Sanofi fired Chief Executive Officer Chris Viehbacher, ending a six-year tenure in which he caused tension with board members and French politicians by shifting the drugmaker’s focus to the U.S. and overhauling its struggling research operation.
Sanofi’s board voted unanimously to remove Viehbacher at a meeting today, the Paris-based company said in a statement. Relations between the CEO and the board weren’t close enough and he failed to sufficiently execute the company’s strategy, said Chairman Serge Weinberg, who will replace Viehbacher until a successor is found. He declined to comment on potential candidates for the job but said nationality won’t be a factor.
“There were numerous issues,” Weinberg said on a call with reporters today. “Management problems, problems of cooperation with the board and execution problems.” He cited inventory mismanagement in Brazil last year and the fact that Viehbacher hadn’t briefed the board in advance of his efforts to sell an $8 billion portfolio of mature products as examples of the CEO’s failings.
Sanofi fell 4.5 percent to 71.15 euros in Paris. The stock plunged 11 percent yesterday, the most in almost 16 years, after Sanofi surprised investors by saying sales in its key diabetes division would be flat next year, and investors speculated that the CEO would be ousted. This week’s decline has wiped about 17.9 billion euros ($22.8 billion) off Sanofi’s market value. By that measure, it’s France’s second-biggest company.
“I’m flabbergasted,” Fabian Wenner, an analyst at Kepler Cheuvreux in Zurich, said by phone today. “Just firing him without having a replacement only makes things worse. I’d be slightly scared of how things progress from here.”
The departure of Viehbacher, who also had a board seat, may disappoint some investors who have applauded his overhaul of the drugmaker. During his tenure, Sanofi ended some unpromising research projects, cut jobs and shut plants in France, and made acquisitions in the U.S., notably the $20.1 billion purchase of biotechnology company Genzyme Corp. in 2011. Viehbacher said he wanted Sanofi to operate more like Genzyme.
“The ups have generally exceeded the downs,” Tim Anderson, an analyst at Sanford C. Bernstein in New York, wrote in a note. “Our perception is that Viehbacher has had the support of the investment community more often than not.”
Viehbacher wrote to the board in September to ask about rumors that Weinberg was seeking a new CEO, people with knowledge of the matter said this week.
Viehbacher, a citizen of Canada and Germany who previously worked at GlaxoSmithKline Plc, relocated to the Boston area this year, joining some other members of the 12-person executive committee who have their primary residence in the U.S.
The move came after French government officials said they were concerned that corporate decision-making was leaving the country, illustrated most recently by General Electric Co.’s effort to buy Alstom SA.
Viehbacher’s plan to cut research jobs in Toulouse and Montpellier in 2012 drew condemnation from then-Industry Minister Arnaud Montebourg, who said it was “abusive” because Sanofi earned 8.8 billion euros in profit the previous year.
Weinberg, 63, is a former chief executive of retailer PPR SA. He graduated from the elite Ecole Nationale d’Administration, a training ground for French corporate leaders and government officials, and worked as chief of staff to Foreign Minister Laurent Fabius when he was budget minister in the early 1980s.
The government had no role in Viehbacher’s ouster, and any investor speculation that it did is “total fantasy,” Economy Minister Emmanuel Macron said in a text message today. “I understand that the decision of the board was very consensual.”