Sanofi Ousts CEO Viehbacher

In a decision being panned by the investment community, Sanofi’s board has fired CEO Christopher A. Viehbacher. The board made clear its problems lay not with Viehbacher’s overall strategy but with his management style. Serge Weinberg, chairman of Sanofi’s board, will serve as interim CEO.

Viehbacher took the helm at Sanofi in 2008 when the company was on the cusp of back-to-back patent losses on its top-selling products. He engineered a transformation of the French firm that included making deep cuts to internal R&D, diversifying into areas such as generics and emerging markets, and making key additions to its portfolio, notably the 2011 acquisition of the rare disease drug firm Genzyme.

But after what many in the financial community agree was a successful transformation of the firm, the board started to have problems. “Chris’s management style was not adequate,” Weinberg told investors on a call this morning. “We needed a CEO with the capacity to align the teams and really harness talents in a complex group [that is] very international and diversified.”

Weinberg pointed to weakness in the company’s financial performance in 2013, particularly in Brazil and China, and a recent slowdown in sales for its diabetes drug franchise.

But he was mostly critical about communication with Viehbacher. As an example of the disconnect between Viehbacher and the board, Weinberg cited Project Phoenix, a plan to sell Sanofi’s portfolio of mature drugs for some $8 billion. Weinberg told investors that the board learned about the project in the press.

“This was a major strategic move, and this was not appropriate,” he said. “Furthermore, it appeared the plan had no real substance because the cash flow of that business is really strong.” The plan to sell the unit has since been scrapped.

Stock analysts are not reacting favorably to the firing. “The board decision to oust CEO Viehbacher, and temporarily replace him with Chairman Serge Weinberg, will only serve to lower investor confidence during a crucial period of launch execution,” Leerink stock analyst Seamus Fernandez told investors in a note today.

A search for a new CEO is under way, and Weinberg told investors the focus is on external candidates with strong pharma leadership credentials.

Fernandez isn’t optimistic about the outcome of the search. “Identifying a compelling shareholder-friendly but experienced pharmaceutical executive willing to challenge the status quo seems highly unlikely,” he wrote.