French Revolution - Pharmaceutical Executive


French Revolution

Pharmaceutical Executive

This Little Red Thread

When the Sanofi board picked Viehbacher last September to replace then-CEO Gerard Le Fur, even the company's own press office was blindsided. "We have no information," the Paris-based rep told reporters.

The response from analysts, however, was a thundering "Bravo!" "The fact that you're bringing a non-French manager with no axe to grind from either the Sanofi or Aventis side shows there is a change of attitude," said Pictet Asset Management's Marc Booty. "A lot of areas were perceived to be untouchable within the group.... It's no longer going to be run as a national treasure, but as a lean and mean corporation."

At a time when every drug giant is (or ought to be) urgently experimenting to discover the right business model, Sanofi has long been perceived as too rigid, too traditional, maybe even too French, to learn Pharma 2.0. The firm's pipeline is arguably the industry's slowest and costliest. And the dreadful year and a half that Le Fur—the favorite of former Sanofi chief Jean-François Dehecq—spent at the company's helm only confirmed the view, however exaggerated, that the French firm was fast becoming a relic.

Sanofi's stock had fallen by 20 percent prior to the news of Viehbacher's appointment. Worse was the slow-motion train wreck of Acomplia, the all-too-pioneering obesity drug that Le Fur championed to investors as the Coming Cash Cow that would cover the loss of tens of billions in annual sales as almost all of Sanofi's top-selling products went generic between 2008 and 2013 (see box). Sanofi's failure to win FDA approval for the drug even after it had been on the European market for two years (accruing ever-worsening warnings about its CNS side effects) was symptomatic of the firm's chronic failure to master the US market.

"North America is a point of weakness for Sanofi-Aventis," LBBW analyst Timo Kuerschner says. "The American market is not so easy to understand—it has some specialties—so I think someone [like Viehbacher] who comes from America will know better."

In addition, the French firm has shown little taste for transparency. Analysts have long complained about its failure to communicate with US investors. "Sanofi is very poor at making public even important information like strategic thinking and pipeline news," says Funtleyder. "Their corporate culture has been shrouded in mystery."

The company's lodestar has been the Sanofi Pasteur division, with its storied history and market-leader position. But as the vaccine business heats up, rivals like GSK, Novartis, and even Pfizer (with Wyeth's arsenal) are nipping at its heels.

Chris Viehbacher, armed with laptop and coffee, during a temporary touch down at the midtown Manhattan offi ces of Sanofi -Aventis US. A Toulous Lautrec print adds some French flair.
Yet the view of Viehbacher as a complete outsider is off the mark. His French bona fides are in good order: He spent the '90s in Glaxo Wellcome's Paris office, speaks the language fluently, and served on the European Commission's G10 working group on the competitiveness of the pharmaceutical industry, for which he was awarded France's Légion d'Honneur in 2003. He makes a point of wearing the ribbon bar, a thin strip of bright red at the tip of his lapel (see photo).

"One of the things I was most proud of in my entire professional career was getting this little red thread, which is France's highest civilian honor," he says.

But at the end of the day, when he takes off the suit, Viehbacher remains a numbers man—not a scientist like his predecessor—and the Sanofi board no doubt appreciates the bottom-line difference.

"The pharma business is now more than ever about sales—and about solid assumptions and actual delivery—as opposed to interesting science that may or may not work," said the Arcas Group's Jan Heybrook.


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