Paris exchange is set to take place shortly after a May 3 Sanofi shareholder vote on the listing, the French pharmaceutical giant said on Friday.

Sanofi shareholders will receive one EUROAPI share for 23 shares held in the parent company.

The company confirmed plans to conserve a 30% stake in the business after the listing while France will buy a 12% stake through public-sector bank EPIC Bpifrance for up to 150 million euros ($166 million).

The flotation plan for the group with its Europe-based production network comes as the coronavirus pandemic and Russia's attack on Ukraine have heightened concerns in the EU over the region's dependency on critical pharma ingredient imports.

"You can read also through the participation of BPIFrance the interest in terms of regional sovereignty and development. It’s not just the interest of France. It is the interest of the whole of Europe," Sanofi finance chief Jean-Baptiste de Chatillon said in an analyst call.

L'Oreal, Sanofi's largest shareholder with a more than 9% stake, agreed to a one-year lock-up period after the listing, Sanofi added.

EUROAPI makes active pharmaceutical ingredients (APIs) for medicines and draws on six production sites in Italy, Germany, Britain, France and Hungary.

Sanofi, which last year accounted for half EUROAPI's revenue, said in January that it expects the business to become the world's second-biggest API player with about 1 billion euros in revenue forecast for this year.

Sanofi CFO de Chatillon said that EUROAPI's estimated core profit margin this year of at least 14%, well below the 21% for EUROAPI's closest rival Siegfried AG of Switzerland, was a case in point why Sanofi was not the best owner.

"When you see the peer performance there is a margin for improvement that we truly believe is going to be delivered," said de Chatillon.

The new company's CEO said Karl Rotthier said, as an independent group, EUROAPI would win over more of Sanofi rivals as customers, expand in high-margin drug development services and advisory and cut more costs.

The bulk of EUROAPI's share capital, 58%, will be distributed to Sanofi shareholders through a dividend in kind, in addition to a previously proposed 3.33 euros per share cash payout.

($1 = 0.9035 euros)

(Reporting by Sarah Morland Editing by David Goodman and Louise Heavens)