Drugmaker Sanofi has suddenly fired its CEO, Chris Viehbacher. The board met early this morning.
Bizarrely, Viehbacher's ousting comes in part because he was insufficiently French, it seems:
• He was the company's first non-French boss.
• He moved to Boston to run the company (its HQ and board were based in Paris).
• He made the company less French and more international in its outlook.
• And in doing so, he made enemies on the French board, who have now temporarily replaced him with a Frenchman, Chairman Serge Weinberg.
The firing is ironic because Viehbacher was brought in originally to de-Frenchify the company. When he was hired, the company wrote its press releases in a sort of strangled "Franglais," using English peppered with French spellings like "Septembre." Viehbacher is a German Canadian who got the Sanofi job after being head of US pharma at GlaxoSmithKline, where he had a reputation for playing hardball and telling it like it is. One of the first things he did at Sanofi was oversee a massive program of layoffs. All of the foregoing was an obvious breath of fresh air at Sanofi at the time ... and it now looks as if the French board has had enough.
Investors now believe the company will turn inward:
"Viehbacher tried hard to change the DNA of the company but the board won in the end. Sanofi will become more parochial now," said Navid Malik, head of life sciences research at Cenkos Securities in London.
Reuters notes that Viehbacher was Sanofi's first non-French boss.
The stock fell nearly 14% in premarket trading on NYSE, it's down on the Paris exchange too. Investors will be furious: Six years ago when he took over, SNY stock was dwelling at $25.62. Until a few days ago it peaked at $56.43. Now it's in freefall on the news.
Just hours before, on Tuesday, Viehbacher had dismissed the "rumors" that he was about to be fired.
It seems that the Sanofi board — which is mostly French — didn't like the fact that Viehbacher had moved to Boston, Bloomberg reports. Generally, in the pharma business, US sales make up around 50% of all global drug sales. Viehbacher also made the company more international, Reuters says:
Sanofi's first non-French boss, he took his job in late 2008. He has transformed a very French drug company by making it more international, winning the praise of many analysts and investors but raising some hackles in Paris and directly butting heads with some board members over the past several months.
The move appears to come after a clash of styles, the Wall Street Journal says:
Sanofi Chairman Serge Weinberg said Mr. Viehbacher was ousted because of his management style and relationship with the company’s board. Mr. Weinberg added that he would temporarily take over Mr. Viehbacher’s responsibilities and that the company had no plans to change its strategy.
The Financial Times has more on the story:
Sanofi’s directors have ousted chief executive Chris Viehbacher in a dramatic denouement to simmering tensions on the board of the Paris-based pharmaceuticals group.
The company, one of France’s biggest by market capitalisation, confirmed the decision on Wednesday following a dawn board meeting.
“The board of directors held a meeting Wednesday October 29 at 8am and decided unanimously to remove Christopher A. Viehbacher,” it said.
The board thanked Mr Viehbacher, the first non-French chief executive in Sanofi’s history, for “all the hard work” during his six years at the head of the company.
The move comes after Viehbachher wrote the board a letter telling them why changing CEOs would be a bad idea, according to the Wall Street Journal:
In the letter, Viehbacher wrote that “it has come to my attention, first through rumor, that the chairman of the board is actively seeking a successor to me as chief executive officer …I, of course, respect the board’s right to change the CEO. I would also like to draw to the board’s attention my personal views about why changing the ceo now would be detrimental to the interests of shareholders and other stakeholders…”
Viehbacher cited the price of Sanofi stock, which was at an “historic high” at the time, recent results of clinical trial data for various medicines and the “value” of the product pipeline. And he argued that removing him would destabilize senior management; disrupt alliances with other companies, such as with Regeneron Pharmaceuticals, and alter relationships with regulators and industry trade groups.
“I have worked hard and traveled long distances over the past five years to rebuild a Sanofi that is financially successful, provided new hope to patients through innovative new medicines and built a strong leadership team,” the 54-year-0ld Viehbacher wrote. “I ask you not to put this development at risk and that we have a dialogue about what the board would like to see going forward.”
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