Sanofi CEO Terminated and Stocks Plummet

By Christian Zeron,
Money and Investing Writer

Chris Viehbacher, the six year acting chief executive officer of Sanofi (NASDAQ: SNY), was fired on October 29, 2014.

The Sanofi stock plummeted 16 percent as an immediate result of this news, has remained about 19 percent below the stocks peak share price in September and lost a total of $22 billion in investor funds.

Viehbacher, a German-Canadian, was brought on board by Sanofi, then Sanofi-Aventis, in 2008 with the expectation that he would lead the charge that would bring Sanofi to not only a short term jolt in profitability but a full company restoration to achieve financial longevity.

At the time, Sanofi lacked many key elements needed to operate at its highest function. For example, Sanofi was without presence in the creation of gene-targeted cancer drugs, which was proving to be a massively profitable field.

Such a lack of presence came as much concern particularly considering that it was Aventis that had launched Taxotere and Eloxatin, two of the biggest chemotherapy drugs in prior years.

Viehbacher immediately addressed Sanofi’s key problems. He became known for his bullish initiative in Research and Development by hiring Elias Zerhouini, the former head of the U.S. National Institutes of Health.

Another key Viehbacher hiring was that of Andrew Pump, a valued Merck director of basic research.

With his new team. Viehbacher was confident he could achieve prosperity for Sanofi.

Like all leaders, Viehbacher made mistakes. Notably, he motioned to invest hundreds of millions of dollars in the acquisition of BiPar Sciences, a company that demonstrated promise in ovarian cancer treatment.

When the treatment failed, the blame fell on Mr. Viehbacher. It surely didn’t help that BiPar’s treatment did not even so much as hit the molecular target it initially claimed.

On the other hand, Viehbacher led the company in 2011 to its purchase of Genzyme, a biotechnology company based in Cambridge, for $20 billion.

Viehbacher viewed this purchase and an opportunity not only to give Sanofi an American research base but also to own an outrageously promising biotechnology company which would diversify their portfolio and increase overall company revenue.

Time has proven Viehbacher’s decision to buy Genzyme to be a brilliant one as Genzyme remains a part of the Sanofi corporation and has built its list of approved and marketed treatments to nine.

Naturally, given that Viehbacher served as the CEO for six years, much of Sanofi’s current success or failure is greatly accredited to his leadership.

Just months ago, Viehbacher asserted that Sanofi had one of the top five pipelines in the pharmaceutical industry.

The foundation that permitted such a strong statement was mostly laid by the relationship he forged between Sanofi and Regeneron (NASDAQ:REGN).

Sanofi has gained ownership in Regeneron and profited greatly from its treatments such as alirocumab and dupilumab.

The root of the internal Sanofi conflict that lead to the termination of its own CEO was that of culture shock and control.

Admittedly, Viehbacher made a share of poor executive decisions that resulted in the loss of great sums of money.

That being said, his progress in building company presence and infrastructure in the United States as well as developing outrageously profitable relationships with both Regeneron and Genzyme has earned him a designation as a brilliant leader.

Unfortunately, his lack of concern for some of the wishes the Sanofi Board of Directors had communicated, such as remaining a resident of Paris, led to his unfavorable reputation within the company end his inevitable termination.

Worse than the arguably unjust termination, Sanofi has yet to appoint a replacement for Mr. Viehbacher leaving the company without formal leadership.

At this point in time, it’s not absurd to say that Sanofi is no where near as safe of an investment as it was just weeks ago under the control of Mr. Viehbacher.

Albertina Torsoli, Bloomberg financial journalist, wrote “At the moment, if you look at Sanofi you don’t know whether it’s an investible stock. You have no CEO in charge, and you don’t know where the company is heading.”

A version of this article appeared in the Tuesday, November 18th print edition.

Contact Christian at
christian.zeron@student.shu.edu

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