October 28, 2014
By Mark Terry, BioSpace.com Breaking News Staff
Sanofi’s chief executive is taking some unusual measures to try to keep his job and has even drafted a letter to the firm’s board of directors, after a swirl of rumors yesterday said the Parisian company plans to fire CEO Chris Viehbacher this week. The French newspaper Les Echos, which first published the rumors, published a letter from Viebacher to the board.
The three-page letter, written in English, requested a discussion with the board regarding his position and provides an argument as to why he should remain as CEO. In addition to citing his successes, he provides five points that would cause “negative impacts.” They include destabilizing senior leaders, confusion over strategy, damage to key alliances, damage to “key relationships with important stakeholders,” and finally, “The group is in the process of launching new medicines between the fourth quarter of this year and 2015. The inevitable media coverage and change of leadership risks organizational distraction at a critical juncture in the Group’s development. This would not be in the interests of shareholders.”
Viehbacher has run Sanofi since 2008, where reportedly he has a contentious relationship with the board. Most recently Viehbacher and the board have disagreed about Sanofi’s potential sale of a portfolio of established drugs worth a possible $7.9 billion. The portfolio contains about 200 mature drugs, including blood thinner Plavix, antibiotic Pyostacine and epilepsy medication Dapekine. Although the portfolio currently brings in about 2.1 billion euros yearly, analysts predict sales will drop 40 percent over the next 10 years due to patent expirations, lower drug prices and healthcare budget cuts in Europe.
Compounding the tension was a decision several months ago by Viehbacher to move to Boston. He reportedly 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. Viehbacher is the first Sanofi executive officer who is not French, but instead German Canadian. He has also had battles with French unions over job cuts.
In 2011 Viehbacher oversaw Sanofi’s acquisition of Genzyme Corp. for $20.1 billion. Generally, despite his battles with the board, unions and France’s former Minister of Industrial Renewal, Arnaud Montebourg, Viehbacher is well liked by shareholders, who have recognized that Viehbacher has made the company more profitable. It has also, as he mentions in his letter, developed a number of international partnerships, which have made the company significantly more international in scope.
“It would be a retrograde step if it was simply — as the press reports suggest — a question of where the CEO lives,” said Deutsche Bank analyst Mark Clark in a Reuters article. “If that’s the criterion for changing CEO I think a lot of people will be disappointed.
