Sanofi investors said former chief executive Chris Viehbacher, ousted today, paid the price for pushing too hard to make the French drugmaker more international.
Sanofi’s board voted to fire Mr Viehbacher after almost six years as CEO, during which he focused expansion outside of France and moved for personal reasons to the Boston area. The relocation came as French government officials voiced concern about corporate decision-making leaving the country.
The stock, however, set a record less than a month ago.
“It’s very unfortunate,” said Josep Aymami, chief investment officer of equities at Merchbanc in Barcelona, which holds Sanofi shares. “He’s done a good job as CEO, and you want stability and continuity in management.”
Before this week, Sanofi shares returned 153 per cent since Mr Viehbacher’s appointment in December 2008, more than double the gain in France’s CAC40 Index, including dividends.
The Canadian- German dual citizen expanded the French drugmaker into biotechnology and rare diseases with the purchase of Genzyme for $20.1 billion and a stake in Boston-based Alnylam Pharmaceuticals.
“He committed the mortal sins of being insufficiently conservatively French and a bit too entrepreneurial,” Erik Gordon, an assistant professor at the University of Michigan Ross School of Business, said by e-mail. “The board will have trouble attracting a world-class drug company CEO. It is unappealing to work for that board and to try to compete globally while being sure to stay French enough for their tastes.”
It is understood that Sanofi's board reached out to AstraZeneca chief executive Pascal Soriot to sound out his interest in replacing Mr Viehbacher earlier this year, according to people familiar with the situation.
Mr Soriot, who successfully fought off Pfizer $117 billion hostile takeover this year, said he wasn’t interested, said the people, who asked not to be identified commenting on internal Sanofi matters.
Mr Soriot (55) is a native of France who previously ran the pharmaceutical business at Roche. His earlier jobs include working for Aventis, one of Sanofi’s predecessor companies.
Smith & Nephew CEO Olivier Bohuon also may be a candidate for the top job at Sanofi, one of the people said.
Sanofi will consider mainly external candidates to replace its departed CEO, chairman Serge Weinberg said on a conference call with reporters today. He declined to be more specific.
Sanofi shares fell 4.5 per cent to €71.15 in Paris today on the news.
Under Mr Viehbacher, the company was in line for several product approvals in the next 12 months, including the insulin Toujeo, a cholesterol-lowering medicine called Praluent and the world’s first dengue vaccine. Analysts predict each can generate sales of more than $1 billion by 2020.
Ten of the 14 remaining members of Sanofi’s board are French citizens.
France’s government had nothing to do with Mr Viehbacher’s dismissal, economy minister Emmanuel Macron said in a text message today.
The fired CEO’s missteps included failing to brief the board on efforts to sell an $8 billion portfolio of mature products, inventory mismanagement in Brazil last year and a decline in its share of the US diabetes market, Mr Weinberg told reporters.
The chairman said some of Sanofi’s biggest shareholders had raised “the execution problem” with him, though he hadn’t held recent discussions with major investors.
Mr Viehbacher (54) wrote to the board last month seeking an explanation for rumours that Mr Weinberg wanted to replace him, and arguing his dismissal would destabilise the company at a critical juncture.
The board’s decision will do exactly that, Seamus Fernandez, an analyst at Leerink Partners, said in a note to investors.
“Identifying a compelling shareholder-friendly but experienced pharmaceutical executive willing to challenge the status quo seems highly unlikely,” Mr Fernandez wrote. “The boardroom drama will likely leave Sanofi as dead money during a crucial transition period.” – Bloomberg
