Sanofi Mulls Firing CEO Viehbacher

Sanofi Mulls Firing CEO Viehbacher

October 27, 2014

By Mark Terry, Breaking News Staff

Rumors are flying today that Sanofi’s board may oust CEO Chris Viehbacher when the company’s board of directors convenes today, and although the board insists Viehbacher’s removal is not on the agenda, French newspaper Les Echos reported yesterday that replacing Viehbacher would be discussed.

The meeting is to approve third quarter earnings. However, before the meeting, the board members have lunch and Viehbacher, who usually attends, is not invited this year.

Viehbacher, who has headed Sanofi since 2008, has had a contentious relationship with the board from the beginning, although apparently shareholders like his outspoken and transparent approach to business.

“He speaks his mind and he can be divisive, which doesn’t necessarily create a good environment internally,” said Jerome Forneris, with Marseille’s Banque Martin Maruel in a phone interview with Bloomberg. “Investors don’t care. They love him.”

Recent disagreements have revolved around the company’s potential sale of a $7.9 billion portfolio of established drugs. Apparently the debate revolves around whether the company should sell, carve out or engage in a joint venture with the portfolio, which has approximately 200 mature drugs. Included are blood thinner Plavix, antibiotic Pyostacine and Dapekine, a treatment for epilepsy. The portfolio accounts for annual sales of about 2.1 billion euros, but analysts project a sales drop of 40 percent over the next decade due to expiring patents, decreased healthcare budgets in Europe, and low drug prices overall.

Another concern is the amount of time Viehbacher spends out of France, where Sanofi is headquartered. Several months ago, for family reasons, Viehbacher moved to Boston. It’s reported that he spends only about a third of his time in France and the rest of the time in the U.S. and other parts of the world. He is German-Canadian, the first Sanofi executive officer who is not French. In addition, he has battled with the French labor unions over job cuts, which also had him going head-to-head with Arnaud Montebourg, former Minister of Industrial Renewal, whose responsibilities included French job creation.

Viehbacher is best known for overseeing Sanofi’s acquisition of Genzyme Corp. in 2011 for $20.1 billion. The company also faces challenges, especially the expiring patent for its best-selling diabetes drug Lantus next year. Lantus brings in about $7.3 billion in sales annually. The company’s oncology pipeline is still considered to be a weak link.

Despite his battles with the board, Viehbacher has made the company a more viable worldwide investment. “They’ve had massive efforts led by him on the investor relations side, and they score highly on all the IR surveys,” said Mark Clark, an analyst with Deutsche Bank AG in London in the Bloomberg article. “He’s made Sanofi an investable stock, which it wasn’t before, because it was very Franco-centric management, very un-shareholder-friendly.”

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