Sanofi India Limited has received a show cause notice from GST authorities alleging tax misclassification for the financial year 2020-21. The Additional Commissioner of CGST and CX, Mumbai East, proposed a tax liability and an equal penalty, totaling ₹72.78 crore.

The notice, dated August 28, 2026, was issued under Section 74 of the Central Goods & Service Tax Act, 2017. It alleges that the company classified certain products at a concessional rate of 5% instead of the applicable 12% rate.

Regulatory Details

The company downloaded the notice from the GST portal on August 31, 2026, and disclosed it to stock exchanges under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The disclosure was signed by Haresh Vala, Company Secretary and Compliance Officer.

Company Response

Sanofi India stated it is examining the notice in consultation with its tax advisors. The company plans to submit a reply within the prescribed time period after reviewing the relevant facts basis which the demand was determined.

Management indicated that it does not envisage any adverse impact on the company’s financials, operations, or other activities arising from this show cause notice.

What the Numbers Show

The proposed penalty equals the proposed tax liability exactly, reflecting the standard provision under Section 74 of the CGST Act for misclassification cases where suppression of tax is not alleged but incorrect classification is claimed. The total potential outflow of ₹72.78 crore represents a significant contingent liability if the authorities' view is upheld, though the company currently disputes the classification basis.

Sanofi announced the withdrawal of its regulatory application in Europe for Dupixent (dupilumab) to treat adults with moderate-to-severe bullous pemphigoid. The decision was finalized on June 24, 2026, following a thorough evaluation by the European Medicines Agency (EMA). This withdrawal contrasts with the June 2025 approval of the same indication by the U.S. Food and Drug Administration.

The EMA determined that the potential risks of utilizing Dupixent for bullous pemphigoid outweighed its therapeutic benefits. The agency concluded that several critical issues remained unresolved despite Sanofi's responses to inquiries. Observed clinical improvements were described as minimal and accompanied by significant uncertainty.

Clinical Trial Shortfalls

The submission relied on a primary clinical trial encompassing 106 adult patients. Participants received either Dupixent or a placebo alongside standard oral corticosteroid treatments until their condition stabilized. The trial's primary goal was achieving sustained remission, defined as eliminating the need for corticosteroids by week 16, along with no disease relapse or need for rescue therapy by week 36.

The core clinical trial failed to meet this primary endpoint. Secondary outcomes lacked robustness due to limitations inherent in the study design. Additional supporting data from real-world use were deemed insufficient to validate the drug's efficacy for this specific ailment.

Regulatory Context

Bullous pemphigoid is an autoimmune skin condition characterized by extensive blistering and itching of the skin and occasionally of the mouth. Sanofi initially filed to expand Dupixent's indication for this disease but later narrowed the scope to target only moderate-to-severe cases during the review process. Dupixent is developed jointly by Sanofi and Regeneron Pharmaceuticals Inc.

What the Numbers Show

The divergence between U.S. and European regulatory outcomes highlights differing thresholds for evidence in rare autoimmune disorders. While the FDA approved the indication in June 2025, the EMA rejected it less than a year later based on the same primary trial data involving 106 patients. The failure to meet the primary endpoint of sustained remission without corticosteroids suggests that the drug's benefit-risk profile was not sufficiently established for the European market under current guidelines.